After reading Steve’s second book in record time, (did nothing else for 2 days) things started to fall into place. I have a line of credit mortgage of 200k for PPOR with a good income to suppliment that, I have one IP and after crunching its numbers into Investment Detective, discovered that I have a net cash flow loss of -$2000.00 so it makes sense to sell and take my hopefully 100K capital gain to start investing again.
Sorry about so much detail but my question is do I just put it into my line of credit PPOR mortgage, until I find my next IP and redraw for cash deposits etc or do I do something else with it.
This is were I get confused !!!
Please help
Snowball [confused2]Hi Snowball,
A couple of questions, is the LOC used for investment purposes?
Do you have any debt on your current IP? Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thanks very much for the reply Steven, My LOC is just for my PPOR and daily living expenses, currently not enough credit on it to invest with. I owe 140K on my IP, its current value is approx 240-260K
Hope that helps
SnowballHi snowball,
Don’t be too quick to sell your IP. There are heaps of things for you to consider. The mortgage guys should be able to advise you here but there may be a way for you to have you cake and eat it.
What about the IP you are thinking about selling. How is it performing as a stand alone. What is the potential for the area and what were your goals when you brought it.
I may not be popular by saying this but cashflow is not the only consideration. 2k in the red might not be that bad all other things considered. Having said that I think you are going in the right direction by trying to balance things out.
Good Luck
[email protected] – Experienced investors living in NZ who can find properties to meet your needs! Email us to receive details of upcoming deals.
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Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
hi snowball
Sorry not a great lover of kiwi’s but for me Don and Liz are on the money.
don’t sell unless you have to or the loss if more then the gain.
You need some one to look at your personal details and give you an informed opinion( and don’t send it to me)
example 1 you are on 1 mil a year with bhp 2,000 loss on an investment no problem.
example 2 living at home no income parents got loan for investment 2,000 loss big problem.
They are miles apart but a broker or lender will fill in the gaps.
Also I have a funny feeling you are not using an accountant you need to look at this also.
I don’t sell my own investments I hold.here to help
Hi Gross,
We are not kiwi’s “not that there is anything wrong with that” we just live and invest here.
Cheers
[email protected] – Experienced investors living in NZ who can find properties to meet your needs! Email us to receive details of upcoming deals.
Project management also available – finding solutions for problem properties! We can manage your renovation project for you.Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi Snowball
There are a number of options available to you,Option 1:
place the remaining funds from the sell of the IP into the LOC and withdraw those funds as needed for future investment:
keeping in mind all funds in the LOC is non-deductible debt. (IMHO this is not a good option)Option 2:
Cancel the LOC and set up a split loan on your PPR, use the $100K from the sale of the IP to pay down PPR loan of $200K. Creating a balance of $100K.Split 1: Approx. $100K non-deductible debt, P&I with 100% offset linked.
Split 2: Remaining equity from PPR, deductible debt, interest only repayments. (Use these funds for deposits etc on future investment)This option will allow you to immediately convert $100K of non-deductible debt into deductible debt.
As already mentioned, holding the IP and perhaps making use of available equity may well be another option, I hope this helps, cheers.
Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thanks everyone for your input,
I guess my ultimate goal is to be financially independent and I would like to start setting things up to have a serious go at becoming a full time investor. So my apprentice investor mind tells me to reduce a PPOR mortgage, when I have 1 IP with a net loss of 2,000 per year, but a 100K capital gain. An yes your right I definitely not an accountant !!
Im not sure that my Unit is going to appreciate in leaps and bounds over the next year or so, and Im thinking I would take more risks investing, if I had a 100K mortgage.
Steve I like the sound of some of your options and I think its probably worth running it by the bank manager
Much Appreciated
SnowballThanks everyone for your input,
I guess my ultimate goal is to be financially independent and I would like to start setting things up to have a serious go at becoming a full time investor. So my apprentice investor mind tells me to reduce a PPOR mortgage, when I have 1 IP with a net loss of 2,000 per year, but a 100K capital gain. An yes your right I definitely not an accountant !!
Snowball,
” Im not sure that my Unit is going to appreciate in leaps and bounds over the next year or so, and Im thinking I would take more risks investing, if I had a 100K mortgage. ” —- Make a lot of sense. A good deal is a good deal.Hi Snowball,
If you decide to keep the IP you could access the remaining equity (currently $68.000 @ 80% LVR) cancel the LOC, set up a 100% offset linked to your PPR loan and park the $68.000 in the offset until required, this structure would help minimize the nondeductible debt, cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thanks very much Steven,
I now need to give it all some serious thought.
Snowball
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