Forum Replies Created
Great Scott! – Don’t be discouraged by your mates rellies and friends – haven’t you heard the analogy of a crab pot? If a crab gets in with a bunch more, and tries to get out, the others see him and pull him back down. If he keeps trying, they pull off his legs to stop him.
It’s the same in our culture – if I get up at work and say! That’s IT! I am going to start investing so I can quit in 5 years, they would all laugh and scoff, and if they saw I was serious, the jibes would get more serious. Finally someone would come and “have a talk” with me and cite examples of why it can’t be done.
BOLLOCKS. there’s plenty of people who have made a decision and thought THATS IT! I’m doing something RIGHT NOW.
You’ve made that decision already. Don’t waver. Get on with it!
I am copping a lot of flak, imaginary and real from my rellies about selling up my share portfolio (see “Sell it or keep it thread”)
But hey – did these friends and rellies become independently wealthy? Probably not!
Go for it Scott! Determine in your heart not to listen too closely to advice from people who haven’t seriously been having a go at their own success!
Yay! I finally made a decision last night when talking to an advisor/friend of mine. (older & wiser)
I will sell the margin lending portfolio. I have set this in motion TODAY.
Then I will temporarily Park some of the cash in IP 2 (under performing one), spend small amount (under 3K) getting ready for market and sell it once the 12months+1day CGT thing is up. (2 months time)I will only incur a small CGT bill, my wife will incur a small one (if at all, due to not much income) and we will be a bit freeer!!!
WOOOO. Thanks for all your help so far everyone.
I DEFINITELY plan to save 20% deposit from now on, I can see that’s a much smarter way to do things.
In other news – my rental manager yesterday from IP 1 has said the tenants are moving on, and she is increasing the rent to $245 per week. WOW, that makes a big difference too – I think it’s starting to GEL.
Rant rave rant rave. I MADE A DECISION! yay.
sorry, a bit excited.After all – “a double minded man is unstable in all his ways” and once I make a decision it sheds a big load off my mind.
thanks Kay. Some people I talk to basically say that selling a property is equivalent to abusing kittens and so forth.
We have chosen for my wife not to work at a paid job, we have an 18 month old child. She used to work in childcare and we decided not put our own child in.
She is starting up an AVON business again. I have considered taking a night job… We deliver papers.
I am realising that there is a balance needed – I beleive we have gone too neg geared and our balance is off. To save our marriage, health, etc, I am quite prepared to do what it takes to do this.
Thanks for all the replies people!
Here’s the breakdown of the numbers:
PPOR – worth 279K
Mortgage 118K
Repayments per month 1026.67 (P&I)
*** Note – we have sold this and bought a bigger house for family reasons.
New PPOR from Oct – 298K
New Mortgage ~150K
New repayments 1305.09 per month
Margin Lending/share portfolio
Curr value: 43K
Curr Loan : 25K (Int Only, fixed)
Equity : 18K
Monthly contribution (was)-$250
Monthly interest costs -$180
Total monthly costs (was)-$430
Now (stop contributions) -$180
Divedends(Reinvested) $1500 / year
Growth ~10% on average
—-
Inv Prop 1.
Curr Value: ~250K
Curr Loan : 177K (Int only, variable)
Equity: 73K
80% Equity: 23K
Rent : +225 /w
Interest : -997 / month
Rates : -1400 / year
Insurance : -500 / year
Maintenance: -500 / year
Prop M’ment: 9.3% (inc gst) + 5.5 p&petties.
-1147
Buffer -500
Cash Cost -4311 / year
Dep (house) +2500 / year (from tax)
Real Cost -1811
Cash Cost 150 /monthInv Prop 2)
Curr Value: ~82K
Curr Loan : 80K (P&I intro rate)
Equity: 2K (not really accessible)
80% Equity: 0
Rent : +135 /w
P&Interest: -473 / month
Rates : -1300 / year
Insurance : -180 / year
Maintenance: -350 / year
Body Corp -1000/ year
Prop M’ment: 8.25% (inc gst) + 5.5 p&petties.
-645
Buffer -300
Cash Cost -2431 / year
Dep (house) 0 (no taxable income)
Real Cost -2431
Cash Cost 202 /monthTotal Cash Costs -180
-150
-202
Current cash cost -532 / monthAdd on my PPOR costs and suddenly:
>100% of incomeSorry about the rant – it helps me solidify where I am at.
