Hi All,
I was wondering if some of the experienced investors could let me know if our situation is good and what things we should look out for once we start investing bigger. I read on a few posts where some people have expressed concern that investors and house owners are getting themselfs in trouble by over extending.We live in our house which has been bank valued at $450,000 and we have also just bought an investment unit that has been bank valued at $110,000. Our morgage on both is $378,000. We are renting the unit out for $140 p/w. My misses and my combined wages are $98,000 pa.
We are looking to buy some more IP's this year and that might be about $160,000 for the next one.
We would like to buy one every year around the same price value and so we would like to know if our circumstances are not so good and what we should be careful about.
Thanks in advance
ChrisChris
Certainly on a serviceability perspective you are not over extending yourselves however i am slightly concerned when you mentioned that the loan on both is $378,000.
I am assuming that you Bank have cross collaralised the loans between the 2 securities (which may effect you down the track) but do hope that the loans are totally separate. If they have combined the loans into one then you really do have a problem.
A little loan structuring never goes a miss.
Also how did you buy the IP – individually or in Trust. If individually I assume that your marginal tax brackets are somewhere equal and you are not expecting this to change in the near future. if not again could be an expensive error and a simple DT structure may have been the way to go if the IP is positvely geared.
Richard Taylor | Australia's leading private lender
No the loans are sepertate I was just putting the figures together for the value to loan ratio.
The unit is not yet positive but is pretty close to neutral. My wage is 52,000 and the missus is 46,000. As I am a newbie to this IP thing could you explain what the difference is with putting it in a trust? In our PAYE jobs we have no real tax deductions and end up paying about 25k a year in income tax. Would it be better to get this down using PI's (negative but close to neutral) rather than putting into a trust? Or is a trust a better option?
Thx again for the help
Chris
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