Ep.95 | Q&A - Investing in a Financial Planner, Upgrading your PPOR, Loan Strategy to Build your Portfolio and more
Summary: As Christmas is a time for giving, we thought today’s special Christmas episode should be none other than a Q&A session! Topics covered today include debt-retirement and refinancing loans, how to go about upgrading your PPOR (Principle Place of Residence), whether it’s worth paying for a financial planner and more. (And click here for your free <a href="http://www.thepropertycouch.com.au/christmas-pack/">The Property Couch Christmas Pack</a>!) Today’s questions are from the following listeners:<br> <br> * Chris on debt-retirement and refinancing loans: Hi there, was hoping you could ‘unpack’ the ‘reality of’ the following finance-related scenario for me. I understand there is an “accumulation phase” where the investor actively accumulates as many quality, appreciating assets as required/wanted before transitioning to a “debt-reduction” or debt-retirement phase in the property investment journey. I was hoping you could spend some time describing what this debt-retirement phase actually looks like, assuming the investor has between 3-5 investment properties all on interest-only terms.<br> <br> Changing all of these to principal & interest at the same time would probably be too strenuous on the budget, so is it a case of paying off the largest investment loan on principal & interest terms while refinancing the remaining loans as interest-only for another 3-5 years and start knocking off the balance of the largest loan? Or is it a case of <a href="http://www.thepropertycouch.com.au/ep44-qa-building-cash-reserve-renovating-for-profit/">building up the offset account</a> of each loan evenly so that you end up paying less interest across all of the loans until you are in a position to pay the loan back in full?<br> But in this scenario the banks will eventually put you on a principal & interest payment unless you refinance again to an interest only loan, so how do you juggle at least 5 investment loans potentially all coming off their interest-only terms within 12-18 months of each other, while you’re trying to retire the debt without blowing the family budget? ($150+ principal payment across 5 loans = $750 a week which would destroy most family budgets).<br> Is it a case of focusing on one property at a time until the rent covers the principal + interest payments, before moving onto the next property or is it a case of continually refinancing to interest-only loans and building up the offset accounts? Is it better to focus on the largest loan first or distribute funds evenly across all loans? How do you actually go about entering the ‘debt-retirement’ phase on a <a href="http://www.thepropertycouch.com.au/ep73-building-a-property-portfolio-in-a-tough-market/">portfolio</a> of 5 investment properties (assuming all currently interest-only repayments with separate offset accounts but the interest-only period is expiring for all 5 loans over the next couple of years). This does not take into account the PPOR but we can ignore that part of the equation for the above scenario.<br> <br> * Bill on upgrading PPOR: My question is…I have paid off <a href="http://www.thepropertycouch.com.au/ep63-qa-ip-or-ppor-next-step-portfolio/">PPOR</a> (home loan account closed) and would like to upgrade PPOR. What advice/suggestions do you have regarding using ex-PPOR as investment or sell off ex-PPOR to pay down new PPOR debt and then buying an investment property?<br> <br> <br> * Anonymous on investing in a Financial Planner: G’day, I have a question that I think a lot of listeners would relate to and something you guys have not covered thus far.Firstly about me. I am 32 and have recently developed a passion to enhance my knowledge of <a href="http://www.thepropertycouch.com.au/ep-52-property-investor-journey-phillip-tarrant/" target="_blank">residential property investment</a>. I am in the Army and have a young family on my incom...
