250k CASH !!!! WHAT TO DO WITH IT ?

The biggest thing you have to think about is NOT the banks or the lenders…it’s your MUM.

People always give gifts (especially big gifts) with invisible strings attached. It seems your mum isn’t giving you money to do what you want with it. She is giving you money to do what SHE wants with it. So your easiest option is to just buy a 2-3 bedroom house for as close to the $250k as possible. Live in it or rent it out.

As time passes and the property goes up in value you could then borrow against the equity to re invest. That way you aren’t touching any of your mums money (cos in her mind it is still her money) you are only borrowing against the added value on top of your mums money.

Money always gets funny when you mix it with family. Keep it simple and avoid being too greedy. You don’t need to “get rich quick”. You can use your mums money to get into the market and then use the growth/rental income you get to grow your portfolio over time.

Ryan McLean
Check out my list of Top Ten Property Investing Books Reviewed

Let us know what you decide

Helluva Mum, helluva head start.
Nice problem to have.
Ryan’s on the money – Get full details on your Mum’s plan n work with her and learn fast as Xdrew suggests..
This forum’s a good start.
You’re pulling the real monopoly board outa the box now. Exciting times have started.
BTW – how old are you and what’s your income ? (so ppl here can assist you further.)

Cheers
thecrest

Everything is in your favour, time, income, attitude, family support, family $ support, willingness to learn.
And thanks for the larger type font, shows great compassion and consideration for us older people, but you might like to scale it down a bit for the majority.

Our oldest citizens type generation didn’t used to make their money work hard, because financial education was not as widespread as it is today. Then the attitude was just keep paying off the home loan over 25 years and try to save as well, heaven knows how they did that.
But it meant they had lazy equity, as they paid off their home, which was doing nothing. You can see the comparison.

There are safe limits to how much debt you take on, and you need expert help to formulate financial plans to find out where that limit is for your own unique circumstances.
Prudent Planning – That’s what the difference is between punters and investors.

Good luck, exciting times ahead for you, surround yourself with a strong team like family, accountant, financial planner, finance broker, solicitor, learn like mad, plan carefully and only trust those in your inner circle.

Cheers
thecrest

Hi Ash88,

In regards to the above, if that is what you are set on doing you are better off only using the least amount possible as a deposit instead of 100K. Approx 50K if you want to avoid LMI. Have an IO loan and have the rest of your money in the offset account. This way when you go to buy your PPOR you can move all your money out of the offset account and into the new loan as this wouldn't be tax deductible. When you rent out your first house the interest you will be charged on this will now be deductible. (200K loan assuming the 50K or less deposit)

Good luck with it all.

Cheers,
Nathan

Good advice from Nathan in my opinion.

Cheers

Jamie

With a P&I loan you are required to pay interest and a portion of the principal every month whether you want to or not.  Alternatively you could pay interest only and put the extra that you otherwise would have forked out per month on a P&I into an offset account against your P&I loan.  The end result is THE SAME.  In other words if you part with the same amount of money each month then neither option will see you paying more interest over the years than the other.  Here is where the difference comes in:

If you put your "extra cash" into an offset acount, you can withdraw it in large volumes at a moment's notice without permission.  This is good if you wish to use the money as a deposit for the purchase of another property.  Or indeed if your intention for the property changes (eg if it started out as a PPOR and you want to convert it to an IP later it is a very bad idea to pay off the loan or the bank interest will never be deductible on your tax return).  Remember also that once you hand money over to pay off the principal, if you wih to redraw on it or take a loan out against it, there will be fees involved.  In other words you are throwing money away.

As Terry always advocates, always go with IO with offset account…. UNLESS you are a person that cannot control your spending and don't trust yourself not to dip into the offset account for silly purchases.

That's what 11,000 posts will do to you….you've probably answered the same question 68 times over the last 10 years

Cheers

Jamie

Here it is
https://www.propertyinvesting.com/forums/property-investing/general-property/4337829

I replied on that thread and he copied and pasted an answer from that to this.

I am not so mad after all.