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From: Mike .


Where do you park your $ whilst on the acquisition trail?
From: NigelW
Date: 05 Jan 2001
Time: 16:43:17

A quick question for the team:

Where do people keep their money whilst looking around for acquisitions?

I realise that one should be trying to buy without money down using increased equity in other properties. But for those of us who are still fairly new to the property investing scene and have only just bought properties we don't usually have enough spare equity to buy without injecting the 10% deposit plus costs in cash.

Hence my question. Where do people investment their money in the interim so as to get the best return but still have it accessible for rapid acquisitions?

I have mine parked with INGDirect getting 6.25% pa compounded monthly regardless of the balance and no restrictions on withdrawals etc (due to it being an internet shopfront bank only I suppose). But I wonder if I can do better elsewhere.

Does anyone else have an accessible account or short term investment that will generate better returns? (Apart from the casino or race track ;^) )

Thanks N.
 
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GB

Reply: 1
From: Mike .


Re: Where do you park your $ whilst on the acquisition trail?
From: GB
Date: 06 Jan 2001
Time: 14:16:08

It all depends upon how far you want to go. Use an offset account (if your bank has one) as a sweeper account - no interest but reduces your effective mortgage balance by the amount in it. Put all your income through it and use your credit card for daily living. Pay the CC each month before it attracts interest. If your CC attracts FF points you may even get a holiday tax free :). This routine will outperform any readily available call deposit if tax is taken into account. Hope this is helpful.
 
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Rolf

Reply: 1.1
From: Mike .


Re: Where do you park your $ whilst on the acquisition trail?
From: Rolf
Date: 05 Jan 2001
Time: 21:18:00

Hi Nigel

I would agree with the ING direct scenario, assuming you do not have any personal debt to park against. Why 10 % deposit + costs ? If you are going through the expense of mortgage insurance anyway at near 90 % loan , take it to the max and take a 5 % down loan. A few orgs now offer this and the mortgage insurance is not a whole lot more than at 85 or 90 %. This can give you much better leverage and depending on your personal situation could help you to "control" two title deeds rather than just one.

Get back to me on [email protected]. My reputation is to help out with no obligation or hassles. What goes around comes around !!

I am an independent mortgage broker and I dislike my computer even though it is a great help.

TA - Rolf
 
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Mike

Reply: 1.1.1
From: Mike .


Re: Where do you park your $ whilst on the acquisition trail?
From: Mike
Date: 05 Jan 2001
Time: 18:25:21

Hi Nigel,

My savings/spare cash is building up quite nicely in my Offset account earning 8% tax-free because the interest is not regarded as income for tax purposes since it is used to offset the interest on my home mortgage. The rentals from my IP also spend a brief time there before they are debited to pay the interest on the IP. I can withdraw any amount at any time for whatever purpose.

I wonder if anybody knows whether "savings" is treated by the banks as equity when calculating the LVR or would they be flexible in treating it as a potential source of income? My problem is that my LVR is quite healthy even without considering the amount in the offset account but I need to boost the income side of the equation to qualify for another loan. If the banks were to treat the offset account as a source of cashflow then I could go ahead with another IP purchase tomorrow instead of taking the rather drastic step of relocating to London for higher wages. Any thoughts?

Regards, Mike
 
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Sim

Reply: 1.1.1.1
From: Mike .


Re: Where do you park your $ whilst on the acquisition trail?
From: Sim'
Date: 05 Jan 2001
Time: 17:41:25

I haven't seen anything that compares with ING Direct's Savings Maximiser for at-call money parking. I can't even find short term deposits that match that rate. Certainly beats pretty much every cash management account around !

Let me know if you find something better... I was actually about to open a Savings Maximiser account myself ;-)

Sim'

PS. for those of you interested... http://www.ingdirect.com.au
 
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