Best strategy for asset poor cash rich?

Hi Guys,

What strategy would you recommend for me?

I have one PPOR valued around 750K with 500K mortgage which is fully offset. I'm working under my own ABN and I have some additional business funds which I can invest in property, however banks only look at my tax return and my serviceability wall is around 800K total. My mother wants to invest her money through me, so it's kind of another cash pile apart from my money sitting in offset account.

I want to have some sort of line of credit to start obtaining different properties across different states and I'm happy to cross-collateralise. However, I don't understand how to go above my serviceability wall as lending criteria getting tighter and tighter. Does it mean I need to look for cashflow generation rather than capital gain assets? Is it worth for me to buy something old and ruined and invest cash in renovation?

 

Get some advice on paying down the loan and redrawing. No need to requalify plus you get investment debt at owner occ rates.

Maintaining a fully offset loan will hold you back

 

Why are you happy to cross collateralise? There's no need to do this and it's just taking on more risk than necessary.

 

Technically speaking if I take all my money from Offset and use it to purchase investment property, I could claim interest on these money as investment related. Or do you mean something else?

 

May be bank would be happy to give a better rate for two property's loan? Either way if I have something goes wrong and I have to sell it, I need to cover the loss and it doesn't matter if property is cross-collaterised.

 

No
Debt recycle

see
Tax Tip 9: Don’t use Cash in Offset account to Invest Tax Tip 9: Don’t use Cash in Offset account to Invest


Tax Tip 2: Debt Recycling https://propertychat.com.au/community/threads/tax-tip-2-debt-recycling.1472/

 

Never off to use more than one property as security for a loan if you are a borrower, but always ask if you are a lender.

Legal Tip 8: The legal side of avoiding cross collateralising properties https://propertychat.com.au/community/threads/legal-tip-8-avoid-cross-collateralising-security-properties.562/

Legal Tip 242: Why is it safer to get all loans with a different lenders? Legal Tip 242: Why is it safer to get all loans with a different lenders?

 

Makes no sense to cross and increase your portfolio risk.

 

Please, please, please don't do this!!! Given the position you're in there's absolutely no reason to cross-collateralise. It only hurts you, takes away flexibility in your lending (which you're likely to need). It might even result in higher stamp duty related costs in some states.

If you tell a bank you're asset rich and happy to cross-collateralise, there will be a wolf, the sheep and no sheep-dog or sheppard.

 

Same rates apply whether crossed or not in nearly all cases. The same thing can be achieved in a much less risky way. Property investment is ALL about managing risk where you can.