This is a hypothetical question. Just trying to ascertain how best to spend an extra $25,000+ each year. This is purely an investment question, not lifestyle (sorry guys 
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If you had an extra $25,000+ per year, what would you do with it?
- Thread starter CairnsInvestor
- Start date
Oops, didn't see the poll!
I voted 'Use it to fund future IP's...'
Paying off PPOR is also a great idea, as long as it doesn't stop you from buying another IP as soon as you can. It's great to have no personal debt, but if it delays your investment plans by years - then it comes at a great cost.
I voted 'Use it to fund future IP's...'
Paying off PPOR is also a great idea, as long as it doesn't stop you from buying another IP as soon as you can. It's great to have no personal debt, but if it delays your investment plans by years - then it comes at a great cost.
Pay off PPOR
I will prefer to pay off PPOR. Top up the LVR and get an LOC to buy more IPs.
cheers
I will prefer to pay off PPOR. Top up the LVR and get an LOC to buy more IPs.
cheers
My PPOR was an IP (at least intellectually), for a very short time - hence I have a large interest only loan against it. So I would obviously use any extra funds to pay down my PPOR debt.
For now, my thinking is that my I'm heavily weighted in property and over the next few years will pay down loan debts and steadily grow my fund portfolio.
For now, my thinking is that my I'm heavily weighted in property and over the next few years will pay down loan debts and steadily grow my fund portfolio.
Payoff PPOR and redraw or set up LOC for deposit on IP. I haven't got by head around the theory of never paying off your PPOR, maybe one day.
I like the idea of shares atm. Why not diversify when the rates go up???
13 months ago my income increased by 62k per year before tax when I changed jobs. I saved into our PPOR offset account, then used the savings as a 20% cash deposit for our most recent IP. This year I'll save again, with a view to buying another IP in 12-15 months. Then then year after I'll look to borrow against another asset for the next one.
alexlee,
I chose this option as I'll be converting my PPOR to an IP one day in the future, otherwise I'd be be paying it off any non-deductable, that will not be converted to deductable in the future.
Others might be doing the same.
That still doesn't make sense. Why keep non-deductible debt that you can convert into deductible NOW, just because you 'might' convert the PPOR to an IP in the future? Who knows when that might be?
Why not just pass the money through the PPOR loan and convert that part into deductible? What have you got to lose?
Alex
I'm always open to advice, if you have any suggestions. Below is how I have come to this solution.
Well, a quick bit of background to give you an idea on my reasoning.
Purchased first house as PPOR1
3 years later used equity to buy PPOR2
PPOR1 becomes IP1
Now here I was thinking Im happy with PPOR2, needs a little work, but happy to stay long term. My other half doesnt like the house after living in it for some 3 years now, but puts up with it. So long story short the above will again repeat itself sometime in the next 5-10 years. I'm sure of this.
So, since I know PPOR2 will become an IP in the future, I figured its kinda pointless paying off the principal on the loan since it will be converted to deductable debt eventually anyway. I thought it would be better to use those dollars by either:
a) kept in an offset account attached to PPOR2 loan
This way once I come around to "PPOR3 time" I can withdraw all funds from the offset and put into PPOR3. I basically end up with smaller non-dectable debt and larger deductable debt (which is the complete opposite of what happened first time around).And hopefully the mrs will be happy to stay put.
(If i actually pay off principal on PPOR2 I cant withdraw it later on for PPOR3 and expect to claim that borrwing as deductable. This is the main reason Ive come up with this solution.)
b) Use in other investments
I am still in the accumulation stage, so I need to build my asset base in order to get to the goal i'm trying to achieve.
Hope that explains what Im doing, thats the broad picture.
I made a comment in this thread which sums up what I'm thinking http://www.somersoft.com/forums/showthread.php?t=38588.
Happy to be corrected, or enlightened
might be a better word.
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Nothing wrong with doing it that way at all, T.D.
There's one small flaw though;
"(If i actually pay off principal on PPOR2 I cant withdraw it later on for PPOR3 and expect to claim that borrowing as deductable. This is the main reason Ive come up with this solution.)"
The purpose of this loan will be for PPoR 3, so the interest is not tax deductible unless you again move out and convert it into IP no.3.
The other way would be to get to PPoR 3 with no debt at all, then you can borrow the equity in it for more investing. Then the loan interest is tax deductible because the purpose of the loan is for investment.
There's one small flaw though;
"(If i actually pay off principal on PPOR2 I cant withdraw it later on for PPOR3 and expect to claim that borrowing as deductable. This is the main reason Ive come up with this solution.)"
The purpose of this loan will be for PPoR 3, so the interest is not tax deductible unless you again move out and convert it into IP no.3.
The other way would be to get to PPoR 3 with no debt at all, then you can borrow the equity in it for more investing. Then the loan interest is tax deductible because the purpose of the loan is for investment.
