Dr Andrew Wilson talks about his 2016 predictions and what impacted his views, what happened and how those actions will impact us this year.

Shannon Davis answers some of your questions and in doing so, he warns about believing everything you are told. Sharon asked us to help her understand how to gain benefit from the equity she has in her 1 bedroom unit to get another property.

John wants to know how he can buy a property in his son’s name, Joe has a beef about negative gearing and Dave needs to know about his options for funding the balance of a loan at settlement. So we asked Andrew Mirams to join us to help.

We back track with Josh Masters and check his report card of 2016 predictions.

Our feature guest tells about his passion for property and how that led him to create a website – developed in his garage – that is solely devoted to helping other like-minded investors.

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Transcripts:
Property gearing tips - Shannon Davis
Kevin:  My special guest in studio is Shannon Davis from Metropole Property Strategists and Image.

Good day, Shannon.

Shannon:  Morning, Kevin.

Kevin:  Let’s get to a couple of these questions, Shannon.  Interesting one from Sharon.

Sharon writes: “I have a one bedroom unit worth about $450,000 with no mortgage, and I’m thinking of using the equity in this property as a deposit for my next property purchase. What’s the best way to access this equity, and can I still claim the interest as a property expense? Is there anything different with accessing this equity as the unit has already been paid?”

Shannon:  Yes. First off, congratulations Sharon for paying off your apartment. Yes, that’s definitely an easy one to do. What you’re looking for there is an equity release. We don’t want to give too much security to the bank, so we use the paid-off property and we take some seed capital out of that property.

Kevin:  Normally, how much would you take? Is it a percentage?

Shannon:  I think, yes, go for the deposit. With an equity release, you’re essentially borrowing the whole lot, so take as much as you need for a deposit and then see a separate bank for the investment property. It’ll be a full deduction but…

Kevin:  Okay, so if Sharon’s going to go out a buy something with $600,000, she’s going to pull the deposit out of what she already has in equity in her current unit, and let’s say she’s purchasing something for, say, $600,000, just to give us a round figure. Would she pull out 10% or 20%?

Shannon:  Yes, take $150,000 or so.

Kevin:  Yes. Will the bank then want a hold over that entire unit?

Shannon:  If you cross-securitize.

Kevin:  Okay.

Shannon:  What we’d suggest you do is get an equity release and see a different bank for that and use your equity release for the seed capital for the secondary purchase. It will be a full tax deduction, and the tenant is essentially going to pay about 75% of your expenses. From there, you have your property A securing that investment property and they’ll both appreciate.

Kevin:  So effectively you’re borrowing the full purchase price but you’re doing it by accessing some of the equity you currently hold.

Shannon:  Yes, that’s correct.

Kevin:  Okay. Have you got any other recommendations for Sharon, by the way, because I cut across you there?

Shannon:  No, but it’s a good thing to have done and you’re making your money work for you a little bit more. As long as you don’t give too much security to the bank. What happens then is the bank is going to be lovely and they’re going say,