buying an IP

I don’t have enough equity or savings in my home to buy an investment property but when I do I want to have the right strategy. Would the right loan structure be an interest only loan? That way you are likely to have positive cash flow once rented and then you can claim the interest you pay as a tax deduction. Am I also right in saying that when I have enough equity/savings etc I should always be trying to keep my LVR below 80 % when I buy a second property? Also know to not cross collateral the 2 property’s as that could end badly

 

You still dont have the big picture.

Keep lvr below 80 as you save on lmi, but if its a hot market and you wait you might miss out. When starting out high lvrs are common as its hard to save for a deposit. Difference between 10 and 20 deposit might be a few years.

What are the risks of cross col? Dont do it if you dont have to. But if the deal is strong and thats the only way to get the money....

Whats a right structure? Io with offset is flexible but if you cant save it wont be good for you. If your uncomfortable with debt maybe pi is better.

Understand the tools, then understand your circumstances. Thats where YOUR best structure is.

 

That's why i'm here to get "the big picture" as you put it. Why interest only with offset, Is that so you essentially pay very little? But then if you already have an offset linked to your own home do you just open a second offset? As I understand it the interest on the investment property is tax deductible so why reduce it?

 

If you want to just deduct more interest, why borrow at the lowest rate? Getting a deduction is good. Not having to pay it is even better.

 

Yeah ok fair enough, so what about the possibility of having 2 offset accounts? what's your opinion on that?

 

To achieve what? What can you do with 2 offsets?

 

that is my point why have 2, you said above interest only with off set is flexible. If you already have an off set set up on your PPOR then what are the options

 

Sometimes doing nothing is also an option. This is where your lack of knowledge shows. No one mentioned 2 offsets.

 

I am here to educate my self not get continually told things like "This is where your lack of knowledge shows" I want to learn the best loan structures. If my PPOR is principle plus interest with an off set then whats the best way to structure my investment property loan.

 

As I said at the start I am not in the position yet to do so but I would like to understand my options, because in my experience the broker I choose did not put my best interest first. I want to be as educated as I can so I can tell the broker what I want. Take no chances.

 

100% this - meet with a good broker who can help you with these questions AND get your goals set, what are you ultimately trying to achieve?

Wrong mentality, a good broker tells you what strategy/structure will enable you to achieve your goals, not the other way around.

 

Develop the knowledge to ask the right questions, and understand answers from experts. Not to tell experts what to do.

 

When you get hard done by you want to get as educated as possible sorry if its the wrong attitude. Just want to learn

 

Terryw's Structuring Strategies

Have a read in this section Investment Strategy Terry posts are a good place to start

 

Thank you

 

By all means learn as much as you can, my point was take the advice from the professional instead of trying to tell them how to do it