How Much Debt?

Are you doing it nonna style ? Lol

 

Just the debt Johnny

 

Probably not a bad idea in the Adelaide market atm.

Im not sure what my next move is.

I have decent deposit/buffer and don't really want to load up on the same cashflow properties I already have...Decisions decisions

 

The only way I feel comfort is when I have no debt at all.

 

If the bank offered you a $10M loan you would be mad not to take it more so if you where made redundant as it would give you many more options. You wouldn't need a job. Just because it is available you don't have to use it. 80% is risky 60% is a good balance and less than 40% would be conservative.[/QUOTE]

I think it depends on what stock you are buying, for me my strategy is only houses Sydney, Melbourne, Brisbane.

Chances of either of them dropping by 20% is rare.

Having 40% LVR on a mining town can still be risky.

Read the YIP thread what if you bought a house a median house in 2011/2 for 750k with 40% LVR (300k Loan), today the median house price is 200k, you have actually lost money and the bank would reposes the house.

I cannot foresee properties in my locations going down 20% without some major event. Going down 10% I can see that happening in Sydney perhaps but 20% I think wont happen.

So on my strategy 90% is risky, 80% is balanced and 50/60% is conservative.

On a mining town strategy 60-90% would be risky and 40% might be balanced and 10% would be conservative.

Obviously if you know the exact timing of the markets 100% LVR isn't risky for either strategy but please let me know when you work this out.

RE: Taking 10M that is your opinion yes it gives you more options which also gives you more risk. I am not here for the quick buck, there are many success stories on the quick buck but there is also many failures. I am okay working for another 20 years (I am 29) and not that I think this way but my financial future is already secured & sustainable without me doing anything due to my parents and what they have done (I am following the same path). However I want an even better financial future for my children (atm only have one), which is why I am here.

Why would I want to risk it all for 10M loans when I am going to be redundant? 10M loan @ 5% p.a. is $500,000 of interest, if interest rates went to 7% (in time) that is another $200,000.

Yes you could put this money in regional properties or even mining properties but this to me is higher risk. Capital gains is where you make the money, the CF just helps service it.

 

That's how I initially read it, but I think he actually means keeping it as a LOC to be used in case of emergencies, instead of taking the loan immediately?