Another LOC question

[Collector]

We are preparing to purchase 2nd IP in the next month or 2.

Looking at best method regarding LOC.


We currently have a LOC which is maxed out - used to purchase IP1


We will either be seeking a 2nd LOC linked to PPOR or the extend the LOC we have.

Looking for pros & cons for both methods.

 

[investor2009]

Pull equity to a new account from you PPOR or IP-1(new LOC for deposit and/or negative cashflow funding for the new investment)
Then, borrow the rest through another lender (preferably).

Your records of expenses/loans will be clear from a tax perspective.

Best to do things clearly as believe me it can get pretty darn messy at tax time, and I've done things relatively well too!

From now on I will be doing things this way though and will have a LOC for non deductible and deductible (seperate accounts) I haven't used equity for non deductible stuff yet but will be soon enough.

 

[traveller]

Yes you should set up different accounts for the clarity at the tax time.

Also from experience, i will always set up different loan accounts for different properties and then if required do a top up on those if required in case i am doing an improvement/capital expense on that specific property.

As for doing loans with different lenders, i have generally done all my banking with one bank only which provides me with ease, simplicity, flexibility and also a good deal as my size of business increases with them. As a loan writer for a big bank i am finding this more common now than before.

However make sure you keep cross collaterisation to a minimum so that you can move(or at least threaten to) to another bank if things go wrong.

-Daman.