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Financing a cheap investment

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  • Financing a cheap investment

    Hi all.

    This looks like a great site so thanks the everybody involved in maintaining it.

    I'm currently looking at investing further in the property market. Unfortunately my last (and now only) property investment is an apartment in Auckland signed for on 2005 completed in 2007. Its well rented but doe to the down turn there is -65K equity in it at the moment (Going by the GV). I own the house i live in and have ~ 140k equity there. That leaves me with an LVR of 87%.
    Also, I am "fortunate" to pay 24% extra tax on anything i earn over 31k so tax deductions are really worth it for me. Paying 62% of the last dollars earned really does pain me.

    So to get tax deductions i am looking to build my property portfolio. But thats hard with an LVR of 87%. I am therefore looking at constructing a new structure (LAQC) and purchase a property therein. As far as i understand i need a 30% down payment + costs to do this. I'm looking at 70k-120k houses so i'm thinking 35-40K should do me. I currently have 15K to spend.

    So what i am asking is if anybody have a way of raising more cash ?
    Is the plan above a good one ?
    Does anybody have any other suggestions regarding tax deductions ?


  • #2
    Originally posted by Odin View Post
    Does anybody have any other suggestions regarding tax deductions ?
    Do not base an investment on tax. Base it on expected returns, both income and capital.


    • #3
      Don't get me wrong. I'm not just investing for the tax deduction, and i will be looking for as close to if not a neutral investment preferably with a bit of equity so i will be able to get an other in a years time. But due to the 62% tax it is a really really good option for me. If a 100K house is casflow neutral after tax for someone paying 38% i will have a gain of 2K or more per year.

      But i'm really looking for idears on how to start with 15K in the pocket. I could buy a 50K property but the down side of anything like that would be that most of the running costs are the same as in a 300k property and that eats in to the cashflow. Therefore i would be keen to get to a 100 - 150K property.

      Any thoughts ?