Almost paid off my PPOR homeloan what should I do?

Discussion in 'Loans & Mortgage Brokers' started by fullylucky, 22nd Aug, 2015.

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  1. Beelzebub

    Beelzebub Well-Known Member

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    If you're worried, why not consider buying cheaper cash flow positive property in regional NSW and getting a PM to look after it for you? Still reachable from Sydney, and no hassle of physically managing two properties, less debt with a lower buy in price.

    As for your tax comments: I think you need to have a discussion with an accountant. You're saying some worrying and illogical things and I wouldn't know where to begin.
     
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  2. marty998

    marty998 Well-Known Member

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    Thread caught my attention - I'm pretty much in the same bucket as fullylucky. ~$10k left to go for the PPOR (will end up with $250k cash fully offsetting the loan).

    Have 1IP... gun-shy on #2 at the moment... thinking that accumulating ETF shares will be a better bet with the recent market gyrations bringing valuations down from their lofty heights. Or maybe just starting a new offset account against the IP loans and start to attack them.

    Really want more property but struggling to see value.
     
  3. Steven Ryan

    Steven Ryan Well-Known Member

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    @fullylucky and @marty998.

    You'd both in great financial positions by the sound of it.

    I think what's missing is a clear goal.

    If you know why you're investing, you will have clarity as to what to do.

    I'd recommend you think long and hard about why you are investing, what your end goal is and build a plan to get there (or confirm that you already are there) with your broker/team. That will dictate your next steps.

    From my personal point of view, as a single 30 year old in the acquisition stage, I would view an almost paid off PPOR as a pile of "lazy equity" which could be put to greater use.
     
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  4. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Totally agree with the comments in regards to what your long term goal is, think hard what your plans are in the next 10,15 or 20 years is... Would rental income from 1 property + pension payments enough for you to live on?

    IMO people say that 2 properties is enough are negative people... You purchase properties to create wealth...
     
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  5. fullylucky

    fullylucky Well-Known Member

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    e.g.
    You buy materials it costs $100.

    Situation A - no IP. It costs $100

    Situation B - you have ip. claim it. reduces your income by $100 same as 37% off. You pay $63 instead of $100.
     
  6. Beelzebub

    Beelzebub Well-Known Member

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    Yep, and this same principle would still apply if used for IP 2, 3, 4, 5 and so on.

    The issue is your thoughts on people buying property to save on tax. Negative gearing helps you hold the property and softens the amount of money you are losing in the short term. But it's the capital gains that provide the benefit not the ability to negatively gear.

    You don't buy property to 'negative gear it' you buy property for capital gains (or cash flow). Telling someone you are buying a property for the benefits of negative gearing is like telling someone you are buying property for the benefit of giving away $1 to get 37c back.
     
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  7. albanga

    albanga Well-Known Member

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    Congrats on paying off the PPOR, amazing effort (that is if you don't like in a 15k caravan).

    Without being harsh I do have to agree with Beezlebub, some of your comments seem very misguided and I would be concerned the advice your taking is from those in no position to be giving advice.

    If property is not for you then so be it but to claim things like people buy property for negative gearing IMO is absolutely absurd. Anyone who purchaes somerhing with the goal of losing money has some serious fundamentals wrong.
    You should be investing in property for either an instant cashflow, a capital gain (where negative gearing simply softens the blow) or to manufacture a gain (renovate, subdivide).

    My simple question is why did you purchase your first IP? To save tax? If so then really think about this. Your paying money to save tax but your still paying money! Really your answer should be I purchsed it because I want to hold it for X years as it increases in value and is worth more than all the costs incurred in holding it PLUS my desired profit.

    There are many reasons to invest in property but saving tax definitely should not be on that list.

    Again well done but if I were you I'd be on the phone to a brilliant broker which there are many of right here and a brilliant acxountant.
     
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