Can we afford another IP? - Advice Please

Dear All,

I feel the need to buy another IP and have felt this way since buying my last IP which is now our PPOR. I was hoping to get some advice after crunching some figures on whether you think acquiring another IP is something we could really afford?

1st property worth $300k loan of $211K with $44K in offset rent $300 week positively geared approx $400 a month with yearly expenses included

2nd property worth $460K with $389K loan and $40K in offset PPOR

Combined income $135K net

No other loans and approx $1000 left every month after every single expense (yearly,bills,weekly expenses.....)

No kids, just married.

What advice would someone offer in terms of throwing around equity to obtain a third property?

FHOG out of the question. AND I HATE STAMP DUTY :mad:

I am keen on capital growth. Should I be even looking at $550K $600K properties or am I dreaming?

I guess moving out of mummy and daddys house last month has put a lot doubt in my mind. Seemed so easy before with everything paid for hheheheehehe thanks mum and dad. :)
 
Hiya

Servicing Wise its probably possible, but the doubts may be with you not being sure of your own capacity. On that basis and from what you have said, a 3 mth break may be a good plan ??

As an aside you may be able to get that non deductible debt down more quickly by doing a debt recycle strategy.

ta
rolf
 
The second property is your PPOR? You should have all offset money (84k) against that loan thereby maximising deductible interest.
 
I thought using the 44K in 1st IP for loan reduction on PPOR is not deductible because the funds were used for personal use rather than contributing to an incoming generating source????

I even applied for a private ruling with the ATO as at the time my current PPOR was a display home and they knocked me back.....
 
I thought using the 44K in 1st IP for loan reduction on PPOR is not deductible because the funds were used for personal use rather than contributing to an incoming generating source????
.

That would depend on the source of the 44 k

if the 44 k is tax paid savings u are good to go.

if its borrowings from equity from the IP then no, u cant move it and get a dedn.

ta
rolf
 
of course thanks Rolf that makes perfect sense. Unfortunately it is released equity.

What do you actually mean by debt recycle?

Thanks again.
 
Hiya Plant

Debt recycling is a strategy that allows you to change your non deductible debt to deductible debt more quickly than the traiditional means.

Couple of ways to accelerate things ( please seek specific advic for you !)
capitalising investment interest, investing in managed funds that produce +ve cash flow etc

ta
rolf
 
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