We've done it!

[redwing]

Andrew which property are you referring to?

Ive recently set up 2 more LOC's topping up our full doc status to 80 lvr .

Looking to purchase two more property in Melbourne with the lazy equity currently sitting in our portfolio.

Now that No/Lo docs have tightened due to GFC I plan to utilise another cash bond structure to extend our full doc lending capabilities to service the leveraging and extending our asset base even further. Nothing like manufacturing serviceability.

Our ppor total back yard reno is nearing completion just in time for festive season celebrations too

An't we in the Global Financial Recovery (GFR)now

Look fwd to hearing about the new purchases

 

[Andrew_A]

Andrew which property are you referring to?

The one from the first post in this thread in Cleveland, though would be interested in any data you can share.

 

[Rixter]

Congratulations Rixter.
I noticed you joined in 2001, i am not sure if thats when you started your property journey, but its 8 years into your 10 year plan.

I joined SS basically when it started (1999) a few web boards before the current one that shows 2001.

Bought my first ppor in 1993. My 2nd purchase was an IP 7 years later and we've basically been purchasing an IP per year since.

 

[Rixter]

The one from the first post in this thread in Cleveland, though would be interested in any data you can share.

Ahh..Settled in Nov 2007 for $328k rented @ $270 p/w. Current value around $360-$370k and rents for $345 p/w.

Are you looking to purchase in the area?

 

[Andrew_A]

Ahh..Settled in Nov 2007 for $328k rented @ $270 p/w. Current value around $360-$370k and rents for $345 p/w.

Are you looking to purchase in the area?

No, though it looks like a really nice place to live.

I note there was a recent sale in your complex, should give some feedback about what the market is saying.

 

[Terryw]

Hi Rick

Just read your thread for the first time. I love reading these how i did it type threads. Thank you for posting.

And it just shows how important planning is.

 

[Alex P Keaton]

Interest on funds borrowed for lifestyle funding is not tax deductible.

.
.

CGA is a LOE strategy and as such you do not pay income tax in the first instance to write deductions off against.

.
.


With LOE you are already funding your lifestyle and existence without tax relief which is your worst case scenario from a cash flow perspective anyway.

Hi

How do you go about it?

Do you for example .....use some of your properties to live off and some of your other properties equity for investment purposes? I'm trying to get my head around all of this.

And

What happens if you decide to use one of your properties equity for investment that was previously used as a LOE for lifestyle funding. Hasnt that equity already been contaminated because you used it for personal lifestyle reasons?



thanks

 

[Alex P Keaton]

ohhhh its clicked for me!!!

When you draw the equity out of the property it just depends on what your using the funds for whether or not its tax deductable or not.

lol

 

[Rob Williams]

What happens if you decide to use one of your properties equity for investment that was previously used as a LOE for lifestyle funding. Hasnt that equity already been contaminated because you used it for personal lifestyle reasons?



thanks

You can't contaminate equity, as such.
I'm experimenting with a similar strategy at the moment.
Not ready to make a full commitment to it (yes, I've been told I have commitment issues), but I'm going to take the leap of faith soon, with a few mods to Rixters strategy that suit my circumstances.

 

[Alex P Keaton]

You can't contaminate equity, as such.
I'm experimenting with a similar strategy at the moment.
Not ready to make a full commitment to it (yes, I've been told I have commitment issues), but I'm going to take the leap of faith soon, with a few mods to Rixters strategy that suit my circumstances.

ok

wow its raining here in perth. its been a while

 

[Alex P Keaton]

D-day Im working towards is 1st July 2010. Im sure you will get an invite Redwing!

Still planning to retire July 2010?

 

[Terryw]

The interest on funds borrowed to live on isn't deductible, but you can make it deductible by doing it slightly differently.

And you don't contaminate the equity in a property even if borrowing to LOE because what you would do is to set up another loan split for investing - so that the interest on this split is separate from the LOE equity - and therefore not contaminated.

 

[want2bewealthy]

Hi Rixter.

I'm wondering if you generally use different lenders for each purchase? I'm just thinking of the refinancing part(s).

I also know that it's quite easy to switch lenders too but would just like to know how you went about this.

Cheers!

 

[handyandy]

The interest on funds borrowed to live on isn't deductible, but you can make it deductible by doing it slightly differently.

I am curious as to what you would do to ensure that the draw down, even for personal use, is and stays deductible?

Cheers

 

[Terryw]

Thats easy. You don't use the draw down part for personal expenses.

Draw down on the loan to pay for investment related expenses and use the rent money for living expenses.

 

[handyandy]

Thats easy. You don't use the draw down part for personal expenses.

Draw down on the loan to pay for investment related expenses and use the rent money for living expenses.

I understand where you are coming from and would certainly be my approach

But this method would hardly allows you to purchase big ticket items as what you are referring to is more in the vain of debt recycling. Also to achieve at any meaningful level you would need to personally manage all bill payments rather than have PM manage the outgoings.

Cheers

PS Also an assumption that there is sufficient rental income

 

[Terryw]

thats true Andy. It would depend on your rental incomes - it may be difficult to fully fund your lifestyle on just the rents of one or two properties. But it all helps.

As for the big ticket items - maybe these could be business related? eg vehicles, and the interest on the funds used to purchase these would be deductible.

 

[agent007]

I am curious as to what you would do to ensure that the draw down, even for personal use, is and stays deductible?

Cheers

I'd would assume that the technique will be to use the rents for personal/living expenses and fund the properties with draw downs from the LOC/Offset acc. In that way it is deductable. I can't see any other way that would be acceptable.
Rgds.

 

[redwing]

Quote from Rixter

When you LOE there is no income tax to pay in the first instance.

There are also some interesting quotes from DaleGG regarding the use of Trust Structures in the "retirement" phase

 

[Rixter]

Hi Rixter.

I'm wondering if you generally use different lenders for each purchase? I'm just thinking of the refinancing part(s).

W2BW, in the early years I used the one lender....nowadays I spread it across a few different lenders with a few IPs to each lender. I have always used mortgage brokers to organise it all for me.