hi, I'm 22 years old and work in a underground mine earning anywhere between $130 000 -$150 000 a year (contract rates). I currently have a Investment property in innisfail north qld which i paid $245 000 for 18 months ago current value would be around $300 000. Its rent return is around 15000 pa. I now live in townsville and i need help on where to go from here. I am making a lot on money and doing nothing with it how should i invest it. i would like to buy another house with in the next 6 month because i do no see the point of paying 400 a week in rent when that could be paying another house off for me. I do not know much about share and stuff like that but would like to get into it but i need to know what to research first so any help would be great.

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Hi everyone, just found this forum, love it! :)

We have outgrown our house and want to go bigger, and as hubby has been looking at investing options, we thought we would move out, turn our PPOR into an IP and start that way. However a friend told me last night that if we turn out PPOR into an IP we will be taxed fully on the rental income, regardless of whether it is used to pay the mortgage on the property or not. I decided to investigate further and found out this forum. It seems we have heaps more issues to address, I am just so confused at the moment, would really appreciate some direction. How silly of me to think it would be simple!

We have tapped into the equity of our house over the years for home improvement and personal use and now have only about $150,000 equity left in the house. If we rented the house out the rent would cover the repayments fully.

I am assuming my friend is only partly right by what I have read today, we will only get deductions for the interest on the original loan and have to pay full tax on the equity we have used for personal use. Then I read its best to get an IO loan for the house and put principle payments into an offset account.

We dont really want to sell at the moment but we do need to move into a bigger house. Would a rental or a purchase be our better option??

I am very confused and have no idea what the tax implications are or where to go from here:(

Any help would be much appreciated:)

Hi Everyone,

I am a former Investment Banker and Hedge Fund trader who now invests his own capital. I intend to outline my value investing methodology. The first topic is 'How I value a business using different scenarios'.

I estimate the intrinsic value of a business by determining its expected value.
I estimate its expected value by determining an upside, central case, and downside scenario for the business and attaching probabilities to each of these scenarios.


Why I use different scenarios to estimate a business’s value
I value a business using different scenarios because I cannot predict the exact future of a business. As Taleb points out:

I also value a business using different scenarios because it will help stop me from collecting information about the business, and then make up a story or ‘thesis’ to explain this information. The problem with making up a story about the business is that I am likely to make an investment decision based on this story, not on the original decision.[2] As Montier explains:

If I do not value a business using different scenarios there is a major risk that I would use the following process:

Gather Evidence > Explain Evidence with a Story > Match Decision to Story[4]

Predicting an upside, central case and downside scenario for a business, and attaching probabilities to each of these scenarios, is likely to prevent me from coming up with a story about whether I should buy the business. This is because I am forcing myself to predict more than one future for the business. By predicting scenarios, my process will be to:

Gather Evidence > Weigh and Evaluate Evidence (Predict Scenarios) > Decide[5]


How I will estimate the probability of each scenario
Estimating the probability of these scenarios is difficult because the future of a business is hard to predict. One technique I will use is to outline the pros and cons for each ‘tentative’ probability estimate. In other words, ask myself what arguments are there for why the estimate is reasonable, and what arguments are there for why the estimate is unreasonable.[6]


How I will estimate the downside scenario
If a business has been successful, it is critical that I find out what risks the business took to generate this success. As Taleb points out, you can often underestimate what these risks were. He says:

Much more to come....The Fallible Investor

We're looking at using the equity in out PPOR to buy an IP.
What strategies are available to us to do this.

Situation;
PPOR value appox 480K
Loan on PPOR 350K
Combined income approx 100K

Would it matter if the PPOR is in joint ownership and the IP in single ownership. The reason I ask is because my wife works part time and hence her income is less putting her closer to the thresholds.