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Today's listener question opens two fantastic conversations, each about two very differing scenarios. Nick (34) and his wife (33) have not only achieved a great start with a principle place of residence loan being fully offset, but they have other properties in their portfolio too. Cate congratulates them on this achievement, particularly given their ages and the fact that they have a baby too.

They have been cognisant of their cashflows and they have saved and managed their money superbly. One twist to the story, however is that some of the total offset funds belong to Nick's parents. While it helps with the interest repayments, the Trio talk about some of the challenges and risks that can result from arrangements like this. From personal interest repayment arrangements to obligations and burdens that can be created, Cate talks through the emotional difficulties that some can face. And if the parents decide to ask for the money back, will this negatively impact the couple's future plans. Dave points out the importance of flagging a loan from parents as a sum that could be repayable on demand. He also unpacks the way that lenders view such arrangements, and maintains a pragmatic view for our listeners.

Nick also asks the Trio about converting their principle and interest rate to interest only... a perfect segue for Dave to discuss the merits of an interest only loan arrangement for disciplined investors. Preservation of the loan balance leads to higher tax deductions, greater control of their money, cash buffers to go towards the future home, and enhanced choice going forward.

It's easy, but it's not simple and so many people miss this incredible strategy. But.... it's only for disciplined investors.

Preservation of the loan balance leads to higher tax deductions, greater control of their money, cash buffers to go towards the future home, and enhanced choice going forward.

Mike prompts a question about refinancing to increase tax deductability and Dave and Cate shed light on "The Purpose Test", and the rationale that the ATO apply when it comes to deductable debt.

The Trio's finale for Nick and his wife relates to their question about when and where they should buy. Cate says, "It's a very ambitious goal, and don't let me separate ambition from reality. I think that the two can go hand in hand when you've got a great plan." Dave reinforces Cate's point about the importance of planning and he offers some good questions for them to consider.

Mike opens our second listener question from an Adelaide family... Jess has three properties with her husband George. They have tackled moving home since having a child, and they ask the Trio whether they should consider selling down a property to renovate a property within their portfolio. They also consider two other options; one revolving around avoiding capital gains tax.

Cate speaks about the importance of happiness when it comes to the family home, whereas Dave talks about the need to consider postponing the move into their family home. He talks about setting up the goals in stages, alongside a robust financial plan, and Dave spells out each of the five important stages.

Cate shares two real life experiences for our listeners that involve a two and three step renovation that moderates the expenditure and the risk of overcapitalisation.

From investor concerns, dwelling types that investors wish to invest in, states they'd like to invest in, and investor intentions over the following year, the survey findings show some intriguing predictions. We hope you have enjoyed this episode.

And our gold nuggets……
Cate Bakos's gold nugget: Cate likens a long term debt reduction strategy to that of a Grand Prix. From coordinating break times, fueling up at pit stops, and maintaining a long term focus, it shouldn't be a short, face race.
Dave Johnston’s gold nugget: The lifestyle vs investment conundrum is such a consideration. People have to decide how much, ultimately they will put into a family home. It's unique to every family and every couple, and it takes clear communication and patience.
Mike Mortlock's gold nugget: The end goal cannot be pushed too far away. Is buying an investment property pushing the family home purchase too far down the road?

Shownotes:https://www.propertytrio.com.au/2023/09/11/futureproofing-your-home-and-investment-portfolio/