Howdy - Here to learn about Somersoft PIA

G'Day Everyone,

Found this forum linked from the Somersoft page, looks like a nice group of people, looking forward to learning and sharing ideas.

My names Alex.
I work for the RAAF, as a pilot.
I have 1 duplex, NSW.
I am starting a townhome in Melbourne.

Any PIA experts in here ?

I have worked through the user guides, but have not been able to figure out how to correctly record equity release.

My NSW duplex has grown well and I am able to release enough equity to cover the deposit and costs for my Melbourne townhouse.

I am currently showing the equity release loan as loan A against the new property, and loan B is the primary loan for the remaining value.

But because all the funds are borrowed it cannot calculate the Rate of return etc, it also means the LVR is 100% which dosn't feel right because it is also dosnt show in property one that there is an loan sitting against it ?

Am I missing a simple way to 'release equity' in a particular year against property 1 so that I can use it as cash deposit for number two, which feels more accurate in my mind.

The overall portfolio should look the same but reflect the loans/assets better

Sorry thats not a great description but hopefully sounds familiar to others too.

Cheers Alex

 

Welcome!
You will learn a lot here
I am no expert but will give a shot
It sounds right if you have a separate loan A and loan B against property 1.

Will it be like this?
For property 1, Loan B (primary loan)
For property 2, Loan A (equity release fr prop 1) and Loan C (primary loan for prop2)

for property 2, LVR is 100% because all loans are borrowed. More debt but 100% tax deductible.

When we started we borrowed 100% to our neck. We had to as we were in accumulation phase. High leverage is ok as long as you got a good stable job and calculated your numbers. It is “expected” to come down with time- capital gain/paying down. Fortunately or unfortunately, that’s how Aus build wealth through leverage and properties - and with tax benefits, it keeps going up

I am not commenting on your properties return, expected capital gain and what not. But you will definitely be asked about your goal and strategy here

All the best with your journey.

 

Thankyou so much @samiam for taking the time to reply - genuinely appreciate your time.

Yes that is exactly how I have it set up, ok that makes a bit more sense, might have to throw 1000 of cash at it to let it calculate IRR haha.

Yes I am in accumulation phase as well, job is stable and above the cashflow I need so I want to turn as much as possible into real assets.

my next goal is to finalise This property whilst learning my options for going again, I think that income capacity will be my limiting factor rather than deposit/equity.

again thank you for your time

looking forward to learning

 

@samiam
you haven't per chance encountered/figured out why in the wealth builder view, it assumes your portfolio loans switch to P&I

I have the individual properties set up as IO for 40 years, but when I view the wealth builder the portfolio loan decreases after 5 years very odd

 

No I haven’t. Our loans were initially all IO but because of low interest rate, we fixed most of our loans PI (overall payments not much difference). But will have to go through full assessment again if we want to switch back from PI to IO.