WARNING: Rambling and long. Just trying to get things straight in my head. 
Our strategy for property investment has always been a slow one right from the begining. Slowly acquire around 6 (or thereabouts) 'average' properties, get them paid off on use their rental income to fund out retirement.
Currently, we have the one investment property and our PPOR. Due to not being Tax savvy when we first started this journey, we have contaminated our loan on our PPOR. Only about 2/3rds of the loan would now be deductible if we were to use this place as an investment.
We have put our investing plans on hold for the past 2 year, whilst adding another child to our brood. Which is always a good way to eat into servicability and chew up any extra funds you may have had otherwise.
With this years tax return however, we have returned to a state of financial equilibrium, and are now contemplating our next move from here.
Upgrading our PPOR from a pokey little 3bedder, is not just a wish, but fast becoming a nessecity with four young children who are growing quickly. Our limited servicability and my lack of desire to enter the workforce, make it a bit of a pipe dream at the moment.
Our plan to move forward and get the bigger house, is to purchase / build a bigger house as an investment - to be rented out for a couple of years, before we move into it ourselves. To do this we need to save a decent sized deposit, however our servicablity also increases, as the rental income from the property is counted towards our income. Either way, it will likely be at least 1-2 years before we can put together the kind of deposit we need. And then another 1-2yrs before we would be looking to move into the property ourselves. But we are happy enough with this aspect of the plan for now
Our delemna's arise around what to do with out current PPOR. Ideally, we would like to keep it as an investment. It has already seen significant capital gains and would make a decent rental. The issues being around the loan contaimination and poor loan structure. Whilst we are still living in this house we would like the deposit we are saving to be offset against this house; however we only currently have the redraw facility - no offset account. We are looking into our options in regards to refinancing.
So our options with this are;
1) refinance with an offset (but likely pay higher interest, and not yet sure how viable this option is with our current servicibility - although I beleive it should be possible)
2) Put our savings elsewhere (ie, the IP offset)
3) Put our savings on the redraw, and not worry about the deductibility on this house {possibly even focusing on paying this loan off altogether and then once we have moved into our new PPOR either sell or draw the equity to fund further desposits for more investments.
If option 1 is off the table, which would you opt for? Option 2 or options 3? Or have I not considered another option?
Either way; it feels good to be moving forward again, even if it is at a snails pace.
Our strategy for property investment has always been a slow one right from the begining. Slowly acquire around 6 (or thereabouts) 'average' properties, get them paid off on use their rental income to fund out retirement.
Currently, we have the one investment property and our PPOR. Due to not being Tax savvy when we first started this journey, we have contaminated our loan on our PPOR. Only about 2/3rds of the loan would now be deductible if we were to use this place as an investment.
We have put our investing plans on hold for the past 2 year, whilst adding another child to our brood. Which is always a good way to eat into servicability and chew up any extra funds you may have had otherwise.
With this years tax return however, we have returned to a state of financial equilibrium, and are now contemplating our next move from here.
Upgrading our PPOR from a pokey little 3bedder, is not just a wish, but fast becoming a nessecity with four young children who are growing quickly. Our limited servicability and my lack of desire to enter the workforce, make it a bit of a pipe dream at the moment.
Our plan to move forward and get the bigger house, is to purchase / build a bigger house as an investment - to be rented out for a couple of years, before we move into it ourselves. To do this we need to save a decent sized deposit, however our servicablity also increases, as the rental income from the property is counted towards our income. Either way, it will likely be at least 1-2 years before we can put together the kind of deposit we need. And then another 1-2yrs before we would be looking to move into the property ourselves. But we are happy enough with this aspect of the plan for now
Our delemna's arise around what to do with out current PPOR. Ideally, we would like to keep it as an investment. It has already seen significant capital gains and would make a decent rental. The issues being around the loan contaimination and poor loan structure. Whilst we are still living in this house we would like the deposit we are saving to be offset against this house; however we only currently have the redraw facility - no offset account. We are looking into our options in regards to refinancing.
So our options with this are;
1) refinance with an offset (but likely pay higher interest, and not yet sure how viable this option is with our current servicibility - although I beleive it should be possible)
2) Put our savings elsewhere (ie, the IP offset)
3) Put our savings on the redraw, and not worry about the deductibility on this house {possibly even focusing on paying this loan off altogether and then once we have moved into our new PPOR either sell or draw the equity to fund further desposits for more investments.
If option 1 is off the table, which would you opt for? Option 2 or options 3? Or have I not considered another option?
Either way; it feels good to be moving forward again, even if it is at a snails pace.
