Im a FIFO worker 200k+ a year still eligible for first home buyers grant,
I'm looking at buying my house and few IP but should i pay cash for my PPOR and put 20% on each IP?
Im single atm, no kids, have a job, income 200k+, i want to be able to live of my IP
If you paid cash for a 600K PPOR, you'd own it outright.
Then, you could consider taking out a facility to draw out 80% of its value (480K) to use towards the purchase of 8 x NRAS INV properties.
The 480K would consist of 8 x 60K tranches.
Each 60K tranche would cover 10% deposit + stamp duty + a 10K cash buffer for the purchase of an NRAS property to the value of 350-400K . You would borrow the balance ( 90% + LMI) against each of the 8 x NRAS INV properties.
Each NRAS property should produce approximately 18-22K of deductions, so 8 X NRAS would result in your assessable taxable income being reduced by @ 150-160K ie. from 200K to @ 50 or 40K. So you'd only be paying tax on about 20-30K of your 200K salary, as the first 18.2K of your income is tax free . On the remaining 20-30K of taxable income you'd be paying 19% Tax on the majority of it, and 32.5% on a portion of it. Broadly speaking, that would mean you'd be paying approx 5-7K in tax on your 200K income.
Each NRAS property should also generate @ 7-8K CF+ tax free , so 8 x NRAS properties would add an additional 56-64K of tax free income to your 200K salary. Even if you were to be more conservative and assume each of the 8 X NRAS generated 5K tax free, that would still equal 40K.
So you'd have nothing but INV debt, you'd have 240K ( possibly 256-264K) of income and only be paying @ 5-7K in tax. The resulting 233-257K of tax free income would then allow you to aggressively pay down
1. the 480K INV debt you had used to fund the 10% deposits , stamp duty etc for the 8 X NRAS - within 2-3 years
2. the majority of the 8 x 315-360K NRAS INV loans
At the end of 10 years, you'd have your PPOR completely debt free, the majority of your INV debt paid out, and be generating a significant rental income from the 8 properties, which will have returned to full market rent after the 10 years participation in NRAS has ended. If each property started at 350-400 per week today , they only need 3% compounding increase to rent to be generating 470-550 per week by the 11 th year. That equates to @ $3760-4400 per week, or 195-229K per annum. If you have little or no debt left on them, there's your passive income for life...
Of course, if you used the equity in your PPOR to continue to invest after paying it off, you may well have a much larger portfolio and be in an even stronger position. But if you just used the 480K of equity once, for the 8 x NRAS properties, this is what you may achieve...