Forums / Property Investing / Help Needed! / help re starting

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  • Profile photo of tribulationtribulation
    Member
    @tribulation
    Join Date: 2010
    Post Count: 1

    Hi

    I have read the book, looked at the forums, spoke to accountants and still feel lost.

    How do you start off when you have a large mortgage already.  My acct advised not to negative gear and wait a few years. I am not one that can wait.

    Any advice would be welcome and maybe I will have a 'lightbulb' moment.

    Thanks

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    If you have a large mortgage you will have to wait for your dwelling you live in to increase in value.
    There are ways of decreasing your mortgage faster.
    (1) Pay off the loan weekly rather than fortnightly or monthly.
    (2) Put more in to the repayment even if it is just $20 a week it adds up
    (3) Do not buy stuff that devalues like a new car
    (4) Set up an offset account and put your wage payments into it.
    This next part requires extreme financial discipline.
         Pay day to day bills with a interest free period credit card and pay the credit card off out of your offset account before the interest rate is charged.
    Once you have paid down your mortgage or the house value has come up you can borrow against the increased equity using a line of credit facility.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    I wrote an article for API last month about my own personal situation.

    I am just glad in 1995 when i hadnt even been in the Country 18 months I didnt wait.

    Certainly back in the 90's in Brisbane and SEQ most properties were negatively geared.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of number 8number 8
    Participant
    @number-8
    Join Date: 2010
    Post Count: 333

    Same as above, I like to be pro-active except no API for me.

    I noticed a post above x2, This is the type of spin I hear from many of my clients that were once direct clients of the bank. As a general rule the bank and its staff who have no idea about property investing guide people into products and encourage some strategies that although they seem valuable on face value, clearly send a person sideways. I am not sure why you would discuss paying weekly payments and putting more into the repayment($20) and in the same post direct someone to using an offset account. Tribulation was lost- but now you have got him setting facilities that are one and the same.

    I would not use a LOC in all cases, both expensive and a little bit of a myth in many circumstances.

    http://www.birchcorp.com.au 

    Profile photo of Greg ReidGreg Reid
    Member
    @greg-reid
    Join Date: 2008
    Post Count: 91

    Tribulation,
    The existence of a large PPOR mortgage should not be the game breaker.

    If you have equity you can access and are able to show servicing for increased debt, one very effective way to reduce non deductible debt quickly is to purchase an IP and debt recycle. You direct rental income and tax benefits (use an ITV form each year) into your offset against your PPOR to reduce the non deductible interest costs as soon as you can. Savings helps but many people do not want to greatly sacrifice lifestyle for this.

    This presumes you can set up the facilities you need to be able to do this for at least 2 years, preferably longer.
    I would say to you , what is the opportunity cost not to invest?
    Good luck
    Greg

    Profile photo of Garry MacGarry Mac
    Member
    @garry-mac
    Join Date: 2010
    Post Count: 22
    tribulation wrote:
    Hi

    I have read the book, looked at the forums, spoke to accountants and still feel lost.

    How do you start off when you have a large mortgage already.  My acct advised not to negative gear and wait a few years. I am not one that can wait.

    Any advice would be welcome and maybe I will have a 'lightbulb' moment.

    Thanks

    Hi tribulation

    It can all become a little overwhelming – particularly when starting out. There are several things to remember:
    1. a large mortgage does not necessarily mean you can’t invest. There are 2 key issues here: (i) how much equity do you have? and (ii) can you afford to invest – do your numbers.
    2. can you pass the ‘sleep test’? In other words, will you be able to sleep at night with additional debt?
    3. identify your objectives, eg is your primary goal cash flow, capital growth, are you looking to renovate, etc?
    4. educate yourself, research, research, research THEN take action!
    5. if you’re inexperienced, get yourself a good mentor. A professional Buyers Agent can help here BUT with one caveat…make sure they have personal property investment experience. There are many mentors supposedly showing folks how to ‘do it’ YET they have never ‘done it’ themselves…something wrong with that!!

    Finally, my moto is: “don’t wait to invest in real estate, invest in real estate and wait” BUT you must know what you’re doing first OR seek professional help.

    Great investing
    Garry

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