From: Mike . Building a house and I just found Wealth through investment property ?! From: Rob Date: 10/22/99 Time: 7:20:15 PM Hey all. I just stepped out onto the road of owning [building] my own home, the great Australian dream. Until recently, I understood the world in terms of having the loan and paying it out. Out of the blue, I found "Building Wealth...". My mind is now racing with the possibilities! OK, there are a couple of queries I would appreciate some property investment angles to consider and comment on. So my situation is this. I bought the block of land outright and the credit union have loaned me 100% of the construction value of the house, $140k odd. The credit union have taken a mortgage over the block and house. The loan currently a variable loan, daily interest, no penalty, no fees, flexible repayment type loan. The house is at putting up the frame stage. Oh and I'm single. So my cash flow is from a single source. So my plan was to take the 25yr loan in order to get the lowest minimum repayments and I was also going to share out the other two rooms. My thinking was that between rent and paying extra from my salary, I'd knock off the loan in about 8 - 9 yrs. Obviously this is an after tax mentality. If I was going to be sneaky, I would have used most of my salary for the loan and then lived off the cash rent therefore minimising [illegally?] the additional tax liability. But NOW a whole new world of opportunities have opened up. Until I read the book I didn't even know that I could potentially negatively gear 2/3 of the loan [3 person house, 2 pay rent], and claim a bunch of other deductions too... all while living in the place as well. I understand that there are CGT implications in doing this, but as I don't understand them, I'd like to ask where can I go to look into it?? Jan's plan also seems to require at least having some equity in your own property to kick off the portfolio. So that means that this first loan *has* to be a P&I type loan. Is this a given? I calculate that the loan could be repaid in about 7 yrs using the 2/3 -ve gearing benefits [assuming I want to share for that long!] Now I'm entertaining other ideas of continuing to share where I am and turn the house into an investment property in order to claim full negative gearing benefits. Even so, the way I read the plan, the loan would still need to be a P&I loan in order to build equity. The down side of this though, is that I would have to pay rent. The dollars almost figure out the same way as if living in the place cause sharing or foregoing 1/3 of the rent by living in the place have the same impact on the bottom line. So I was wondering whether there were any views about the "living in" versus the "living out" scenario. I see some of the forum folk talk about making the first house IO while still renting a place. So that makes me ask, how do you kick off a portfolio after that first place if you never develop any equity????? To buy another place IO would mean you'd have to do some amazing sweet talking to get the bank to accept the investment property as the sole security for the loan? And doesn't that also mean that you're always well behind cause you have to fund your own rent, plus the difference between the taxman and renters on any properties you IO buy?? Too many questions!!! Why didn't I find this book years ago???? Look forward to hopefully a lively discussion with a single's investing point of view in mind. Thanks in advance. Rob.