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From: Mike .


IP Strategy Advice
From: Michael B
Date: 27 Oct 2000
Time: 09:18:40

Hi all, I'm another newbie to the forum seeking a bit of a guiding hand. My wife and I are currently renting at a very cheap rate($60/wk) and are buying 2 IPs. The first one is half a duplex in Dubbo that is not appreciating (and I'll never buy in regional areas again!) but we have 60% equity in. The second is a townhouse in Canberra that is appreciating quite nicely and we have about 26% equity in.

We are looking to buy a home for ourselves in about 4-5 years, which is how long we have left on the duplex loan at the current repayment rate, then using the rent from it to pay off our house. But, what about the idea of throttling back the payments on the duplex and buying another IP?

I was thinking of a house/townhouse in Brisbane with an interest only loan, just to hook into something with some capital growth. Also, would the bank allow us to redraw some of the equity in Canberra, say, in 5 years time simply to pay out the Dubbo place? Is this the best way to buy your own home while playing with IPs or can someone present a better plan?

Michael B
 
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NigelW

Reply: 1
From: Mike .


Re: IP Strategy Advice
From: NigelW
Date: 27 Oct 2000
Time: 09:35:24

Michael

I get the impression that your existing IP loans are Principal and Interest. As far as I'm concerned that is a big NO NO! You've got bucket loads of equity to work with, what I'd do if I was you is convert both loans to Interest Only and use the big cashflow boost to fund the further IPs!

My 2.2 cents worth!

Cheers Nigel.
 
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