Well I am quite surprised at the lack of response to my earlier question today re taxation lawyers and the benefits of using them. It has been suggested to me that rather than utilising a financial advisor it may well be more valuable in the long run to utilise a tax lawyer that has the expertise on how best to not just minimise tax as an objective in itself but rather how to maximise our ‘after tax returns’It may well have been already discussed to death on this forum, in which case apologies for bringing it up.

cheers and happy hunting

dosser

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Just sharing my experience from about 3 years ago, when we didn’t know better.
We brought a townhouse and 2 apartments of the plan, and didn’t fully realise that this builder would be charging us progress payments.
The upshot was, a lot of financial stress, meeting progress payments on our income with no rental income for quite a few months.
We ended up selling the townhouse, minimal profit and many months later, having had them rented first, the apartments at a good profit.
If you are now building two units, and struggling with the mortgage payments, you should consider selling at least one off the plan.
I certainly slept better, having reduced the financial burden.
We do wish to build another townhouse on our own dual occ. block but are getting some rent from the existing house and plan to sell another subdivided block of land outright, before building to improve cash flow.
I don’t think a cash flow positive property will necessarily make it any easier.
I don’t want to be in such a tight situation again. Ultimately, you want to be able to sleep at night.

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Cheers Regina

Hope that this posting comes out Ok.

We bought the townhouse we now live on off the plan and financing it worked out well (although we did lose out on stamp duty). I guess my main concern is that we will be able to finance the two town houses we are building, but we continue to utilise the increased equity in our other properties to finance these deals. In short we have a number of properties but with dwindling equity in them.

I would love to be able to hang on to the houses because of the rising of value of property in the area,however ensuring that I have enough funds to manage it all is a bit risky in light of the current world crisis with Iraq etc. I appreciate your response Regina and will keep the forum posted as I act on advice received.

cheers

David

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Hi dosser,
Sounds like you’r negatively geared and are having difficulty meeting your repayment obligations.

You’ll probably get a lot of people recommending you go out and buy something cashflow +ive to balance the equation – nothing wrong with this strategy but it doesn’t sound like an ideal time to be doing it now.

Ae your loans I.O or P&I?
If they are P&I, i’d think about refinancing to I.O to help your cashflow, and also perhaps locking in a 3 year fixed rate while you’re at it to give you some certainty for future budgeting.

You have to think about your future goals and what is the best decision to make to help you move closer to those goals. Will selling or holding these properties bring you closer or further away to these goals?

If you intend to continue with property investment, i would hang in there if i could – if you’re able to manage on one salary. Perhaps think about selling one of the new properties to help reduce debt, and/or to reinvest in something cashflow +ive. Rent out the other property and ensure you get a depreciation report done to maximise your deductions.

Maybe you could also review your rent on all propertiesd and see if a small increase will make much difference and bring some relief.

Some may be able to provide more specific and better advice if you supplied us with some figures on your rental, loan repayments and values.

All the best with it,
Quentin

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