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This Q&A session (brought to you by The Stig) features everything from the BEST benefit of an offset account that most folks don’t know about to build your own home from scratch. We tick off a few new topics and cover…

• A Tax-Saving Hack For An Offset Account
• How To Distinguish “Emotional Value” from “Property Value”
• Why Building a “Forever Home” Is NOT The Same Thing As Investing
• The Simplest Way to Keep Track of Your Properties
• Property Software Solutions for Existing Property Investors
• Multiple Offset Accounts: Why It’s Not Something We Recommend!

All four questions we answer today are listed in full further below — and a special mention to Brodie, Emily, Alan and Chris for contributing today’s epic Qs!! As always, if you want to be featured on a future Q&A, ask us your question here.

Free Resources Mentioned…

• Property Investors Council of Australia (PICA)

• Episode 257 | The Exception To The Rule When It Comes To Off The Plan Properties & House And Land Packages
• Free Book– Make Money Simple Again

The Questions Answered Today…

Question from Brodie on Building a New House

“Hi guys, love the insights I have gained and I feel you have saved me thousands. My question is around new property. I understand buying off the plan is a bad idea as an investment etc. however, my partner and I would like to buy a house for the next 10 or so years to raise a family and everything that comes with that.  I am a building designer so I am a bit more bias towards building so my question is would building a house with an outlook to live in it for an extended period (10 years+) stack up to buying an existing property?”

Question from Emily on Property Investment Software     

“Hi Ben & Bryce, I love your podcast and only recently discovered it since finishing your book. I’m currently up to Episode 70 and can’t get through them quick enough! I am 25 and just finished university in an accounting degree and now have 3 investment properties with a forth due very soon.

I have a question regarding property investment software I hope you can answer. I am wondering what software you recommend for keeping the administration side of your investment properties in check? From what I can see from my Google searches, many of the software packages already available in the market are for the DIY property manager, which advertises its features to do with the collection of rent, scheduling inspections and communications with the different types of tenants etc. However in my personal experience, hiring qualified property managers is the best/most reliable way to go, so these features are useless to me as this is already taken care of.

My question therefore is, is there any software available like MYOB or Xero tailored to property investing that we can input our property costs including regular maintenance, scheduled bills and buying costs. Ideally I would have a different ‘project’ or ‘account’ for each property so that in 30 years when/if I choose to sell, the cost bases for each property are easily worked out to determine the capital gains liability.  I love your work and love listening to your podcast every day. Thank you for making such a huge difference to the lives of the little guys on the ground.

Question from Alan on Offset Accounts & Loan Structure

“Dear Ben & Bryce, big fan of your show. A question in terms of offset accounts. I have an offset account on my investment property. Currently, I am living at home and am looking to purchase the second investment property. I am wondering, do I need to set up another off-set account? I don’t want the loans to be inter-linked/cross collateralised. Your faithful listener, Alan.”

Question from Chris on Affording Offset Accounts

(We also went “Live” on Facebook when we answered Chris’s question! You can watch it here.)

“My current home loan is $350,000. Property value sits around $400,000. This is not our forever home and we bought to get on the ladder. We would like to buy our next “forever”” home in the next 4 years and rent out my current home. Current interest rate is 3.23% on a standard home loan, no offset with Bank SA. Current savings for me and my partner sits around $45,000, which currently earns us around $500 in interest a year in an online Rams saver account. That goes up around $20,000 a year with a goal of reaching $100,000 by 2022.

I spoke with my mortgage broker and he came up with the following change in home loan to add an offset: Bank SA, 3.28% interest (0.05%) higher with an annual fee of $395. With $45k in the offset that should work out to an annual saving of $905pa, I think.

Everyone tells me to get an offset but am I getting ahead of myself? I feel once I add on the annual fees and take into consideration, I won’t be making any interest on that 45K, I will actually be costing myself money on my current situation. Or can anyone recommend a better home loan that I should look into. I would love to have multiple offset accounts but they seem to have higher interest rates. If we add all our money in all accounts it would sit around $50K.”