Hey, Just wondering if anyone could help me. Firstly I'm new to this, so excuse any weirdness..
I am a female in mid 20's on $55k wage, w/ boyfriend earning about $65k. Currently have a house in Adelaide in which we are living, with a mortgage on it of $200k, and approx valuation of $330k. We are looking to buy a house in Brisbane for about $350k maximum but not too far from the city, and were planning on renting this place in Adel out for approx $320/wk rent, thus an extra $40/wk needed to cover this mortgage. ? Therefore we would have about a $550k mortage (jeepers!!) ~ Would a bank lend us that much? is it viable? any other ideas?
Would appreciate anyone's thoughts on this, am not sure whether should keep this house as an investment in the long term, or whether just sell it now and get a better house in QLD? Any thoughts?
Aim: To be a property tycoon, but still have a decent lifestyle
Can somebody help???
Thanks a lot !
ShelThe banks should lend you that easily, you both have full-time work and a decent 'bit' of equity…a 200k loan is like $650 per fortnight so that’s the first home paid for so then you just really need to concentrate on servicing the secondary loan of $350,000 which with your combined income is very do-able. (this is just my opinion, some may disagree)
Thanks for that, but is it a lot more expensive to have a 2nd house rented out that is not covering the mortgage by a bit, in addition to the council rates, water i assume, emergency services levy, building insurance etc do you know??> or do you think we would be better off by just selling this place and buying a bigger better one interstate? But that doesn't help my goal of owning stacks of property!! hmm..
Hi Shel, why would you sell? Most property experts promote the "never sell" principle. Your in a great position with considerable equity in your first property. Phorsha is correct in that banks will lend you a considerable amount based on your income and existing equity. Its the way most people, including us have continued to buy property, ie borrow against the equity of existing property etc. Dont forget a Depreciation schedule, particularly if your property was built after 1985. Talk to anyone and everyone who has been there and read heaps of different Australian authors. Good luck and dont rush your decision……
Hi, I live in Adelaide & just built 4 houses & start building another one in April, bringing my total properties to 7shops, 5 houses, 5 student accommodation apartments and 1 rubber estate.
Believe me, I know the fear of a BIG debt.
I'd cut off an arm to be in your position, to have your youth & enthusiasm, your salaries etc. You are in a good position.
$500000 is not a lot by today's standards. Any lender would be happy to give you a loan.
Your house in Adelaide can be rented out for six to seven years & qualify as an investment property at the same time as PPOR. If it's built before 1984, better still. You get depreciation benefits. This is a huge tax advantage.
Max out your borrowing on the Adelaide house to buy your next property, be it in Brisbane, Adelaide, Sydney or Timbucktoo! You get to use the deductions & yet keep capital gains intact when you choose to sell.
Speak with your accountant to be more specific. The tax laws change all the time so I will add that any "advice" here needs to be checked & verified.
Good luck,
Kum YinHello Shel
In your position I wouldn't sell.
You need to calculate about 20% of the yearly rental for expenses (repairs, insurances, rates, water, agents fees, vacancies etc.). This does not include the interest on your loan. However, don't forget that all this is tax deductible, including the interest on the loan.
If your current loan is principle and interest then it would be good to convert it to interest only.
Cheers
ElkaNicely done Kum Yin.
elkam wrote:
You need to calculate about 20% of the yearly rental for expenses (repairs, insurances, rates, water, agents fees, vacancies etc.). This does not include the interest on your loan. However, don't forget that all this is tax deductible, including the interest on the loan.
[/quote]I keep on reading this 20% expenses alot. Does that include a property manager, as that would eat up like 8-10% of rent. Therefore if this is included(in the 20%) and I am going to manage myself, then i would only have about 10% rent for expenses.
Does this sound right.
Chris.
Hello Chris
Yes, the 20% includes the PM (agents fees). Depending on where you buy your IP, the agents fees vary. I am paying 7% managements fees and 3% letting fee (for a new tenant). This is in Melbourne.
I think 10% is a bit low. I would work on 14- 15% to be on the safe side.
Cheers
ElkaDear Shel25,
The golden rule in Real Estate is never sell, because you will only regret it in the future. The only time you should sell any investment property is when you are ready to retire.
Have you considered purchasing a postive cash flow property that will pay for itself?
Kind Regards,
Mark Leith
Property Advocate
Global Buyers Agent
http://www.buyersagent.com.auHi, Shel
Do not sell unless you really have to, or the place you currently have is not performing well in the currently strong economic market. An outlay of $40 a week to hold a place is cheap considering a dual income status. Once you add in a depreciation schedule and raising rent, your Adelaide place could even become +ve cashflow for you.
This will allow you and your partner to focus on the place in Brisbane.
Worry not the size of the loan, but your ability to bring in the cashflow to service it.
All the best.
Daniel Lee
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