Hi all,
Was reluctant to post here as a newbie however have been reading so many posts with sooo much information (& will continue to do so), thought any advice my post might attract re our situation and position might benefit others…
I am 47 year male, my partner 37 years we have 2 IP's 1st 4 bed new house when purchased in 2007 at $369K in Pacific Paradise Sunshine Coast QLD (street name etc for some on here who do seem to request for research purposes) we took 100% loan and payed mortgage ins, houses in that same street now selling at $425-$435K . We rent this through property manager at $425 a week and have $333K owing with 6.1% int only loan our repayments $950 fortnight.
Second is a 1 bed unit in serviced corporate style apartments Kangaroo point Brisbane purchased 2010 at $412K fully furnished walk in walk out etc. Loan for this is $433K interest and principal, our repayments $1100 fortnight. We manage it ourselves at $500 p/w exact same units in this complex now selling at $425-$435K, body corps at $4K rates at $1200 P/A.
We have $30K now from tax return & $20K coming from partners' annual bonus, I am on $60K plus & partner on $110K package.
I have hit a wall after reading (most) of Steve's book, and now comments/posts here as i am thinking we are going if not backwards certainly only sideways. I do not want to buy another negative geared property to just have us SAVE tax and pay the bank a fortune over years….
ARE WE TOO LATE? If we keep the 2 IP's we have for capital gain could we now head to positive geared property for number 3 purchase and save ourselves?
Just very unsure now however so happy I have found the book, and all of you at this point rather than not at all or in years to come…
Richard QLD007 especially interested in your idea or point of view as you are a QLD local, (sorry anyone else similar no less respect to any of you… I just have noted Richard in posts to date)…
I very much look forward to contributing where I can (as we learn from mistakes and wins) and learning all I can from all you wisened souls!
Onward and Upward..
Shedin
Never too late – just depends on the strategy you employ.
For what it is worth simply buying and waiting at the moment will be a slow journey. If you continue to buy the type of property that you have been then you will no longer be able to service new loans and you'll be hamstrung waiting for the general market to improve.
In the current market I would be looking for two things; one opportunities to buy under value or increase value. Typically this would be sub-divisions, renovations and small scale developments. These three strategies also provide a higher rent return this improving your overall cash flow position.
Suggest you sit down with a broker and work out what your capacity to borrow additional funds is like at the moment. Obtaining finance is a primary consideration of all property investors and knowing this will help you determine your next step.
I would definitely be looking to balance the portfolio with some high yielding properties in regional centres.
There are a couple of options to investigate: purchase some positively geared property (possibly in growth areas), diversify ie look interstate for cap growth or cf, sell the worst performing asset and buy a quality inner city location, nothing against Kangaroo Point.
Delete the street names – suburb will suffice as scammers may see you as a target if they can identify you from the transactions
Thank you for your replies thus far! My fingers are doing some substantial walking as I investigate, delve, prod and poke all that is out there in PI land..
Cheers
Hi I wouldn't say it's too late, but it seems like your heavily geared – no offense
I would look at reducing some your of your debt
First thing I would do is get in touch with Richard, organize a valuation on your properties and really see what they are wworth a house can be listed for any price but it does not mean that it's worth that much
Also why are your overall goals?
Our goal was to have 8 properties but after our 3rd investment we changed Our goals
We sold two and we have almost paid our PPOR off and we only owe 120k on our other ip which got valued at 380k
Evukate your goals and create a plan
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Hi Shedin
Sorry for the late response to your post but been one of those with applications coming out of my ears and at 12.50pm i am still knocking the out.
Without knowing all of the facts it is difficult to comment but one observation would be that one of your existing securities is a serviced unit and this type of property is certainly not loved by lenders in the current climate irrespective of the lvr.
I am assuming the properties are cross collateralised and to free up equity you are going need to restructure or refinance and that could be harder than you think.
As i say need the full info to advise further but at this time i thought i would throw it in as a possible spanner.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Shedin
Probably time to consult an expert in structured lending – Richard who responded above is your man. I'm sure he'll be able to get you back on the right track.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I do not think it is too late, but I would recommend you to get in touch with a bank loan representative to see how much money you would be able to borrow at this moment to get a new property. Also, I recommend to look into under value property. Often you can find great investment deals to get positive cash flow buying under value and then renovating a property.
Adding to Scott's comments about Kangaroo Point.
Noticed you are paying P & I – is there any reason for this? Can it be converted to I/O?
Being an apartment any growth you get (or not) is inextricably tied to the sale prices achieved for similar units in your complex. You have no means of adding value and the property will just track the local market.
Nothing wrong with cutting loose an underperforming property and redirecting your hard-earned elsewhere. Sure it means, by extension, you could have made a better investment choice originally but plenty of time to tweak your current approach and strategy.
Hi Mattsta
Just out of curiosity – why do you have a link to bigpond money in your signature?
Do you do SEO work for them?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Again, thank you all for the input, I am checking each day for more forums here and more replies of information and advice to this post.
We do have a broker whom we have purchased the previous 2 properties through and whom we are very happy with, but always happy to expand and not have all eggs in the one basket!
Have been in touch with a few of you whom have offered advice here and I so very much appreciate all that we have discussed to date.
I feel Location, location, location is nothing compared to Homework, homework, homework!
Any continued advice, opinions, recommendations still greatfuly viewed..
Cheers
Shedin
Shedin wrote:We do have a broker whom we have purchased the previous 2 properties through and whom we are very happy with, but always happy to expand and not have all eggs in the one basket
Hi Shedin,
While that is all well and good – your loan structure doesn't look that terrific. and I wonder if the loan structure you have is because it was easy to do it that way rather than being the right and better way. Sometimes loan structures are set up because it is easy for the broker.
Now I am not a broker but it looks, to me, as if your loans are cross collateralised. Given your Kangaroo Point is not your standard residential property this makes for an 'interesting' situation.
Just reading your original post – is there a home in your property assets?
Hi Derek,
We do not have a home, we have lived in both the above properties when they were each purchased, we now rent in Sydney. I expect our loans are cross collateralised and probably because we needed maximum loan percentage each time.
Shedin wrote:we now rent in Sydney. I expect our loans are cross collateralised and probably because we needed maximum loan percentage each time.That shouldn't matter.
If the deal can be done with the loans crossed then it can normally be done without them being crossed as well.
Cross coll is generally the result of either a lazy banker/broker or one that doesn't know any different – or a combination of both.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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