{"id":10415,"date":"2017-02-05T01:00:16","date_gmt":"2017-02-04T14:00:16","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10415"},"modified":"2017-02-05T01:00:16","modified_gmt":"2017-02-04T14:00:16","slug":"property-gearing-tips-shannon-davis","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/property-gearing-tips-shannon-davis\/","title":{"rendered":"Property gearing tips &#8211; Shannon Davis"},"content":{"rendered":"<p>&nbsp;<br \/>\n<strong>Shannon Davis<\/strong> 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.<\/p>\n<h4><\/h4>\n<h4><strong>Transcript:<\/strong><\/h4>\n<p><b>Kevin:<\/b>\u00a0 My special guest in studio is Shannon Davis from Metropole Property Strategists and Image.<br \/>\nGood day, Shannon.<br \/>\n<b>Shannon:<\/b>\u00a0 Morning, Kevin.<br \/>\n<b>Kevin:<\/b>\u00a0 Let\u2019s get to a couple of these questions, Shannon.\u00a0 Interesting one from Sharon.<br \/>\nSharon writes: \u201cI have a one bedroom unit worth about $450,000 with no mortgage, and I\u2019m thinking of using the equity in this property as a deposit for my next property purchase. What\u2019s 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?\u201d<br \/>\n<b>Shannon:<\/b>\u00a0 Yes. First off, congratulations Sharon for paying off your apartment. Yes, that\u2019s definitely an easy one to do. What you\u2019re looking for there is an equity release. We don\u2019t 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.<br \/>\n<b>Kevin:<\/b>\u00a0 Normally, how much would you take? Is it a percentage?<br \/>\n<b>Shannon:<\/b>\u00a0 I think, yes, go for the deposit. With an equity release, you\u2019re 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\u2019ll be a full deduction but\u2026<br \/>\n<b>Kevin: <\/b>\u00a0Okay, so if Sharon\u2019s going to go out a buy something with $600,000, she\u2019s going to pull the deposit out of what she already has in equity in her current unit, and let\u2019s say she\u2019s purchasing something for, say, $600,000, just to give us a round figure. Would she pull out 10% or 20%?<br \/>\n<b>Shannon: <\/b>\u00a0Yes, take $150,000 or so.<br \/>\n<b>Kevin:<\/b>\u00a0 Yes. Will the bank then want a hold over that entire unit?<br \/>\n<b>Shannon:<\/b>\u00a0 If you cross-securitize.<br \/>\n<b>Kevin:<\/b>\u00a0 Okay.<br \/>\n<b>Shannon:<\/b>\u00a0 What we\u2019d 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\u2019ll both appreciate.<br \/>\n<b>Kevin:<\/b>\u00a0 So effectively you\u2019re borrowing the full purchase price but you\u2019re doing it by accessing some of the equity you currently hold.<br \/>\n<b>Shannon:<\/b>\u00a0 Yes, that\u2019s correct.<br \/>\n<b>Kevin:<\/b>\u00a0 Okay. Have you got any other recommendations for Sharon, by the way, because I cut across you there?<br \/>\n<b>Shannon:<\/b>\u00a0 No, but it\u2019s a good thing to have done and you\u2019re making your money work for you a little bit more. As long as you don\u2019t give too much security to the bank. What happens then is the bank is going to be lovely and they\u2019re going say, \u201cYes, we\u2019ll give it to you\u201d and they\u2019re going to cross-securitize, which means if anything went wrong, they have full control of the sales of both properties. You don\u2019t need to give them, say, a million dollars of security for a $600,000 purchase.<br \/>\n<b>Kevin:<\/b>\u00a0 You\u2019re talking here about the both lenders.<br \/>\n<b>Shannon:<\/b>\u00a0 Yes, being cross-securitized with one lender I think would be the one thing to watch out for there.<br \/>\n<b>Kevin:<\/b>\u00a0 Okay. Who should Sharon be talking to about this?<br \/>\n<b>Shannon:<\/b>\u00a0 A good finance person \u2013 a person who\u2019s probably more than just her existing bank manager.<br \/>\n<b>Kevin: <\/b>\u00a0You wouldn\u2019t go to the bank manager?<br \/>\n<b>Shannon:<\/b>\u00a0 Well, they\u2019ll just tell you what\u2019s in their best interest, really.<br \/>\n<b>Kevin:<\/b>\u00a0 Of course.<br \/>\n<b>Shannon:<\/b>\u00a0 Get a couple of opinions, and see what is best for you here.<br \/>\n<b>Kevin:<\/b>\u00a0 Is this where brokers start to come in now?<br \/>\n<b>Shannon: <\/b>\u00a0Yes. Brokers have got access to the whole market rather than just what one bank specific offerings are. And it\u2019s more than just interest rates, I would think, too. People get stuck on interest rates, but there are other facilities in a line that makes it more appealing.<br \/>\n<b>Kevin:<\/b>\u00a0 Like what?<br \/>\n<b>Shannon:<\/b>\u00a0 The option to have offsets, be able to pay it off sooner, perhaps locking a portion of your loan to fixed interest or letting it float on a variable rate. They are all things to be taken into account and a person needs to sit down with Sharon and see what\u2019s in her needs and what\u2019s the best fit for her.<br \/>\n<b>Kevin:<\/b>\u00a0 Would a broker be able to advise Sharon in relation to the entire loan now that we\u2019re dealing the two lenders?<br \/>\n<b>Shannon:<\/b>\u00a0 Yes, definitely. Not just any broker; someone who specializes with investments and can tell you the ins and outs of the finance industry.<br \/>\n<b>Kevin:\u00a0 <\/b>How do you find one of those?<br \/>\n<b>Shannon:<\/b>\u00a0 They\u2019re just going to take an interest in your needs as far as your timeline for investing, what you want from your life, and not just trying to transact and get a commission out of you.<br \/>\n<b>Kevin:<\/b>\u00a0 In other words, we\u2019re not just looking for a solution to this situation; it\u2019s more \u201cLet me ask you some questions about you, what you want to achieve, and we\u2019ll come up with a package for the whole thing.\u201d<br \/>\n<b>Shannon:<\/b>\u00a0 That\u2019s correct.<br \/>\n<b>Kevin:<\/b>\u00a0 You look at the whole thing as a picture.<br \/>\n<b>Shannon:<\/b>\u00a0 Yes.<br \/>\n<b>Kevin:<\/b>\u00a0 That seems to be more than way, too. I know that\u2019s more developing a strategy, and I know that as a property strategist that\u2019s what you guys do at Metropole. So you really have to come up with a strategy, don\u2019t you?<br \/>\n<b>Shannon:<\/b>\u00a0 Yes, definitely. I think when people ask questions about what they\u2019re trying to achieve? How long have they got to do it? Where are they in their working life? What serviceability do they have? And when you take in all those points of view, then you can have a property strategy at its highest and best use for your particular circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; 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&#8230;.<\/p>\n","protected":false},"author":176692471,"featured_media":10416,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[6,32,10,11,13,36,17,25,27],"tags":[101],"class_list":["post-10415","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buy-in-brisbane","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Property gearing tips - Shannon Davis - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/property-gearing-tips-shannon-davis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Property gearing tips - Shannon Davis - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"&nbsp; Shannon Davis answers some of your questions and in doing so, he warns about believing everything you are told. 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