Need suggestion to build portfolio and loan structuring with 800K.

Discussion in 'Investment Strategy' started by heyduggee, 11th Jun, 2019.

Join Australia's most dynamic and respected property investment community
  1. heyduggee

    heyduggee Member

    Joined:
    5th Sep, 2017
    Posts:
    7
    Location:
    Sydney
    Hi,

    We have a PPOR with 1.35M in loan repayments. We have a detached self contained house which is generating $720pw rent in the same PPOR.
    Income:
    Mine - 130K-140K pa age - 37
    Wife - 75K pa age - 35
    Rent from detached house - 720 pw

    We recently sold our house in overseas and expecting a cash around 800k very soon. We are looking for inputs on..

    - Looking for a strategy around loan structuring to maximise our loan capacity.
    - Need inputs on property portfolio to balance between Cash flow and capital gains.
    - Open for Commercial property or unit development projects if the deal is good.
    - Not interested in investing in regional suburbs.

    Intention is have a good portfolio for long run and also with decent passive income (4 to 5k per month) in 3 years time to avoid rat case. Any suggestions are welcome please.
     
    heyduggee, 11th Jun, 2019
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,649
    Location:
    Gold Coast (Australia Wide)
    HIya

    Welcome

    Few things i suggest so there is more clarity pls

    A lot comes down to if that 1350 mill in loans is fully drawn, and how much if it is tax deductible ?

    ta
    rolf
     
    Rolf Latham, 11th Jun, 2019
    #2
    Lindsay_W likes this.
  3. heyduggee

    heyduggee Member

    Joined:
    5th Sep, 2017
    Posts:
    7
    Location:
    Sydney
    Not much as we bought PPOR couple of years back. We purchased property for 1.8M and loan we took is 1.38M...
     
    heyduggee, 12th Jun, 2019
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,649
    Location:
    Gold Coast (Australia Wide)
    I expect that serviceability will be an issue moving forward, so a well mapped strategy is a must, before you do ANYTHING

    More importantly, that large non ded debt, you may want to look at an active debt recycle strategy

    ta
    rolf
     
    Rolf Latham, 12th Jun, 2019
    #4
  5. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,654
    Location:
    Sydney (Australia Wide)
    In simple terms, with your debt mix over time, you want to have as little PPOR debt as possible & more of it weighted to investment debt.

    If your investing, you can do this via paydown the OO loan by 800k. If you invest with it, redraw it back out in a separate investment split that you can keep track of (this will likely be deductible debt if used for investment purposes). Will need to see what your investing options are here. If its a flat $800k purchase with no further lending, then use the income associated with this to continue paying off the deductible portion of your PPOR debt that remains (~1.35m-800k). Based on your incomes, you're probably likely to be able to borrow a fair bit more too if you wanted to expand your portfolio further & leverage the 800k into a bigger portfolio.

    - Set up your loans to allow you to do this as flexibly as possible (some make this far harder than it needs to be).

    This probably is best mapped out first. The more clarity you have over what your seeking to do, the better you can design your structure to achieve it.
     
    Redom, 13th Jun, 2019
    #5
  6. Never giveup

    Never giveup Well-Known Member

    Joined:
    13th Oct, 2018
    Posts:
    1,567
    Location:
    Sydney
    Hi @Redom ,

    What do you mean by this statement-any example?
     
    Never giveup, 6th Mar, 2020
    #6
  7. Laney

    Laney Member

    Joined:
    27th Apr, 2020
    Posts:
    21
    Location:
    Sydney
    @Redom can you provide further information about setting up loans for ultimate flexiblity?
     
    Laney, 28th Apr, 2020
    #7
  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,685
    Location:
    Perth WA + Buderim Qld
    Some lenders have horrible policy that makes debt recycling quite difficult - where others have products specifically designed for it. Others yet have products that can be manoeuvred to get a decent outcome :)
     
    Jess Peletier, 28th Apr, 2020
    #8
  9. Laney

    Laney Member

    Joined:
    27th Apr, 2020
    Posts:
    21
    Location:
    Sydney
    Our PPOR and IP are with CBA, how do their products compare for debt recycling?
     
    Laney, 28th Apr, 2020
    #9
  10. Laney

    Laney Member

    Joined:
    27th Apr, 2020
    Posts:
    21
    Location:
    Sydney
    @Trainee more info on these would be great
     
    Laney, 28th Apr, 2020
    #10
  11. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,685
    Location:
    Perth WA + Buderim Qld
    Easy to split, but can’t combine or restructure with out a full application. Okay if it’s set and forget, but not ideal for active debt recycling where you’re buying and selling shares regularly. You can get around it with a good accountant and a spreadsheet.
     
    Jess Peletier, 28th Apr, 2020
    #11
  12. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    5,058
    Location:
    QLD/Australia Wide
    AMP's Master Limit is the best product on the market for active Debt Recycling in my opinion
     
    Lindsay_W, 29th Apr, 2020
    #12
Investment Portfolio’s monthly returns