I didn't start investing in property until later in life but I have done ok. Debt feaks me out though so I have been buying property with an investment partner. From my first investment property, I never have known exactly how much debt I have been in. If I don't know, it can freak me out, right?Just a quick update ive now saved 220k and i have been talking to lots of different people about different strategies. one guy who is also my age gave the advice of be in as much debt as possible at as young as possible while you can manage it because it wont get easier and for tax reasons. He went on to say he was in 1.2mill of debt with three houses and if anything happened he could just sell up. Scary i thought but then he said "you have to risk it to get the biscuit" lol.
Another said Pay of your Ips and get them positively geared. Another person said go Interest only with offset accounts and use the banks money not your own to fund your IPs. So everyone has there own different view. Im now ready to talk to Professional people but unsure in what order and who actually. I no i need banks, broker, accountant, financial planner real estate agents. My question is who would be the best person to talk to first about planning a strategy?? I know i need a whole team of the people mentioned i just want to no who you experienced guys would talk to first. Thanks
I look at how much the repayments will be, how much the rent will cover the repayments, what is the shortfall, can I cover the shortfall? If interest rates go up 2 or 3%, can I cover the shortfall? If the property is empty and interest rates go up, can I cover the shortfall? What contigency do I have in place to cover any problems? If I am comfortable with the answers to those questions, I don't worry about getting into debt.
If you read about different strategies, the point is not to pick the "right" strategy, it's about understanding how the strategy works and the advantages and disadvantages of that strategy. For example, someone might suggest interest only. Another person might suggest offset accounts. However, most banks won't let you offset against a fixed interest rate loan. You would need to understand that. Understand how the strategies work and then pick something that might work for you. When you talk to professionals at least you will have some idea of what to ask and some understanding of what they are telling you.
You have done well, keep reading, keep asking questions and get professional advice. How you structure your investment property loans and the way you purchase them (as an individual, in a company, in a trust etc) can have major tax consequences down the track. This could cost many thousands of dollars if you get it wrong, so it's good to understand the implications up front.