Hi from new...investor?

[Slow&Steady]

Not sure what I am yet!

I've never thought of myself as a 'property investor' but found this site because I'm looking for a mortgage broker in Melbourne.

I bought my first place (a unit) a few years ago, which I moved out of a while ago and rented out so that I could move into a house and get a dog (a beautiful beagle)!

I haven't really been treating it as an IP, and have just continued to do what I did when I was living in it (ie. been trying to pay it off as quickly as I can on a principle and interest loan). Anyhow, I really like the house (and so does the beagle!) and am now wondering about the possibility of buying it as my PPOR and treating my unit as my 1st IP.

From reading everyone's invaluable comments, I've realised that maybe I could actually do something a bit more productive with my unit than just trying to pay it off as quickly as I can!

Anyhow, not sure where this post was suppose to go, but just wanted to say thanks to the posters on this forum for helping to open my eyes and making me realise that maybe even an average jane like me could achieve financial freedom through property!

Thanks for the recommendations on MB in Melbourne - I'm going to give Kristine a call on Monday. Hopefully this will be the first step towards being a 'property mogul'

 

[craigb]

welcome, and everyone takes a first step, already having the other IP seems like your one step ahead.
listen,learn, and play along, and you might change your mindset, and retire very wealthy, if thats what you want.

 

[steveadl]

Welcome to SS S&S.

At a quick glance of your situation - are you planning on buying your own PPOR one day? If so, then you'd be better off saving the money instead of paying it off your unit. Or put it in an offset account against the unit loan which you can take back out one day when you do want to buy your PPOR.

That way you'll be able to have a bigger deposit saved up and take out a smaller (non-deductible) loan for your PPOR one day.

Depending on the age of your unit and it's interior, it may also pay you to get a depreciation report drawn up by a quantity surveyor to give you non-cash tax deductions. You can get them to back date it from when you first started renting it out and re-file your previous years tax returns if it ends up being worthwhile for you.

Also make sure your getting proper market rental rate for your unit if you haven't been looking at this as an investment per se until now. ie. you may have let it fall behind by not increasing it if it's say $300pw and other units in the area are now renting for $350pw?

Anyway, there's plenty more to think about - but that should give you some food for thought.

 

[Slow&Steady]

Welcome to SS S&S.

At a quick glance of your situation - are you planning on buying your own PPOR one day? If so, then you'd be better off saving the money instead of paying it off your unit. Or put it in an offset account against the unit loan which you can take back out one day when you do want to buy your PPOR.

That way you'll be able to have a bigger deposit saved up and take out a smaller (non-deductible) loan for your PPOR one day.

Depending on the age of your unit and it's interior, it may also pay you to get a depreciation report drawn up by a quantity surveyor to give you non-cash tax deductions. You can get them to back date it from when you first started renting it out and re-file your previous years tax returns if it ends up being worthwhile for you.

Also make sure your getting proper market rental rate for your unit if you haven't been looking at this as an investment per se until now. ie. you may have let it fall behind by not increasing it if it's say $300pw and other units in the area are now renting for $350pw?

Anyway, there's plenty more to think about - but that should give you some food for thought.

Thanks for the pointers! The depreciation report is a good idea - will look into that one.

Thankfully, my property manager is pretty on the ball and has just done a rent review!

Yup, would love to buy the house that I am living in (and renting) now as my PPOR...was looking for a mortgage broker to see what I could do about that when I stumbled onto this forum...and realised that yup, like you said...probably should have saved the additional dosh that I put into paying off my unit as quickly as I could!

Oh well, at least I learnt something today!

 

[steveadl]

Thanks for the pointers! The depreciation report is a good idea - will look into that one.

Thankfully, my property manager is pretty on the ball and has just done a rent review!

Yup, would love to buy the house that I am living in (and renting) now as my PPOR...was looking for a mortgage broker to see what I could do about that when I stumbled onto this forum...and realised that yup, like you said...probably should have saved the additional dosh that I put into paying off my unit as quickly as I could!

Oh well, at least I learnt something today!

No biggie mate, you're still saving yourself money on interest in the IP loan, so it's all good. Glad to hear you're using a PM as well.

Stick around Somersoft, you'll learn a huge amount and make $$ doing it.

 

[traveller]

Welcome to the forums SS.

As mentioned you should make your existing IP loan as Interest only and park any additional money in the offset account. When it comes to the settlement of your PPOR you can either of these 2 things:

1- Take loan for the minimum amount that you need after taking out money from the IP offset account.
2- Take out PPOR loan for the maximum amount and take the money from the IP offset and put it in the offset against the PPOR loan. Make all the loan accounts as Interest only. This way you can save all the additional money in this offset account and put it against your deposit for another PPOR down the road.

Thanks- Daman.

 

[BayView]

From reading everyone's invaluable comments, I've realised that maybe I could actually do something a bit more productive with my unit than just trying to pay it off as quickly as I can!

Paying off this property loan is probably one of the most productive things you can do right now.

Don't worry about the fact that the interest is a deductible expense; it's all money you can save that is wasted - even after the tax refund. It's good debt, but it's still debt. You need to have it to leverage yourself, but paying it down should always be part of your strategies.

Of course, you may be able to get a much better return on the money you use to pay down the loan by investing it into another investment vehicle, but unless you have the knowledge and skill to do it, the best thing you can do is what you know already.

The quicker you pay down the loan while the property value increases, the quicker you will be able to invest some of the equity into something else.