Our situation is as follows:
PPOR Valued @ 450K Amount owing 250K
Invest Prop 1 Valued @ 260K Amount owing 160K
Invest Prop 2 Valued @ 270K Amount owing 160K
Invest Prop 3 Valued 2 300K Amount owing 230KAll investment properties are within 8km of Brisbane CBD.
The first 2 properties are cashflow+ when taxation is included. The third is cashflow neutral when taxation is considered.
We are running on a fairly tight budget at present as both my wife and myself have taken a short term paycut this year in our Monday to Friday jobs, my wife to spend some more time in her own business and my self to step back for six months or so at work and then to move onwards and upwards again. I am seeking some advice as to increasing our cashflow and also to pay off our PPOR ASAP. We have no other debt with a credit card automatically paid in full each month.
Any ideas would be greatly appreciated.Hi Bomber,
Can we assume that you already have your investment debts structured as interest only considering you also have a non deductable debt?
If not, start here![wink]
Hi Matt
Investment property loans are all Interest only and I feel we have maximised rent on all properties
Regards
BomberPerhaps you could borrow some equity sitting in your other places and buy more investment properties (perhaps start looking at commercial since you have so much equity avalible to you).
Rgds.
Lucifer_auHi Bomber,
To pay down your PPR debt at a faster rate you could look at attaching an offset to the loan, but I suspect you may have this in place as you mentioned the monthly swipe of the credit card,Are you getting a discount off the SVR from your lender?
Another option to increase the level of cash flow, may be to consider investing in cheaper properties with higher returns; with your impending decline in income and I assume a lower tax bracket this may be beneficial,(see disclaimer below)
You have more than enough equity in your portfolio to continue investing, good luck to you.
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Hi Bomber
I am in a fairly similar situation to yourself, and what we are doing now, is drawing out the available equity to invest in ‘alternative’ investment strategies that provide a better return than the bank interest you’re paying on this debt.
This inturn increases my cashflow, and if you have a flexible lender who will count this investment income towards servicibility, you can then go shopping again for property, and so the circle goes round.
I know this is not for everyone, but I feel it is necessary for me to do to keep the wheels turning.
The only other option I see is to find +cashflow properties(not many in Brisbane under 10km anymore) or to work more hours in your job and increase your earnings(Not a wealth Creator!).
Regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]Bomber,
From your figures – you have equity, this must be an income thing. Hard to get around, you may need a more lenient lender.[upsidedown]
Hi Geronimo
Any suggestions re alternative investments? The option of taking some equity amd investing to collect a return greater than the interest being has real appeal
Regards
BomberIt was mentioned above…….. what are the main benefits of IO loans in investment? Is it to assist in creating + cash flow IP’s? How should the PPOR be structured?
One a year is my plan!!
Turismo.I think the idea is to pay IO on IP and put the difference into PPOR as this debt is non tax deductible.E.g If P&I loan payment is $1050 and IO payment is $1000 then you would put the $50 difference straight into your PPOR loan to pay it off quicker.
Russ.So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.0438 659 411
Another Option you may or may not want to consider is selling one or two of your investment properties, and using the money to pay off your home loan. This would kill your non deductible debt (or a lot of it), and you could then reborrow the money for more ivnestments.
BUT, you will have to pay CGT and stamp duty when you buy new property to replace the old. How much would depend on how much you purchased the properties for and your incomes at the time of sale. If you have scaled back work, you may have a low income this year.
This may be worth considering, depending on your situation.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by bomber:Hi Geronimo
Any suggestions re alternative investments? The option of taking some equity amd investing to collect a return greater than the interest being has real appeal
Regards
BomberHi Bomber
Not being a licensed financial planner I am unable to advise you on cashflow investments. I would however be happy to share with you what I am currently doing myself.
Feel free to e-mail
Brendon
Acute Mortgage Reductions
[email protected]
‘Better Finance for More Homes Sooner’Excellent answer Terry
Dom[biggrin]
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