Need help – which structure should pay my income

a) Hire yourself as property manager for 2 years.
b) only take out commercial loans, or deal with the commercial lenders so they can assess your loans as actual, not at 7.2% etc.

Sorry Robbie that is not correct lenders certainly consider rental income when assessing your serviceability for future loans.

Many lenders merely take 80% of the Gross rental income and then deduct your usual expenses (assume you don’t have any loans against the properties) and your living expenses.

I built a $30 M unencumbered property on rental income alone.

Cheers

Yours in Finance

Robbie yes received your email although as mentioned i am currently in Iceland with limited internet access.

All lenders take a percentage of rental income (usually 80%) due to the fact you have expenses such as Council rates, insurance, strata levies etc deducted before the net income.

In many cases lenders also cap the rental yield at circa 6-6.5% so if you have a property which you are getting 9% out of then only 6% yield will be considered.

Most lenders also sensitize your existing debts in accordance with the APRA guidelines so if you have a loan at 4.5% interest only then loan is considered a liability at 7-7.5% on a principal & interest basis.

In saying all of this it would make no difference whether you had PAYG income or not the formula calculation is still the same.

Cheers

Yours in Finance

Robbie Venter wrote:

I have been using the income from my job to get loans. Given that the banks don’t really regard rental income as a legit form of income, how can I use the income I am getting from my properties to pay myself a wage which the bank will see as a solid income?

Which bank doesn’t regard rental income as a legitimate form of income?

All the lenders I know of take anywhere between 75% to 80% of gross income.

Cheers

Jamie