Maximizing my investment strategy cashflow

[DanielG]

Hi All,

I was looking for a simple way to maximize my investment strategy in terms of cashflow.

I just settled on my 3rd IP last wednesday (hurray!) and I got a professional package with an offset account.

This is what I want to do (please give me feedback):

1. Have my savings (approx. $70K) placed into the offset.

2. Have the 3 lenders of all 3 mortgages use this offset to direct debit each month for the interest owing.

3. Have all 3 realtors use the offset to credit in the rent for each month.

This way I have a single pool where funds are drawn and credited whilst offsetting the interest repayments by the amount in the account each month.

Is this a good way of doing this?

Also, since this is professional package I also have the option of using the "package debit card". Should i utilize this somehow? What is the best way to maximize my cashflow? Someone made mention of doing using the card for all my living expenses but Im not sure exactly how this benefits me.

Thanks guys.

 

[wobbycarly]

Daniel,
From someone in a similar position, I fully commend this path of action.

The only question you seem to have is around using a credit card. Assuming you have the financial discipline to "manage" a credit card, get one with the best rewards scheme. (Although Amex can have a really strong rewards system, it's not accepted everywhere and some places charge a surcharge, so stick with a Visa or Mastercard.)

Use this credit card for everything! Make sure that the payment is due late in the month. The theory (and practice) is as follows:

You get paid (rent, and maybe salary) at the start of the month and this sits in your offset account reducing your interest bill.

You use your credit card to pay for everything, even your IP bills where possible. (Maximise the points).

Late in the month, you pay off IN FULL your credit card from the offset account; you've had $x cash sitting in the account reducing your interest bill and have used OPM to pay your living expenses.

You get a big bonus in the first month of using the credit card, but even if you have bills of $1000, rather than paying cash, you can have that value sitting in your offset until the CC is due. It's not huge, but every little bit helps!

EDIT: Sorry, I just saw you said "package debit card". Use a credit card! You want to use OPM, not yours!

 

[DanielG]

Hey great thanks...exactly what I was looking for. Sorry whats an OPM card?

Also, my offset strategy? Is this what you have done also?

Regards

 

[wobbycarly]

Hey great thanks...exactly what I was looking for. Sorry whats an OPM card?

Also, my offset strategy? Is this what you have done also?

Regards

OPM = "Other People's Money" whether that's a credit card or some other loan.

And our "offset strategy" is pretty much as you've outlined, except we still have everything with the same lender. Another handy hint, is to try and get your loan repayments late in the month. Usually you can just ask the bank to adjust the date, and they'll do it - it might mean 1 month is a bit higher, but then you're back on track.

 

[DanielG]

Ok, I was just doing some reading and this strategy seemed to pushed forward by those that want to pay off their PPOR quickly...is this really a strategy for IP's with IO payments?

 

[wobbycarly]

Will your offset account be offsetting personal, non-deductible debt?

Even if not, then surely reducing your interest is still better than getting a tax deduction, isn't it? (Pay $1, get 30c back?)

 

[HandyAndy888]

Hi All,

I was looking for a simple way to maximize my investment strategy in terms of cashflow.

I just settled on my 3rd IP last wednesday (hurray!) and I got a professional package with an offset account.

This is what I want to do (please give me feedback):

1. Have my savings (approx. $70K) placed into the offset.

2. Have the 3 lenders of all 3 mortgages use this offset to direct debit each month for the interest owing.

3. Have all 3 realtors use the offset to credit in the rent for each month.

This way I have a single pool where funds are drawn and credited whilst offsetting the interest repayments by the amount in the account each month.

Is this a good way of doing this?

Also, since this is professional package I also have the option of using the "package debit card". Should i utilize this somehow? What is the best way to maximize my cashflow? Someone made mention of doing using the card for all my living expenses but Im not sure exactly how this benefits me.

Thanks guys.

This sounds like a very neat and manageable way to set up the accounts...I have mine similar, although I didn't have access to an offset.

 

[DanielG]

Will your offset account be offsetting personal, non-deductible debt?

Even if not, then surely reducing your interest is still better than getting a tax deduction, isn't it? (Pay $1, get 30c back?)

LOL...well put.