Just starting out

Hi folks,

Have been reading this forum for the last few weeks and am motivated to invest more in property!

I have a Brisbane city unit for 5 years and that has performed well for me when I lived in it to start with, and then rented out for three years while in London. Now as I return I want to use some of the equity to purchase something else.

I Purchased for $220,000, I owe $168,000. it is conservatively valued at $370,000. I have also $50,000 in stocks too in the UK.

Now I would like to keep what I have but would like to change the loan to IO and have it at $300,000. Can I do that?? I know that it is still a PPOR at this stage so would need to get it valuedas I change it to an IP, just not sure if I can change the loan to gain the negative gearing tax purposes??? and then get a house in the 10km Radius ($450,000)

Or I sell the Unit, get all the CGT becaude it is PPOR and buy two new places in the 10km radius?

Happy to sell the shares to fund this as well.

Thanks
 
Hi folks,

Have been reading this forum for the last few weeks and am motivated to invest more in property!

I have a Brisbane city unit for 5 years and that has performed well for me when I lived in it to start with, and then rented out for three years while in London. Now as I return I want to use some of the equity to purchase something else.

I Purchased for $220,000, I owe $168,000. it is conservatively valued at $370,000. I have also $50,000 in stocks too in the UK.

Now I would like to keep what I have but would like to change the loan to IO and have it at $300,000. Can I do that?? I know that it is still a PPOR at this stage so would need to get it valuedas I change it to an IP, just not sure if I can change the loan to gain the negative gearing tax purposes??? and then get a house in the 10km Radius ($450,000)

Or I sell the Unit, get all the CGT becaude it is PPOR and buy two new places in the 10km radius?

Happy to sell the shares to fund this as well.

Thanks
I wouldn't sell the inner city unit Ever!! and I certainly wouldn't be bringing over any money from UK while the exchange rate is rubbish. Buy carefully with what you have now using the equity in your unit, get advice about where to buy from the experts on this site, do lots of your own research and watch the exchange rate closely.
 
Hi CIT

Welcome back to warmer climes :)

The max deducrion you can get for that property is the current reduced loan amount being 168 000.

If you draaw the loan back to 300 to access equity for your new house, then the portion used for the new PPOR wont be deductibel.


there are things you may be able to employ to change the atio of non deductible to deductible debt more quickly b uisng a debt recycle stratgey, but without a whole lot more data we cant really work out if that may or may not work for you.

What will work for you is the turn the 168 into an io loan as soon as you can

ta
rolf
 
Just on face value of the info you have given, I would cash in the stocks to use as a deposit on the new PPOR. Then redraw from the IP to buy another IP.

If you sit on the UK stocks waiting for the exchange rate to improve you could lose more money on the stocks than you gain on any exchange rate movements.

These are just my thoughts.
JB
 
Just on face value of the info you have given, I would cash in the stocks ...........

If you sit on the UK stocks waiting for the exchange rate to improve you could lose more money on the stocks than you gain on any exchange rate movements.

These are just my thoughts.
JB
There are stocks and there are stocks. If you own ones with international income streams they will maintain value regardless of the exchange rate. Nothing wrong with diversification so I would think carefully before concentrating everything in residential property.
 
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Wow - I think you actually have an amazing opportunity that many people dont actually realise they have until its too late - i.e. several years after buying an IP and realising it was the wrong decision in hindsight. Wrong because it was decision made without any well considered plan in place.

You have the perfect opportunity to take stock and do some serious goal setting before jumping into the deepend.

Why do you want to invest? Because you want to have more property? Im guessing more likely its because you want more wealth - the same reason (I assume) nearly everyone else on this forum wants! If thats the case then you need to take the time to consider and develop a structured, measurable plan to achieve your means.

Rather than ask "what should I do", I think you should ask "what do I want". As has been mentioned many times, there is a great cliche that goes "start with the end in mind"!

There are many ways to acheive this and already you have been offered several contrasting view points - sell focus on property, keep shares and diversify, etc. IP is an investment - why do you need to buy local when there may be so many better deals elsewhere in the nation. If you buy shares in a company do you go and visit their headquarters??? If you want to buy IP's for a financial reasons then why not treat them the same. Im not saying this is what you should do, rather highlight there are so many different viewpoints.

Set you goals, make a plan, find out what you need to know, get educated and take massive action! As you have discovered this forum is probably the single best resource around and its free!!!

Just my 2.2c (inc. GST) worth :rolleyes:
 
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Thanks for the responses people most appreciated!

Invested in shares in the UK mainly because of the exchange rate, and not sure if the exchange rate is going to get better, though it has picked up in favour of the pound recently. The stocks have performed well but was never going to be a long time hold, just better than the money sitting in the bank.

I would only sell my current property to have a larger loan for deductable reasons on an IP than what it currently is, but would incur buying and then repurchase fees on that as well. Will have to research what I can do with the current loan to help me with further purchasing. Debt recycle stratergy sounds interesting in this sense.

I would like to invest close to where I am to value add to the property, quick refurb and then rent out, still a long term hold and not too turn over properties to make a quick buck. Maybe when I have a few properties under my belt will look to diversify into other investments out of state. Have seen the CG in my current property and for me that seems to be a great way to build wealth.

My financial goal I have not thought much about, and understand it is easier to have one in place so you have a goal! Would think that I would like to pick up 2 properties every 4 years, using the equity built through CG, and then have a total of 10 when I am 50 ( 30 at the moment). I read about a lot of people here trying to get a property each year and think for me that would be a push.

Research and action is the next step!!!
 
Having a long term goal, such as accruing ten properties in 20 years is good. Have a think also about how much asset base you want in terms of $$. For example, I set a goal in 2005 of having $3M in assets (IPs and shares combined), in 2005 dollar terms, by 2021. Work out how much of an asset base you think you need to achieve your longer term goals.

Now, it seems normal to me to start with an IP, and then in time get another. It's perfectly valid to start slowly then build up your rate of buying over time.

I also support looking further afield, although there's still a lot to be said for investing into whichever market you know very well.

Just a few things to think about. Anyway, have fun with the journey, and let us know how you're going!
 
Hi CIT

Welcome back to warmer climes :)

The max deducrion you can get for that property is the current reduced loan amount being 168 000.

If you draaw the loan back to 300 to access equity for your new house, then the portion used for the new PPOR wont be deductibel.


there are things you may be able to employ to change the atio of non deductible to deductible debt more quickly b uisng a debt recycle stratgey, but without a whole lot more data we cant really work out if that may or may not work for you.

What will work for you is the turn the 168 into an io loan as soon as you can

ta
rolf

Just read about your Debt recycle stratergy elsewhere, Sounds like I could use that.
 
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