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What am i not seeing

Discussion in 'Investing Strategies' started by bonecrusher, 4th Nov, 2007.

  1. bonecrusher

    bonecrusher Member

    Joined:
    10th Jun, 2006
    Posts:
    17
    Location:
    sa
    Hi all

    I thought i would share my situation with the forum as i am not sure if i am doing things as effeciently as possible or as beneficial. I am finding that i am paying out of my own pocket some money which i am not sure i need to. I am hoping your experience in some of these type of matters could offer some guidance.

    PPOR. Val 320,000. Have a split loan at 80%=256000

    PPOR Loan .........85000.I/O......(linked to Offset account.)
    Personal LOC .........26000.......used 10,000
    Investment LOC......145000... used 55000 invested in shares no dividends with these shares. 20,000 of this debt was for IP1 during building stages when complications arose.

    I pay approx $125 a week towards the INV LOC to cover interest only.

    IP1 Val 340,000 Loan at 80% = 272000 made of loan and LOC
    Loan 248000
    LOC 24000..unused recently set up to pay for any expenses etc for IP1

    My income approx 60,000
    wife approx 24,000
    IP1 rent approx 21,000

    -Am i in a postion to move any further.?
    -Should i be looking for Income type investments?
    -What would i need to be looking at.
    -Could IP1 LOC pay the interest on Investment LOC (145000)?
    -Have about 12years to retirement.


    Look forward to replies

    Cheers
    BC
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    BC
    I believe it can, you just need to keep track of the payments
    so that they are not mixed up with the actual IP expenses.
    You still have $95K in your investment LOC but I wouldn't buy any more shares atm and I wouldn't expand the IP portfolio as yet.

    Are your loans with a major bank or with small lenders?

    Have you got good quality shares that you really want to keep?
    Be careful with shares because there is a general feel that in the near future we will be heading for a big stock market correction.
    Cheers
     
    Last edited by a moderator: 4th Nov, 2007
  3. bonecrusher

    bonecrusher Member

    Joined:
    10th Jun, 2006
    Posts:
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    Location:
    sa
    Hi BV

    Thanks for your reply.
    Sorry BV i am not sure what you mean..
    If incurr expenses directly related to IP1 then i would've used the INV LOC to pay these before. Now with the new LOC (24000) which primarily is dedicated to the IP1 shortfalls or expenses

    Both these LOC would be tax deductible. So my Qu. why would the interest on the INV LOC paid by the LOC (24000) be a problem all the interest on either would be tax deductible.
    I am investigating whether its a possible strategy to release the 125 a week i put in and might be used towards another IP in the future perhaps.

    With the Shares:
    Yes i have thought about. They are small to midcaps but i feel there is some potential with these. But have thought of taking some profit and lightening the portfolio. My main focus is on rescources (China factor) Iron ore/gold/nickel.

    Cheers
    BC
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    BC

    Ok let's see if I can explain it better.
    IMO the $24K LOC linked to IP1 can be used to pay the interest for the $55K you've spent on shares.

    But if you decide to do this then you shouldn't use the same $24K LOC
    to pay for the IP expenses.

    The reason being that if you pay IP expenses and other non IP related expenses from the same LOC it will get messy and it will be a hassle at tax time.

    Cheers
     
  5. bonecrusher

    bonecrusher Member

    Joined:
    10th Jun, 2006
    Posts:
    17
    Location:
    sa
    Hi

    Thanks BV yes i understand not to mix personal with Investment. The Inv. LOC was always dedicated to an income producing asset. The first 20,000 was costs which were incurred+ interest during the OTP building/time delays/interest/bank issues etc.

    The additional 55,000 were put into shares and added to the 20,000 the thinking behind this was that the shares may increase over time and cover the 20,000 debt which i incurred during the building of IP1.

    For personal purposes i only use the personal LOC which has a limit of 26000.


    I am now considering looking at income for cashflow. I am reading a fair bit about MF but not to sure about them. If the market does go backwards for a while MF are affected too and fees etc still have to be paid despite the performance as i understand it.

    For another IP well that would put me in a position of neg gear so am cautious on this.

    Margin loans i am not sure about this.

    So anyone have any experience or suggestion would be appreciated.

    Cheers
    BC
     
  6. bonecrusher

    bonecrusher Member

    Joined:
    10th Jun, 2006
    Posts:
    17
    Location:
    sa
    Hi all

    Any strategies that others have used to gain growth and income. Managed Funds are not capital guaranteed.

    How do you rely on Dividends for income when they can be missed when the market has a rough time?

    What the solution to this when one is relying on income from investments.

    Rents from property generally pay the mortgage and IP expenses providing not negatively geared.

    Cheers
    BC