money ? which way to go?? feedback please!

[craigb]

we have accepted an offer on our large ppor (down sizing) and will come away with $500k so the original idea was to pay 200k on a new ppor and have a 3ook mortgage , and then place $100k down on three IP's being a handy guy i will renovate and add a master room and ensuite i will spend no more than $400k on eack of these , placing $100k on each IP.

The result should be a small $300k mortgage for me to pay , and i hope three IP's purchased at $400k with 20% down for others to pay.

OR? should i place $500k on our PPOR and use this equity and borrow for the other leaving them geared neg?
i would love to think of what you have to say about these choices ?? thanks craigb

 

[Rolf Latham]

hi Craig

Id structure it to borrow the max possible for the PPOR purchase, but with a split or that you can fully repay and then redraw from from investment purposes.

This is assuming you have a good income to gear against

t
arolf'

 

[BV]

This is assuming you have a good income to gear against

Craig

I think this is key to your decision.
The other factor to consider is tax deductibility and which way you lean would depend on how much tax you pay today and how much you're likely to pay in 1, 2 or more years time.

If you're currently paying a lot of tax you'd want to have 100% tax deductibility on the deposits used for the IP's so you'll probably want to put those funds into the PPOR and then redraw them when you are ready to buy the IP's

If you aren't showing much income then borrowing large sums could be an issue so you need to talk to a broker about the funding options available to you.
In certain instances a loan with a LOC could be a better option because when you don't use the extra funds you get 100% interest offset and when you do use them you'll get the tax deductibility you want.

cheers

 

[craigb]

yes , thanks you see if i did,nt ask these questions i would not have clicked , buy the PPOR outright, then borrow against this for two IP's as they come about, get a LOC of $100k and buy IP 3 with another bank so they dont lock me in ,
Then do the payg withholding for my wifes tax (38k last year) and do the ballence at the end of the year, same result but cleverer,

 

[BV]

buy the PPOR outright, then borrow against this for two IP's as they come about

If you can borrow, because you'll need to show serviceability

 

[Sheryn]

yes , thanks you see if i did,nt ask these questions i would not have clicked , buy the PPOR outright, then borrow against this for two IP's as they come about, get a LOC of $100k and buy IP 3 with another bank so they dont lock me in ,
Then do the payg withholding for my wifes tax (38k last year) and do the ballence at the end of the year, same result but cleverer,

Agree you have 'got it'

Buy PPOR outright
Establish LOC against PPOR for investment purposes to buy IP's
Put down minimum deposit on IP and borrow rest of money for purchase from another bank etc.
Improve value of IP before renting by reno or addition etc. ( as a builder you would know what you could do)
Rent for increased $ return (cashflow) and see how tax works out.

Rest & relax with family.

Repeat on next IP.

My thoughts are that I know lots of people have said in reflection that they wished they had gone harder earlier but I believe you need to maintain your business and family life without stressing yourself.


Regards
Sheryn

 

[craigb]

yes , priority one , get my family back too! thanks sheryn , the hardest thing balance .

 

[Canberran]

Max borrow for IPs is the way to go.

Still have a plan for 2013?