Where to start ? IP and Equity etc

[zero]

Just after some feedback on ideas im confused

Own my own home worth around $350k and still have around $1k left of a 100K loan for when i purchased the property.

1. Looking to purchase another property although unsure of my avenues in regards to Neg gearing a property or positive cashflow and i dont fully understand how all that works.

2. Should i redraw the $100k off my current loan ?

Any idea would be appreciated whilst i do some forum searching for similar scenarios.

Thanks

 

[zero]

I have been looking at a property thats $130K with rental return of $145 a week.

Should i just redraw the $100k off my original loan and pay the 30K up front from my savings and have the Rental pay off the Loan or would i be better having the rental pay into the loan and also pump in as much of my income to the property to have it paid off quickly ?

Is the above the incorrect way of doing things ?

 

[WillG]

Just after some feedback on ideas im confused

Own my own home worth around $350k and still have around $1k left of a 100K loan for when i purchased the property.

1. Looking to purchase another property although unsure of my avenues in regards to Neg gearing a property or positive cashflow and i dont fully understand how all that works.

2. Should i redraw the $100k off my current loan ?

Any idea would be appreciated whilst i do some forum searching for similar scenarios.

Thanks

Good questions.

First things first ... What don't you understand ?

 

[Peter_Tersteeg]

A negative or positive gearing strategy will really depend on you personal circumstances.

Property with higher capital growth potential tend to be negative geared. Also note that for negative gearing to be really tax effective, you need to be on a high income to get the most out of the deductions. For this reason, I don't worry too much about the tax issues - I just enjoy the return at the end of the year.

Property with higher rental returns are generally perceived to have lower capital growth. This is mainly because positive geared properties tend to be of lower value in regional areas. They're also getting very hard to find. The good news is they don't take money out of your pocket on an ongoing basis.

As you've got a reasonable amount available in a redraw facility, you can use this to help fund your first investment property. As your home loan is currently all but paid off, redrawing this on this loan for an investment would meant he interest is most likely tax deductible.

These funds could cover your initial deposit and purchase costs. You would then have an additional loan against the investment property for the rest of the costs.

 

[super_sam]

As WillG mentioned not sure what it is you dont understand

If I was in your situation, I would establish a line of credit (LOC) to 80% LVR giving you available funds of $280K. Then draw down on the $280K to use as 20% deposits for a few IP's and maybe invest some into managed funds or shares. Using the LOC for business or investment purposes allows you to claim the interest as a tax deduction too

If you just want to buy one IP this should be easily done (assuming OK credit history and servicability)

This is not advise this is just what I would do as I'm pretty comfortable with the idea of good debt

 

[zero]

Wow thankyou for the prompt replies , I dont fully understand how negative gearing works but that will come with time and reading of this forum.

I have a gross income of around $70k a year with a perfect credit history , basically as mentioned im just loooking to start buying another property or even a few properties

If i was to purchase the property above as mentioned would it be viable for me to pay it off as quickly as possible ? My gut feeling says pay it off asap but i know thats not always the case i guess my parents are old fashioned and bought me up that way

 

[WillG]

I think the question you are trying to ask is ...
What is the best, safest & most flexible way to buy an IP ?

If your plan is to buy 1 IP and pay it off ASAP, you will structure your affairs differently than somebody who is aiming to buy 5 IP's in the next 10 years.

May I ask what your longer term financial goals/plans are ?

 

[zero]

WillG

At this stage i was just looking at purchasing another property as a channel for my funds ie Savings plan now my house is basically paid off. Im 28 so got a few years up my sleeve yet LOL

Although if it would be reachable to obtain 5 properties within the next 10 years without stretching my living funds to much that would be great.

Sorry for being such a newbie but i guess we all start somewhere.

 

[zero]

Anymore ideas to me

 

[alexlee]

Not sure what sort of ideas you're after, Zero. You have equity. Talk to a mortgage broker about how much you can borrow and go buy something. Keep it cheap for the first one since you'll probably make a few mistakes. Get used to it, then look for the next one.
Alex

 

[steveadl]

Work out how much you can afford to service with a shortfall in rent vs. interest and expenses from your own income.

With $350k equity already, you could opt to get pretty much whatever IP you want from $100k to $600k, again depending on your servicing ability with shortfall. I'd just finish off your PPOR loan and start a fresh new IP loan that is secured by your PPOR (but ask the brokers).

Then see a broker, and get advice on the whole loan process. Once you have a set $ figure you can spend, then start looking for a property - that's the fun part, and you'll have a whole heap more questions there