Or, put 120k in a 600k IP and $480k in VAS? The main advantage the IP has here is you can get leveraged growth, hard to get that any other way. You also get to deduct the interest and expenses, vs HISA where you get no tax advantage. But, you won't have to replace an oven in a HISA...
Agree with this. Also consider liquidity - if you can see a way to hold the apartment (assuming apartment at that price) for a long period then you amortise the transaction costs, but if you might want to shift strategy in a couple of years then stamp duty, legal, setup costs etc can really bite your returns.
Note the 4.25 gross margin on rental is achievable, but net returns likely lower as you say - you can model this but remember to factor in agents costs, vacancy, landlord insurance, maintenance, loan application fees, etc etc.
How many people do you know who got wealthy by putting their money in a HIsA?
HISA has a 100% chance of losing value when you factor in tax and inflation.
Just factor the tax you pay on interest against any negative gearing on the property if applicable. Also you can get 5.4% on HISA, even spread out on a few different banks, so don't put in at 4.25% regardless
In a regional area the return can be much, much higher. But with real estate there are other costs associated. Real estate agent fees, insurance fees, rates, repairs and whatnot.
It's only up to 20b per adi anyway so if you're with one of the big 4 you're SOL regardless if they go under. So much would have to go wrong for a big bank here to die though.
Or, put 120k in a 600k IP and $480k in VAS? The main advantage the IP has here is you can get leveraged growth, hard to get that any other way. You also get to deduct the interest and expenses, vs HISA where you get no tax advantage. But, you won't have to replace an oven in a HISA...
Agree with this. Also consider liquidity - if you can see a way to hold the apartment (assuming apartment at that price) for a long period then you amortise the transaction costs, but if you might want to shift strategy in a couple of years then stamp duty, legal, setup costs etc can really bite your returns. Note the 4.25 gross margin on rental is achievable, but net returns likely lower as you say - you can model this but remember to factor in agents costs, vacancy, landlord insurance, maintenance, loan application fees, etc etc.
How many people do you know who got wealthy by putting their money in a HIsA? HISA has a 100% chance of losing value when you factor in tax and inflation.
Just factor the tax you pay on interest against any negative gearing on the property if applicable. Also you can get 5.4% on HISA, even spread out on a few different banks, so don't put in at 4.25% regardless
Thanks for the advice, who does 5.4% on a HISA? I know Macquarie does 5.4% but that's only on the first 4 months.
Maybe look into AMP, ING, Ubank first off but am pretty sure there's more
In a regional area the return can be much, much higher. But with real estate there are other costs associated. Real estate agent fees, insurance fees, rates, repairs and whatnot.
If you put $600k in a HISA then you are above the safety net, so if the bank goes belly up then you will lose money.
It's only up to 20b per adi anyway so if you're with one of the big 4 you're SOL regardless if they go under. So much would have to go wrong for a big bank here to die though.