Property Investing: The Slight Edge™

Going through my notes and thought I'd compile a list of the small and not so small things that can help build a solid portfolio and reach your target quicker by maximizing deductions, minimizing tax/expenses and increasing CF.

• 5 or 10 year IO with 100% offset and divert all income into it

• Borrow 105%

• Never pay cash for an IP deposit, always borrow

• Use PAYG variation to increase CF and amount in offset

• Borrow to pay for all investment expenses (except IR)

• If using LMI, aim for 88% and capitalize

• Use interest free credit card to pay for all expenses so your cash stayed in the offset for as long as possible

• When paying bills a lot of the time there is a surcharge for Amex and even Visa/MasterCard. You can use Aus Post BillPay and select pay via PayPal. You can then link your Amex to PayPal which allows you to collect the points, avoid the surcharge and use borrowed money (thanks to @markson)

• Look at Professional Packages. Costs $300-$400 but loan application fee (~$750) is waived and cheaper IR

• If P&I, pay fortnightly and as much as you can and not just the minimum

• If you have a PPOR with equity, read Terry's Ideal Loan Structure

• Go part fixed and part variable to lower overall interest rate on a reasonable sized portfolio

• Always get a depreciation report, preferably diminishing over Prime Cost

• Better tax benefits to use LOC from PPOR to pay IP deposit than $'s from offset

• Shop around for better rates etc every year. Cost to refinance is about $750

• Scrapping schedule (and depreciation report?) before and after reno

• Consider becoming an owner builder if doing structural reno

• Buy insurance through Super to pay premiums with pre-tax $'s

• Debt recycle as much as possible

• Prepay personal income protection insurance for a year before June 30 to receive larger tax deduction

• Look into cash bonds if you're nearing servicibilty limits but have equity to spare

• If buying shares, borrow by why of equity release

• Insure everything! Income, involuntary redundancy, TPD, land title etc

• Tax- Read and implement all of Terry_W's tax tips! Legal tips here

Feel free to add any other tips or strategies that could help (Or correct any that may be wrong!)

 

Giddy up!

Don't forget the debt recycling and CGT strategies too!

 

On the "insure everything" there's actually a pretty good argument to the contrary (ie that it's best to ensure nothing). This make sense particularly once your portfolio gets to a certain size.

 

especially if your house is on the beach.

 

Added!

What would that contrary argument be?! Didn't think there'd be a situation where it would be preferably not to be insured.

Thought there'd be a few more investing "hacks" suggested. Don't be shy

 

Hi house, what do you mean by this point?

• Scrapping schedule (and depreciation report?) before and after Reno

Scrapping what schedule? Why get rid of the depreciation report and what benefit do u get when u get rid of the report?

Thanks,
K

 

Not scrapping the schedule, but obtaining a schedule determining your loss from your demolition

 

In my opinion, one of the quickest and most effective ways to build your portfolio faster is to really buy below market value and then add some value any way possible. It helps to reduce risk on the way in, allows for you to manufacture some equity and then use the equity to jump into your next deal and so on.

 

@House - how did you manage to add TM to the thread title?

 

™

its alt + 0153 keyboard shortcut i think.

 

Ah you got me excited thinking you were sharing a tip! If it's for the iPhone I have an emoji app thing otherwise you can Google the word 'trademark' and copy paste the symbol from Wiki, works just as well.

 

Thank you House! This is fantastic!