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Yes, the debt increases are you access the equity, but what are you using the equity for? You're using it to buy other assets that generate income. For example, my first place was purchased for $170k in 2000, and now rents for 330pw. So it's now cashflow positive, and if I refinance it to...

There’s no set formula for this. And no formula works 100%, because it depends on so many unknowns like availability of credit. LOE is more than just borrowing against equity to fund the shortfall between interest and rent. This is interest capilisation. You can have positive cashflow from...

THAT is really the key point, in my opinion. Buying when the market is going up is straightforward. What do you do when the market goes down? Australia in the 90s went through years of flat to down markets before the next boom started. If we have another one of those (perfectly possible), will...

There is such a thing as an educated guess, Stumunro. Don't just ignore Japan. Read about it. Study it. That way if (when) we have a crash and everyone starts raising the spectre of Japan, you've already through it through and concluded it's not going to happen here. I don't think a Japan style...

Also, Leilah, when you're doing LOE you're probably not drawing a 80% LVR up to 90% LVR and then waiting until the value goes up before drawing down again. You're more likely to be around 50% LVR, drawing down another 10% and so on. LOE is very dangerous if you already have a high LVR. Alex

Because the value of your properties keeps going up, so your equity increases. Theoretically, as long as your withdrawals are smaller than your property appreciation, you're ok. alex

Depends on the loan. Some loans may require a minimum withdrawal. No, because you're not changing the tax cost base of the property when you draw equity out of it. In the same way, refinancing and using the extra money to buy shares, another property, etc doesn't change the CGT payable on...

Yes, it is. If you draw money from an IP, it's not income, so it's not taxable. However, the interest on that amount will not be tax deductible. No one will dispute that. If you don't declare the interest as a deduction, the ATO doesn't care what you spend it on. Alex

Yes, because the Japanese people are rather more docile and there is no credible alternative political party in Japan. Australia, however, is different. The two parties are equally credible (at least in that they have actually been in power this side of the war). In any case, we have more...

I'm claiming that we will most likely have a sharper recession than Japan. Obviously being something I'm predicting I have no data. It's all anecdotal. My own reading and experience in Japan suggests that for all the talk about a lost decade and so on, unemployment was relatively mild, partly...

Since I already own property, if we have a boom in the next 5 years like the last 5 (really unlikely, in my opinion, given that rates are higher and there are many more risks in the world market) I'll just happily watch the values go up. In any case, there is no such thing as a uniform...

The main thing is that the Oz government will LET the economy go into recession. That means if (when?) we have a recession, we'll have bankruptcies, high unemployment, people losing their homes. After the excesses have been shaken out of the system, we'll have another boom. I'm not saying...

My own reading of the Japanese boom/bust makes me confident that we won't have one of those in Australia. The bubble in Japan was much bigger, and the subsequent government policies in response made the bust worse. Which is also one reason why I don't think we'll have another '29-type...

They do what they want to do with their money, we do what we want to do with their money. But then I'm not the most charitable guy in the world. Going back to the topic of the thread, 1m in equity just doesn't do as much as it used to. Alex

Surely that's common practice. You simply refinance your existing properties to get say 25% of the cost of the new property, then get 80% LVR on the new IP. The thing you have to keep an eye on is the total LVR of your portfolio. I bought my last 2 IPs with zero deposits (by refinancing) but...

It's the start that's the hardest. Say you have the following: Portfolio A: $2m in assets, $1.8m debt Portfolio B: $1m in assets, $800k debt In both cases, the EQUITY is $200k. However, Portfolio A will, given normal growth rates, produce much more equity faster ($140k a year for P-A...

Trom, what's behind this three year thing? If I told you that it'll take you 5 years to get to $1m equity, would you just say it's not worth it? Even more importantly, what are you doing / planning to do to achieve $1m in 3 years? Most of the members are telling you their history based on...

Trom, I think you'll notice that all the people who have achieved what you want to achieve ($1m in net equity) don't really look at it as a goal. Or at least, by the time they're close to it, they no longer think of it as a real goal. I recently hit $1m in loans, and though, 'Is that all?'...