How much debt do you have?

[Joeyv]

And how do you not think about it all the time.

I currently have about 500k debt and 3 IPS

Want to invest more and have been told by bank I can borrow up to 300k more but am not sure if I want to get into that much debt.

Of course if you can service the debt it doesn't matter but not sure...

 

[D.T.]

At around 1m debt so far at 90 LVR, to be increased in the near future when i go for construction loans for building on my block.

I don't think about it all the time like you mention. In fact my broker said he was going to apply to the bank for a rate discount because I had passed some threshold and I didnt even know.

Don't really care what the number is, as long as the asset total is higher.

 

[perthguy]

And how do you not think about it all the time.

I currently have about 500k debt and 3 IPS

Want to invest more and have been told by bank I can borrow up to 300k more but am not sure if I want to get into that much debt.

Of course if you can service the debt it doesn't matter but not sure...

I don't want to be in debt but I won't reach my investment goals without a lot of debt.

Debt is not that important to me. Serviceability, cashflow and LVR are important to me.

For example, my current LVR is 51%, which is terrible! I have been asleep at the wheel letting it get that low

I am currently borrowing more to build an pushing that out to 71%. Of course after building it will drop back again.

My current interest is $47,996 and current rent is $37,440, so I will be looking to improve that by moving to a lower interest rate and building a townhouse I can rent out. I figure after the townhouse is rented out, my interest will be around $56,624.90 and my rent will be around $66,040, so that will be a lot better.

 

[ww2_nut]

Me and my wife only owe just under $200k on our small portfolio.
LVR is only 36% but looking at buying again soon once our son is a little older

 

[jim1964]

k more but am not sure if I want to get into that much debt.

Look at it as a bunch of figures on a piece of paper.If its affordable,do it.Dont be afraid of debt,your on 500k,whats an extra 300K ?

 

[jim1964]

Don't really care what the number is, as long as the asset total is higher

^^^^^^^^^^^ This is what to look for.^^^^^^^^^^^^^^^^^^^

 

[The Fence]

For a start dont call it "debt". It's liability.

Then dont forget your "assets".

The relationship between these two is what you should be considering followed by the servicability including net rent.

Dont focus on the one thing that is "bad" in your head.

Look objectively.

 

[danwatto]

And how do you not think about it all the time.

We will be ~$4m in debt by Christmas and paying ~$200k interest. Highest debt in our life but it's a necessary part of our plan.

It's easy not to think about it though after carrying IO debt for over 10 years. Just think what the portfolio will be worth in 10 years, and remember that the debt will stay static at the same level I think of my $120k mortgage I took out on my first $140k house in 2001, and how small that seems now when the house is worth $400k.

Of course if this was PPOR debt, it would be alot more scary! But we rent instead of owning a PPOR, so this all contributes towards tax deductions along with depreciation etc. Before tax all the rent income covers more than just the interest since we made about half the portfolio in cashflow properties. So it's not a problem in terms of being scared of being able to cover it.

Of course if you can service the debt it doesn't matter but not sure...

Risk management can relieve worries as well, we are:
* Fixing some loans (on properties we wont' touch for a while) for various periods so they don't all end on the same date
* Taking out income protection insurance
* Diversifying across different states
* Low vacancy rate areas
* Using good property managers
* Landlords insurance on all properties, including rent cover

Want to invest more and have been told by bank I can borrow up to 300k more but am not sure if I want to get into that much debt.

If the bank will lend you $300k, ask yourself what risks are you are scared of, then ask yourself how can you mitigate that risk.

Is the risk vs the reward?

Also what is the risk of doing nothing, not borrowing and investing? What will you do in 20 years if you did nothing?

 

[danwatto]

For a start dont call it "debt". It's liability.

Then dont forget your "assets".

The relationship between these two is what you should be considering followed by the servicability including net rent.

Dont focus on the one thing that is "bad" in your head.

Look objectively.

Spreadsheets are our friends

It's easy if we can see the end to end budget, cashflow, and the assets and liabilities of our own property investment business. Then when you start to look at the rate of return and profit, it's hard to go back to not wanting debt..

 

[The Fence]

Yes, it should be "good debt".

 

[jim1964]

To keep your mind off all the debt,buy something like this to amuse yourself....

 

[LeoT]

And how do you not think about it all the time.

...

Simple.

The thought/reality of being forced to work 40-60 hours a week until I am 70, then retiring on peanuts petrifies me more than the thought of debt.

Easy one.

Leo

 

[The Fence]

So, Joeyv, it's all mindset.

Do the sums, back up your due diligence, calculate the risk/reward, make the decision and go for it. Dont bring in Mr Scareoff.

Deal with the larger numbers you are using, get used to them, then go higher.

Just numbers you know.

 

[oc1]

Don't really care what the number is, as long as the asset total is higher.

You will if you get caught out at the end of the major cycle.

 

[HomePage]

Although I still have a mortgage, it is linked to an offset account of the same balance making the balance effectively zero. Keeping the mortgage alive gives me future options.

 

[Demoivre]

Spreadsheets are our friends

+1 for spreadsheets!

Ive started my IP journey a few months ago finally and at the beginning it did bother me a bit.

Offer on 3# IP has been accepted a few weeks ago and if I include that. I'll be sitting just a tad under 1m. LVR 50%. At the moment I will be paying around $50pw to hold all three places once settled and assuming no major repair works.

 

[Demoivre]

Although I still have a mortgage, it is linked to an offset account of the same balance making the balance effectively zero. Keeping the mortgage alive gives me future options.

That's one thing I'm trying to digest at the moment!

 

[natedog]

12 years ago when we were first home buyers it was a struggle to pay 1 mortgage.

Today with 9 times more property debt I am way more comfortable knowing I have taken steps over those years to free up our future time.

I get that question alot from colleagues who know we invest "how do you sleep with all that debt?"

I guess it's just accepting that a managed risk like real estate investment is actually safer than doing nothing.

Different thought process to the masses, different results.

 

[Ed Barton]

No debt, no worries

 

[property_girl]

Two teenagers still at home is debt enough.