Hi all – just after a little advice, guidance, opinions, thoughts on our current situation. Both my partner and I are paying off mortgages but are looking to consolidate and we are not sure which avenue to take or how many more there are that we are yet to discover!! To sell one or both, to rent one or both, to buy or renovate……..the choices seem endless. So is our decision simply a matter of personal choice for us or is there a more appropriate avenue we should consider that could prove more financially beneficial for us that another?????
Hi fifintone
Welcome to the forum. I hope you enjoy your time here and get some wonderful ideas.
I'd suggest you both decide on an area of investing that really "grabs" you and zone in on that. If it happens to be real estate, you've come to the right place, as there is a large range of diversity here and that diversity will allow you to drill down and find you're niche.
If I was in your situation I'd be working out the cash flow position of both your properties, if they were rented out. Once you know if they would be negatively geared or generate positive cash flow, future decisions about those properties become easier. At this point I'll assume you want to live in one of these properties.
If either of the properties will generate positive cash flow, I'd rent that one out and live in the other. If they both would generate positive cash flow, I'd be renting out the property that is most cash flow positive. If they would both be negatively geared, I'd live in the one I'd prefer to live in and sell the other so that it generates on going positive cash flow, i.e. on-sell with vendor finance.
With the positive cash flow from the property that's been sold with vendor finance, you may then be in a position to continue building your portfolio by adding a negatively geared investment property (IP). The goal being to have the property that's been sold with vendor finance, support the new negatively geared IP.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
You have just entered the financial maze of life, assuming you are young, the choices get even more interesting as you make more money….
Go to your local propertry guru, you need a complete 3-4 hour options session……
Check out some ideas that you may have to consider…..
The following gives you an idea of the complexities of financial advice.
1. Plans in relation to health, income insurance, Trauma, Life/TPD (term or whole of life)?
2. Asset protection-general insurance (house, contents, Liability, Indemnity etc)?
3. Tax Deductible Debt v Non Tax Deductible Debt
4. Fee’s and charges charged by banks and other related industries?
5. Your own home and tax benefits- Owner occupied exemption, CGT exemptions
6. State and Federal Grants for homeowners.
7. Mortgage Broking concerns- interest rates, variable, low doc, LOC, fixed (short v long-15 years), 100% offset, investor loans- tax deductible set up, Records to keep for tax deductions, Consumer credit code, LMI, Capacity
8. Purchasing costs of a home- government search, conveyancing, P&B
9. What is capitalising interest? Sub accounts?
10. Are you in the property business?
11. Business structures, Sole trader, Partnership, Company and Trust ( Bare, Discretionary, Unit, and Hybrid).
12. How does A= L+OE apply to a property business?
13. Why would you buy a house in a trust? This is often not good contrary to the latest hype.
14. Investment property seminar –interstate, are they deductible?
15. The benefits of Holiday homes.
16. In who’s name for taxation and capital gains purposes?
17. Is interest payment tax deductible prior to a house being rented out? What about repairs after the property has been tenanted for income purposes?
18. Land tax- name on title, joint tenants, tenants in common, % effect v taxable income v Capital gains tax
19. Joint ventures?
20. Expected rate of return v inflation (opportunity cost)
21. Commercial v Residential v Public Trusts v Syndicates v Trust
22. Do you want to retain your present home/ what are your house plans or areyou planning to move within several years?
23. Rent v Buy, Shares v Property
24. Employment situation and taxable income?
25. Non -Tax deductible debt: credit cards, hire purchase and leases of domestic nature. What effect do these have on your mortgage or loans available?
26. Depreciating assets v appreciating assets – What are these?
27. Free cash flow- How can I improve this situation? How do you structure yourself to afford more property.
28. Income Tax Brackets and Capital gains Tax.
29. Age profile and the ability or risk that may be taken?
30. Should I pay off my home?
31. Mortgage repayment calculator? What can I afford to repay?
32. How can paying off my home be accelerated?
33. Negative v positive geared, The upside and downside to both of these?
34. What is OPM, leveraging, equity, and collateral?
35. Where to buy, unit/house, rental yield, new/old, price range, pool etc
36. Management issues with properties. How to avoid these?
37. Can someone house share with me to help pay the mortgage?
38. Strategies and tricks?
39. Co-owners with friends is this a bad idea?
40. Depreciation v Repairs v Capital Improvement
41. Loan cost write off
42. What is the Cost base for CGT and the trigger date?
43. How a line of credit can be so wrong?
44. Pre-paid interest and variation to PAYG ( form 1515).
45. How Lenders Mortgage Insurance (LMI) is of no financial concern.
Sorry, but this is Why you cannot have such a large open ended question solved on this site. A question such as the above will get a response that may cover only one of the above topics – If you went away to make a decision based on one, two, or even three of the facts above then you are short changing yourself and the ability to make a valid decision for your future.
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