Pause and consolidate

QMy husband [26] and I [27] own four investment properties in Brisbane with 10% equity – they are negatively or neutrally geared with interest-only payments.

We have a large investment property mortgage of $2.3 million and HECS debt but no personal or credit card debt. We have saved $350,000 in our offset account, own $80,000 worth of shares and have combined superannuation of $80,000.

We plan on moving into one of our investment properties next year and starting a family. We have our own business (on which we have a $430,000 business loan) which brings in $2000 a week (after tax) for my husband, and I do contract work at about $2000 a week (after tax). I would drop to no work when having children and do casual work if required.

I just wanted to get an opinion on where to go now. I also question whether we have over-leveraged ourselves. Should we continue to invest our money or should we keep that as a cash buffer?

Pause and take a breath is my advice to you, Louise. I can see you have reasonable equity, you have a solid amount of cash in your offset account, your business is doing very well and your income is excellent. But with thoughts of a child and moving to one income it is time to consolidate.

I would be adding to that offset account as rapidly as I could. With four properties, you have plenty of skin in the property game. I would be “de-risking” your position by building more cash.