A property investment scheme is attracting interest in WA.
The Investors Club plan is based on using equity in a home as temporary collateral for the 10 per cent to 30 per cent deposit on a first investment property.
Branch manager Joe Stone said the principle of the plan was to help people buy properties using only tax and rents.
“They never put a hand in their pocket and harvest the capital growth to live off – tax free,” Mr Stone said.
“Our investors borrow on their capital growth and we strongly recommend they never pay off the capital and borrow interest only.
“Rents will service that and the tax depreciation will cover all costs and put money back in your pocket. Instead of negative gearing, you’re basically generating positive cash flow.”
Mr Stone said the properties recommended to members have a high probability of doubling in value every seven years.
The theory is that in the eighth year up to 50 per cent of the growth in the first property is harvested by taking a second mortgage on it which, being borrowed, is tax free.
