Joint Ventures on the surface seem like a good way to get into property either as a small operator or joining others in a large development. Peter Koulizos takes us through the pros and cons of this type of investment and details the areas you need to be ware of before getting involved.

Apartment living looks set to be the way of life for the future and strategic investors need to work out how and when they are going to respond to this growing trend. Michael Yardney gives us the 5 reasons why apartment living will become the new norm.

Russell has asked us to further clarify a point made by Andrew Mirams in a recent show about refinancing. We will do that for you today Russell.

We set about either proving or disproving a common property myth to do with buy and hold or flipping. What is best? Nhan Nguyen will give us his opinion.

We tell you about a new website that will help you assess your portfolio and why it is so interesting is that it actually brings together all the tools you will need instead of having to rely on various sites.

 
Transcripts:
Andrew Mirams
Kevin:  We’re going to answer a question in the show now from Russell. Thanks for the question, too, Russell.

It is in relation to some comments that were made recently by Andrew Mirams from Intuitive Finance to do with refinancing investment, and in particular, Russel wants to know by refinancing, you could access your equity and use the funds for a deposit on a property investment to invest in stocks and shares at education costs to support your children in purchasing their own home. I guess the key question here is Russell wants to know what other things could this be used for as opposed to property? Could it be used for lifestyle?

Andrew, it’s a great question, isn’t it?

Andrew:  Yes, it’s a fabulous question, Kevin. Thanks, Russell, for asking it. As experts, we tend to just roll these generalizations out and probably don’t drill into the specifics like Russell has asked. I think it’s a great question.

The key here really is the purpose, Kevin, the purpose of what you’re using the money for. It’s his equity. If Russell has done well in his property portfolio and it’s all increased in value and he wants to refinance it and use that equity, he can use it for whatever he wants. That’s the end of the game.

But the key is not what we would call blending personal use – so whether he’s funding some education costs or he’s going on a holiday or buying a new boat or a car as a reward for what his property portfolio has done – blending that with then a deposit on that next investment property because that makes it really difficult to determine your tax deductibility, and the ATO will often scrutinize that quite heavily.

Kevin:  Therefore, obviously, the answer to the question is he can use it for whatever he likes, but he should use it in a separate sense. Is that right?

Andrew:  Absolutely, and that is the key. Let’s just say, he has three properties, his home and two investment properties. His home, he might have only just purchased, and that hasn’t really gone up in value because he’s just upgraded, but the two investment properties have gone up in value – let’s just say for ease of numbers – $100,000. That means at 80%, he could access $80,000 for each.

Now, he might have gotten active in the property market when he was just married and didn’t have children, and now the kids are going to school, but he also wants to buy the next investment property. So in that case, he would do two separate lines of credit or interest-only loans, or whatever it be, but two separate facilities.

One, you might say, “Look. This is going to be for the personal use,” and the other for the investment use.” By doing this, you’re quarantining both debts. One is very clearly used for personal use that can’t be tax deductible or isn’t tax deductible, and the other that is used for the deposit on his next investment,