Firstly, thanks in advance for taking the time to read this post and I would be greatful for your feedback.
I'll start with our current position then tell you my plan for this year in an effort to gain feedback to act as food for thought. I'll be honest in saying that unless a hurdle comes up, I am convinced this is feasible and will be setting up a meeting with my mortgage broker over the next week or two to get the ball rolling.
NOW:
- PPOR worth approx $320K of which we live of a line of credit and we currently owe about $20K.
- We have a managed fund worth around $30K which I will not include in the calculations for IP purposes.
- 1 IP worth about $520K (townhouse in Bentleigh) which should go up by about $20-$30K shortly once we convert the study area into a 3rd bedroom.
- Salary $100K plus Super and my wife does not work (1 dependant)
- Assets total $840K with Loans of $450K which includes our $20K owing on the line of credit
- I calculate our equity at approx $390K plus the managed funds.
- Both my wife and I are 30 years old so we still have many investing years ahead of us.
OBJECTIVE
By age 45-50, I would like enough equity in property to be able to live of the equity, ie. draw off the equity to fund a reasonable lifestyle - perhaps around $100k per annum in today's money.
PLAN
- we would like to sell our PPOR and move into a new house which we estimate would mean we need to borrow $150K in order to move into a house we would be happy with for at least 10-15 years (although hopefully longer).
- I would also like to purchase another IP this year for say $300K around the Narre Warren/Berwick/Endeavour Hills area.
- in 2-3 years, the equity should be sufficient to fund the next IP purchase
FINANCE
- for the 2 IPs, I would like to set up a loan for each plus a line of credit for each so we can add the shortfall to each loan. The purpose being to put our extra funds into the $150K PPOR loan in order to reduce the non-tax deductible loan as a priority.
- I would also have a LOC on our PPOR of say $200K (which would include the $150K loan we need to move) to live off in the event we need to access funds in an emergency.
RATIONALE
- we would not be saving any money during the next 2-3 years however we would expect a conservative increase in equity of around $100K - $150K.
- By proceeding with our plan it sets us up for additional properties in 2-3 years and then more frequently from there.
- I calculate our current LVR at approx 53% and if we proceed with our plan, our LVR would increase to approx 70%.
In light of all the above, what are your thoughts of my plan? Would you do it? Do you think I am being too ambitious for 2008?
Thanks again for your feedback!
I'll start with our current position then tell you my plan for this year in an effort to gain feedback to act as food for thought. I'll be honest in saying that unless a hurdle comes up, I am convinced this is feasible and will be setting up a meeting with my mortgage broker over the next week or two to get the ball rolling.
NOW:
- PPOR worth approx $320K of which we live of a line of credit and we currently owe about $20K.
- We have a managed fund worth around $30K which I will not include in the calculations for IP purposes.
- 1 IP worth about $520K (townhouse in Bentleigh) which should go up by about $20-$30K shortly once we convert the study area into a 3rd bedroom.
- Salary $100K plus Super and my wife does not work (1 dependant)
- Assets total $840K with Loans of $450K which includes our $20K owing on the line of credit
- I calculate our equity at approx $390K plus the managed funds.
- Both my wife and I are 30 years old so we still have many investing years ahead of us.
OBJECTIVE
By age 45-50, I would like enough equity in property to be able to live of the equity, ie. draw off the equity to fund a reasonable lifestyle - perhaps around $100k per annum in today's money.
PLAN
- we would like to sell our PPOR and move into a new house which we estimate would mean we need to borrow $150K in order to move into a house we would be happy with for at least 10-15 years (although hopefully longer).
- I would also like to purchase another IP this year for say $300K around the Narre Warren/Berwick/Endeavour Hills area.
- in 2-3 years, the equity should be sufficient to fund the next IP purchase
FINANCE
- for the 2 IPs, I would like to set up a loan for each plus a line of credit for each so we can add the shortfall to each loan. The purpose being to put our extra funds into the $150K PPOR loan in order to reduce the non-tax deductible loan as a priority.
- I would also have a LOC on our PPOR of say $200K (which would include the $150K loan we need to move) to live off in the event we need to access funds in an emergency.
RATIONALE
- we would not be saving any money during the next 2-3 years however we would expect a conservative increase in equity of around $100K - $150K.
- By proceeding with our plan it sets us up for additional properties in 2-3 years and then more frequently from there.
- I calculate our current LVR at approx 53% and if we proceed with our plan, our LVR would increase to approx 70%.
In light of all the above, what are your thoughts of my plan? Would you do it? Do you think I am being too ambitious for 2008?
Thanks again for your feedback!