Hi everyone, This is my 1st post so here goes,
I have read Steves book and gained some very important advise which has got myself and my wife thinking. How we can reduce our non tax deductible debt. Here is the scenario. Our PPOR would rent for $380-400pw.We pay approx 1700p/m in pi Repayments. We are thinking about renting to the Defence Housing Authority for a six year period and renting a cheaper property appox 200pw in the same vicinity as there is only 2 of us and we dont really need such a big house to live in. There are still +ve gains for our PPOR and we can move back in down the track as our family grows, as our after tax cashflow would improve by $900 per month. I already have a JV with my sis, which at this time is
-ve geared, and renting out my PPOR would very close to cash flow positive. Has any one done this or can advise if this is a wise move, and what the pros and cons. Any advise would be much appreciated. [
]ZigZag
Imagine what you could achieve if you knew you could’t failWhy do you choose DHA instead of the open rental market? DHA is expensive.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi zigzag..I live in a DHA Army rented house so i can tell you from a personal point of view.
The Army do inspections all the time and keep the maintenance up to date all the time when you get your house back it is in as good if not better condition than when you rented it out but the Army take around $25.00 per week back to cover the maintenance, most Army personal stay in one place for 3 years so you would only have 2 familys in the 6 years…The better the house the higher the ranking officer who lives in it….[]Simon,
I guess DHA as secure rental for the longer term, will maintain and repaint and re-carpet at conclusion of lease. If on open rental market would have to pay LL insurance and hope renatal was for 52 weeks of the year. How ever does the concept of renting out PPOR to reduce non tax deductibe debt make sence? Even if we have to rent ourselves for less.[?]ZigZag
Imagine what you could achieve if you knew you could’t failZig zag it certainly makes sense.
I was in DHA homes for years and years when I was in the Army. There are lots of positives for the landlord who needs the additional security that they offer however I would check out the community vacancy rates, the rent you can achieve and work out which is better for you.
DHA will only repaint after 6 years. New carpets afer 9 years.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks for your replies,
So if we end up going down this path would there be an ability to depreciate the building even though we have intentions of moving back in after the 6 year period?
I think the DHA would put a lieutenant and his family into it as it meets all their required criteria except that we put in a pool 12 months ago, any way we will get an agent to estimate. We have realised a sizable amount of equity a few months ago which we will put to some good use trying to locate +ve cash flow properties
Thanks
This is just the beginning, as Steve says you have to take some pain for long term gainZigZag
Imagine what you could achieve if you knew you couldn’t fail
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