HI All,
I am only new to property investing and am ready financially to buy my first investment property. However i am getting confused on what the best strategy is. I am reading Anita Bell’s book at the moment and she seems to be of the opinion that you should go for P&I type loans to pay of investments. She says that IO loans are not the best choice because at the end of the loan term you still dont own the property. I understand that you would own the CG that the property has made over the loan period but that is it?
So i suppose the option is go the IO route and potentially grow my property portfolio over a shorter period of time.
Or go P&I route and maybe only look at 1 property but i would be paying more into that property.
She also seems against releasing equity to fund investments etc?
Please excuse my questions, i am just gettng very confused with all the different approach’s etc.
Our goal is simple i think. To buy solid investments that are either Positive cash or close to it, then as time goes on repeat the process to build wealth.
To give you a rough idea of our situation, we have about 100000 equity in a house valued at 450000. We have about $800 a month at the moment that we just waste.
Hi there
No disrespect to Anita but she is not Licensed or qualified and whilst may have done quiet well to have paid off her loan many of us have done that without writing a book.
You certainly would not take out a loan of P & I nature if you still had a debt outstanding on your PPOR. My preference for clients is to structure an interest only loan secured against the PPOR linked to an offset account and then sit a LOC behind this.
The function of the LOC is to draw down deposits and acquisition costs for your invetsment properties. These are then standalone without the need to cross collateralise.
Once the balance in the Offset account is equal to the balance of the PPOR you could transfer this over and pay out the debt but again why would you.
Unfortunately loan structuring is a boutique finance area which not many standard mortgage brokers understand let alone the general public.
Done properly it will save you $$$ over the term of the loan but set up wrongly from day 1 will have the opposite effect. The cost will be both financial as well as the lost opportunity to move quick enough when good deals arrive.
The loan structure is one thing but also the entity in which you purchase the property in is another.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
HI Richard,
I really appreciate you taking the time to reply mate.
Given your advice, where would you suggest looking to find someone who can help me get this intial structure setup properly form the start?
I live in Townsville and am struggling a bit at the moment knowing who to turn to. I am with CBA at the moment for our current home loan but i need to get the structure as you suggest setup correctly based on our situation before approaching a lender.
Regards
Hi there
The Big C i have to be honest we refuse to deal with them. There post sales service is non existant and they promise the world yet deliver absolutely nothing.
The Branch staff have nil or little knowledge and have one thing in mind on every deal and that is to protect the Bank at all costs irrespective of the customers needs.
We would be happy to assist if you want to shoot me an email.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Hi there,
I have an investment property located in WA for good investment. The property cost only 340k and rent out $980/month (tenanted until October 2008). Current occupancy rate 90%. If you are looking for a negative earing, then this property will suit you. I will be happy to assist you with this property.
Equity Finance & Mortgage
Mortagage Advisor Mob: 0413 594 675Am i green or what
What is a negative earing ? something teenagers get done to shock their parents.
Richard Taylor | Australia's leading private lender
I think negative gearing has a lot of benefits:
– Reduce Your Tax
– Increase Your Equity
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