setting up for first investment property

Hi there,

I'm currently on the lookout for an investment property in tas where I currently live. Just after a few different views or opinions on the structure an set up to help achieve my goals and plans.

A brief intro is that I am early 30's no ppor debt (well $100) on my ppor only redraw no offset with commbank and home valued at around 350k ish.

In addition have around 120k invested in lics, etf's and a Couple blue chip stocks getting total divs of around 4 to 6k per annum however I'm adding around 25k to these lic's per annum so these divs will keep climbing.....hopefully!

Also have around 85k cash as a reserve buffer and am looking to get onto the property ladder and get something bit modern ish for around 300k which would rent for around 300 to 350 per week.


I know everyone says use other people's money etc etc and I understand that but here in tas the capital growth isn't here like it is or was in melb and Sydney and unsure of the type of loan to get!

Parents have several properties paid off none of this IO loans and waiting for cap growth and then l leveraging to the hilt! I would like to sleep at nyt!

Have been following ashley ormond and his literature in trying to pay off debts ASAP (who advocates no bells and whistles home loans and using p + i and paying down all debt ppor and ip debt and paying the tax as required) which I have done on my ppor but unsure on how to set it up for getting a IP???

Currently investing around 25k into lic's a year as well as saving an additional 25k as cash.

Just wondering on the approaches some ppl would take in my situation before I see my accountant and run some numbers by him!

Ideally would like to own my ppor which I do as well as build up my lic divs to around 20 to 30k in the next 15 years as well as have a IP fully paid off giving me another 15k a year before I pay tax.

Thoughts? Don't be too hard on me, just getting into the property game after seeing my parents retire and life the dream collecting rents from residential and commercial property with cash at bank buffers.

Thanks for taking the time to read my post!

 

Split your PPOR loan and use some of the funds in redraw to pay for the deposit and costs on the IP, then get a new loan for the balance of the IP.

There's a few quirks - you need to be careful the loan splits don't automatically close- and also tax considerations so I don't suggest DIYing this.

 

Can this work even if I have cancelled the direct debit on the loan as it is just 100 dollars so I pay around 50 cents a month a interest??

 

Seek some specific legal advice on ownership structure and funding structure, but PI could work well for someone in this sort of position.

Even though you have cash laying around, i would avoid using it. Just borrow 105% and keep the cash in offset accounts as this can help you do a more effective retirement.

You might want to consider single name ownership of property. As there are many tax strategies that can be employed.

A trust could be incorporated well in this situation too, depending on the state the trustee could be the owner of the property or it could be the funder of the property.

Don't forget the estate planning aspects.

 

Yes was going to place property on m name and limit the use of my money and build up offset account for the IP to give me added flexibility down the track!

Trusts!!!! Now they are a complicated beast! Have been reading up on these in regards to my lic holdings in my and my partners lower income earning name!

1 step forward 2 steps back when I try and read up on them so a planner or advisor won't pull the wool under my eyes! Trying to suss out a few different scenarios or opinions on setting it up right from the start.