Question: Recently my wife and I were approached to invest in property, the funding was the split line revolving line of credit. We would have to borrow 85% of our our home evaluation.We had never heard of this type of lending. This would cut our existing home loan to seven years, currently it is twenty years. We would like to know obviously what risks are attached, how safe is this, what are the tax benefits, is it too good to be true?
Answer: I am always concerned when anybody is "approached" to buy any investment because it is a strong indication that the person approaching is doing it for their benefit and not for yours. Yes, it is possible to make money in real estate and there are tax breaks but at the end of the day you have to be convinced that the capital gain is going to be more than your net expenditure. I feel the best profits in real estate are made by buying a run down house in a good location but you will find these are never offered to you by the property floggers. If property is your thing talk to a lender about your borrowing capacity and then talk to respectable local agents about any bargains they may have in the area where you would like to buy.
Source http://www.smh.com.au/
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