Advice for unique investment situation

Great one. At least try to get your max from the bank, and borrow from family to offset.

Yes there is a risk that the bank may take the offset money in extreme situation, however even that happens, it just falls into the original arrangement - directly borrowing from the family.

 

But the tax side needs to be considered. The interest on any borrowed money parked in an offset would not be deductible. May or may not be an issue and there is a way around it if there is.

 

thats no issues. as your wife is hoping to start work as a dentist, you should hopefully be able to have good income and borrow 90% LVR for a house in future.

you are having a massive headstart which is great. I would either
- if you dont want to move anywhere for next 5 years, buy a nice PPOR for your family at a lowish LVR say a $1m house in a nice suburb and you have v manageable post-tax mortgage repayments
- buy an investment property -- high quality means dif things to diff people.

main point was that generating income from residential property is VERY TOUGH. if that was purely your goal, i would give the money to a wealth advisor like Macquarie Bank, you get invited to all their wine nights, investor seminars etc and you take home an easy 5-6% dividends with no stress.
you could just buy the banks and telstra right now and get close to 7 or 8% i think

the whole point of property i thought is u want to gear up and grow YOUR CAPITAL BASE faster using the banks money

 

Thanks Terry. This was a strategy I found to be possibly best suited for us. We're quite young (31 &26) and childless (until I give in soonish ) and we're not really fussy on where we want to stay. We thought we'd just continue to rent and keep up sizing the rental property as the family grows.

This would give us the flexibility to move to different cities depending on where our careers take us. Having the money parked in the offset a/c would at least ensure its available incase its required. If its required, then I can just revert came to paying the bank the interest rate.
Would loose out on claiming tax benefits i guess.

 

Hiya Jester get a clear understanding of what 'financial freedom' means to you both and set some clear goals in place, i agree with those saying borrow the minimum that you need from your father to get into the market and then go from there. Your father may not be getting a great return on this money right now but a negative return is worse. Even if he does not need the money repaid in order to live comfortably you will sleep easier at night knowing that $400k of his hard earned money isn't invested in the property if the market turns

 

Another consideration is how will you feel about any investment achievements you make knowing they started with a hand out? It sounds like you and your wife will be fine starting this journey without the extra help.......not trying to sound rude, just talking from my own personal experience. I'm definitely not a high rolling stock and property investor but I'm very proud of what I've achieved. I have wealthy parents and they have offered to back business ventures but I couldn't do it. They are self made and so are my achievements.

 

Your and other comments here don't make sense if the property is purchased off the father with an instalment contract which can be altered at anytime by mutual agreement, the fathers money will be safe or safer than being invested any-where else or/and it could be invested elsewhere too. If the market tums down , so what ! it wont be the fathers problem, he will be better off. You can assume the buyer is in acquisition stage and buying for the long term and a down turn may make it easier or enable more property purchases by either party , ( seller sells high, buys low. if buyer gets mortgage or part, gets security for more purchases) which may enable financial advantage for both the vendor and buyer where the buyer can offer incentives for mortgage discharge. Flexibility is a great advantage and usually overlooked. I dont get why people think for some-one to gain, some-one has to loose , when every-body has different needs and requirements time frames and goals. Banks are more likely than any-one to screw you.

 

Hopefully Fargo but in the worst case a job is lost etc it is such a big risk to potential add hardship to retired parents. Unfortunately people find themselves in situations where they can no longer make loan repayments....

 

Sounds like an Asian culture. You look after your son, daughter until they are 99 years old if you ever live that long. So I was told.

 

I think it's lovely but I guess if you have been raised to do it alone it might not be the best for your confidence....I'd be too worried I'd stuff it up & harm my parents retirement....

 

@SSG I think despite what any of us say or feel ultimately you know your father better than anyone and his financial situation. If loosing 400k has no effect on his retirement and you can accept the help without it harming your confidence then go for it if it feels right.... the middle ground of accepting some is a good option too. Perhaps it is nice for him to see you enjoy part of your inheritance, I get that. As a mum I want to do whatever I can for my children. I have a fairly harsh view because we were raised to do it alone. I was very jealous when I was young and I watched my school friends receive massive handouts. But I noticed as we got older they never really grew up & every time life got tough their mum and dad were there. I now look back with so much respect and love for my parents.....I'm rambling but my point is we are shaped by our experience. I have made judgements about your situation and on reflection that judgement is clouded by my own experiences. I wish you the best on whatever path you walk.