Hi Jojo,
Have you talked with the Agent re taking “vacant possession”? This usually leads to a scenario where the Agent then discusses the “change of landord” with each tenant, and introduces to them the likelihood of a rent rise.

Depending on each one’s circumstances, they might choose to stay and pay a bit more, or they might choose to leave. Of course, this means you may need to find FOUR new tenants – but discuss that likelihood with the agent too. You would need to know how much competition is out there from other units to rent, etc. Playing the “vacant possession” card allows you to flick-pass the problem to the seller. Of course, any existing leases might need special consideration (see your lawyer re this though).

Or, flip side, if the top 3 are good people, and you want to keep them around, maybe take them on as is, but introduce discussion re “What else would you like to have in your unit?” They might be wanting to have air conditioning, or a new oven, or a fresh coat of paint. Whatever it is, look at HOW you might be able to make that work, in return for an uplift in rent. e.g. one might tell you “WE nearly left to go to another place because it has a new kitchen. We would be happy to pay an extra $20 a week to have a new kitchen.” Now, you could borrow the money needed to renovate the kitchen – like this :-

1. Expected cost to renovate = $10000
2. This can be a likely Tax deduction (but check the circumstances with your adviser – not all items may be deductions).
3. This may add an extra $20k in Equity for you (market value lift because of the reno).
4. If borrowed on a home loan at 5%, this costs you an extra $10 a week in Interest (close enough).
5. The tenant is happy to pay an extra $20/week (sounds like a 100% profit to me, even without Tax deductions)
6. Any old items replaced are written off in this FY, adding to your deductions, and the new items fitted allow MORE of a deduction in years to come.

By the way, I have heard of some who can do a kitchen reno for way less than that, so my $10k is “a shot in the dark” just as an example.

Can something like this work for you?

Benny

Hi AB,
That appears to be a US-based website. I am sure such a product is available here too – akin to a Life Policy that pays off the house if you die, yeah? Not to be confused with LMI (Lenders Mortgage Insurance) where you pay a premium to protect your lender.

If the above scenarios are covered through the Super wouldn’t we be over insuring ourselves by paying a premium for MPI?

As you say, if you believe you are suitably covered by your Super for Death benefits, then this is just one more Insurance that may not be necessary. This would be a very individual thing – some like to mitigate all risks at any cost, while others tend to be more casual, and would not spend on something that likely won’t happen for a while, and, when it does, there will likely be heaps more Equity sitting in the properties to leave behind a substantial nest-egg.

I’d be interested in reading what others say too,
Benny

Hi Bond,
Welcome to this place – it is good to see you already drawing on the collective knowledge of this place, and it sounds like it is going well for you. Some good answers there from those who know.

I’d like to add a bit too – and that is simply this – it could be possible to borrow up to 90% on your Mossman IP. LMI would come into it, and it might be worth maximising the loan to 88% (talk to your Broker). My point is simply that all costs of this property are in “Tax deductible space” – so keeping its costs higher could make sense, while keeping what’s owing on your PPOR lower.

A “warts’n’all” look at your finances by a good Mortgage Broker would be advisable though before taking action. There are lots of little twists and turns – and your situation will help to dictate which twists you utilise.

Benny

Hi Chattaway,

In case your question is looking for guidance in print, let me direct you to Jason’s recent Article :-
https://www.propertyinvesting.com/how-to-invest-in-real-estate/

Look in Chapter 3 – which is all about goal-setting. It provides a lot of practical commonsense in writing – e.g. the bit about “half life, Third Value” (you’ll see when you get there, and then you will go “Sure! Makes sense!”)

Maybe some of that can help you formulate your own ideas,

Benny

Hi Tim,
Your title mentioned an 8% fee – is this a number that has been quoted to you? It seems way too high to me. At that kind of rate I would be looking for another alternative !!

I was interested to hear you have started a company. Do you want to share what you do? e.g. a company that does reno’s, or developing, or sell Real Estate, or something else?

Benny

Hi JJ10,

Depending just where this house is, could you try contacting a local glazier. Seems all you need is someone to “rubber stamp” the work done by Stegbar – for a few dollars, or a carton !! ;) Hell, you’d probably pay a goodly amount to have this behind you, wouldn’t you?

But really, I have no blooming idea !! Hopefully one of our members who is in the building trade might be able to step in. Truckloads of luck !!

Benny

PS Is there a “Building Ombudsman”?

Hi Rillanon,

So we should actively try to get our third loan for the house from a separate bank.

By that, I think you mean “The loan that has the new IP as security” (not the loans that exist against your own home). As I think things would go:-
1. You would have an existing Mortgage against your PPOR (own home)
2. You are looking to borrow an extra amount to provide “Deposit and Costs” for an IP – this is a second, separate loan against your own home.
3. The “third loan” is the one secured by the new IP (probably around 80% of the value of the IP. And yes, THIS one could be held by another lender without too much drama. But talk it out with your adviser re all aspects of whether this should be a separate lender, or your old one.

Just because I chose to keep my Home lender and my IP lenders separate, this was almost 20 years ago – some things might have changed, so check what is right today with your adviser.

We have a couple of companies in mind from this forum

Some good people on here – you should go well,

Benny

Line them up in an appropriate order, and be wary of booking them all in too close together in case one attends later than planned.

Good one, Jacqui !! Such an important consideration….

Benny

Hi Novice,
Welcome aboard !! It is good to see you getting in and posting – that is what a forum is best for (sharing ideas and information). I hope our members are able to help you out.

But first, please provide us with the Council involved – different laws and by-laws apply depending on which State and/or Council is involved. Without that, any answer can only be generic at best, and plain mis-leading at worst!!

Benny