Never, ever, ever sell ...... a reflection by a Perth investor

It would have been far less challenging with the servicing calcs at peoples disposal in the past. Carrying large amounts of debt wasn't the same impediment it is today. It was treated at "actuals" as we all know, and the constant rate cuts across 3 decades combined with "actuals" to create sustained increases to everyone's borrowing capacity year after year after year ...even if pay rises were absent, rate cuts provided pay rises in their absence. And because everyone could borrow more, prices climbed consistently, and because everyone could borrow more and prices climbed consistently, harvesting equity was easy. CBA ran ads about it for years ... equity mate !

In addition, you could hold large amounts of IO indefinitely without it having any additional impact on borrowing capacity, meaning you never had to be concerned about P&I repayments . That lasted for almost 30 years .... plenty of time to accumulate vast amounts of equity mate .

Cash out rules were also incredibly generous by the late 90's /early noughties... and stayed that way until @ 2015/16 when APRA got nervous. Cash out was essentially unrestricted to 90% LVR. And true, evergreen LOC's with 30 genuine years of IO were readily available. NIVA, ZIP, Portfolio, Master Limit just to name a few ... Imagine the impact of a 30 year IO loan on a servicing calc today..... imagine trying to get cash out for hundreds of thousands today .....

These days, if you can delay gratification, most people are mathematically better better off buying cash cows , paying down debt aggressively and using that as the platform to get into a big PPOR. Only very high earners can carry that load . most people need to go about it smarter...but they wont. delayed gratification isnt agreeable to most people these days. Thats why these forums of choc full of people complaining they have loads of equity in their PPOR but cant get any more money . It isnt a coincidence. the old ways dont work for anyone but ultra income earners, these days.

 

Plenty of diversity in Mount Druitt

 

Life is too short and you still have to live somewhere. (This is my lived experience)

I would rather live and raise my kids in my own home in a great area, rather than settling for a lesser area (and/or renting) just to make and save money to move into that better area and home later in life.

But we all have to tread our own path.

 

Well written. I enjoyed reading that.

 

^^^ to be honest... in the early years of investing i ramped up on debt and used it wisely to substantially grow my position. As I near 40 and start looking towards financial freedom in the near-mid term; strategies reliant on taking on debt; are no longer of interest to me. If anything, I'm aiming to pay out pretty much all of the debt asap.

Doing this means, as I concurrently migrate to cash-outright strategies; I'm never reliant on banks or lenders (and thus, never forced to prove any income for loans); which is true financial freedom to me. Again, to me, a strategy that is reliant on taking on more debt to seek financial independence; has an Achilles heal (being the fact that lenders will want to see regular employed-income, to give you said-debt!). So that's the honey-pot trap right there. It isn't right, to me (especially if you have say passive investment income of $100k+ per year...) for a lender not to recognise this as being "as good" and PAYG or self-employed "worker" income. But.. it is what it is.

So to me, id prefer not to faff about pleading/begging for debt from banks and jumping through their hoops; when I can/have/am building a strategy that becomes a cash-flow machine; enabling me to start purchasing cash-outright without more debt.

 

I will be forever grateful that I found this forum in 2017.
We stretched to our max budget for an old PPOR in a good area of Perth in 2018 for 730k, added value through renovation (still incomplete) and we recently got the property valued at 900k enabling us to refinance to a low 2's interest rate and use equity to go again if we wish. All the knowledge in these forums and the generosity of its contributors can change lives and has changed ours.

 

How recent was the val mate? Also did they come to your house or just get you to send some photos?

 

I got 3 different banks to complete valuations.
One guy came out to view and take photos on Wednesday, another came out Friday and another completed an online valuation yesterday. All 3 came back at $900k and I got some feedback about potential ROI on remaining renovation plans which I am very excited about.

 

Excellent, how much as reno cost do far??

 

So far $100k.
It is an extremely extensive renovation.
Everything except the slab, bricks and timber in the roof has been touched and every sqm of the 809sqm block will be made new again.

 

Great Post, thanks for sharing.