My current thought is to sell
Inv Prop # 1, realise Capital Gain, pay the 14K CGT, put the rest in my mortgage, and enough into Inv Prop # 2 mortgage to keep the bank happy. This will reduce the costs there as well.Maybe I only have to sell 1 at this point. My annoyance is it’s the “good” one. It’s newer, and easy to rent. The other one is older, needs work and rents slowly. (vacancy)
At least I won’t be as exposed to interest rate rises.
C@34 – yes they are cross collateralised.
I shouldn’t have to sell all 3 hopefully. If I sell Inv 1 – I will instruct @ settlement to reduce Inv 2 Loan to 80 % of prop and then plunge rest in to mortgage.Wow Slumlord – that’s an interesting way to do things. Wouldn’t that reduce your serviceability however? More loan with same income?
Does it actually work for you?I would imagine that would make it even HARDER to purchase property in the future.
I only ask because this is in effect what I did. I borrowed extra against a (nearly) neutral cashflow property 12K. This extra money, I then used $3K to build a fence, 3K on Air Conditioning (sweat sweat)
2.5K to deposit on another nearly pos geared property (which I also borrowed a bit extra against)
I then ended up with 8K extra. This money was eaten up within a year of the second purchase by all the negative gearing ($400 per month + existing margin lending of $450 per month) lets say between 700 – 800 per month.This = 8.5K
1 year later and I am now in the position where I have to sell one or all three assets to stop the bleeding. I am kicking myself.
If I had not borrowed the extra, the neg gearing would have only been 450 margin loan (which reduced to $200 interest only this month)
+ a little bit of neg gearing from both properties: maybe $100 per month.I would have been able to service this and keep the lot instead!
I would not recommend borrowing – however Steve Navra seems to on the somersoft site – but his idea is ONLY to purchase more and should ONLY be used in asset building phase – not to control bleeding.
I would describe it as follows:
It’s like getting an IV to control chronic bleeding without pinching the artery off!my thoughts. from personal experience.
On the other hand – I will have made 50 – 70K capital gain which I can plunge into my own mortgage once sold up, and start again with a positive CF mindset!
By the way does anyone know of a Brisbane Solicitor that thoroughly knows and deals with Wraps / Lease Options?
Similar for Financiers/
Thanks l_au.
Didn’t your mum ever tell you ‘don’t deal with the devil?’ [biggrin]
I have booked out the money secrets of the rich book from the library. I should get it soon.
Like I said, I am pretty short on Cash at the moment.
Thanks Desk Top; I’d love to do the renovation if I could find the time, or I had money.
Currently I don’t have either available to me. I would have to borrow the money, and after a long hard think (enforced due to 3 days bed rest) I have come to the conclusion that I might just be in the poo.Marissa – why did I borrow the extra?
Naivety – to use for holding costs – ie rates / unexpected expenses. I also thought that I would be able to use the money to renovate.We’ve had the second place for a year now and haven’t done too much except for regular maintenance.
Here’s the situation:
We are running very short of cash.
have 3 negatively geared investments,
1 Unit – costs $180 -200 per month average
Return is 8.88%1 house – costs $150 – 200 per month
Return is 6.59%1 margin lend – costs $200 per month in interest
(I just finished contributing my last contribution, now the loan is fully drawn down. Before that it was $450 per month (250 contribution, 200 interest). Yikes.
Total monthly input is now:$600
The surplus money is now all gone, our own budget is going backwards to try and pay all the bills and I have woken up.
It looks like I made several big mistakes.
(Duh! some of you might think)My thoughts is to sell all three investments
(break even on unit)
and start again.
Dump the profit in my own mortgage so we are in a better situation.
We will start again.
Save 10% this time and start from cash savings
and put 20% deposits
rather than borrow 110% like we did beforeMy thoughts – could be the illness speaking though. I feel pretty bummed about all – I feel like I’ve gone too high too fast and fizzed out.
Any alternatives anyone?
Regards, alwayscurious
The Brisbane Investors Group meets every month at Salisbury State High School Library on a Tuesday Night
The next one is 31st August at 7pm. Cheers alwayscuriousThanks loanarranger.
Here’s the breakdown of 2BR unit.Annual
Loan repayments: 5676 (P&I at intro rate)
Water : 100
Rates 1300
Maintenance : 500
Body Corp : 1000
Insurance : 200 (contents only, unit.)
Let fee 148.5 (1 week + gst)
Total costs 8924.5Income 50 wks@135 – 8.3% mgment fee
6750
Total -2174.5 per annum
Per month -181.This is in my wife’s name and she does not earn a recognised income so there is minimal tax advantages.
We made the mistake of beleiving the agent who convinced us that 150-160 per week on a 2br unit was reasonable. It may have been – however the market was flooded with rental units shortly after and still is. [angry2]
Any ideas?
