Hi Peter

It’s never been easy.

I’m one of the much despised baby boomers. We had no mobile phones, credit cards or access to easy finance, no first home buyers grant or subsidised stamp duty, if you wanted something you saved for it.

Housing finance would only lend 66% of valuation – yes you had to save one third before they would even talk to you. Then we went through the late eighties/early nineties with up to 18% interest rates. Lots of people lost their houses and had to deal with negative equity (owe more than the house was worth). We rented for 3 years before we were able to get into our own home. a fairly basic 3 bedroom brick box.

Some suggestions?

Median pricing is the half way mark, half the houses are below that figure. Why not start out with something cheaper – say a smaller unit, not a flash new one with gym and pool but something you can do up a bit.

You can do it if you want to.

(and by the way, we also had to deal with
“You kids don’t have the drive…….
– When I was your age………….
– You don’t know how good you got it………
– seems to happen in every generation.

I just checked out realestate.com, and in Bunbury there were 15 homes listed at under $300,000, also a 2 bed unit for $188,000. So there are cheaper properties out there.

Marg

These “interested buyers” may or may not exist – it’s a common ploy to get vendors to sign up with agents.

Check out other agents in the area and their charges.

You will probably have to sign an agreement with the agent for him/her to act for you, just be careful about signing up for a long period. I reckon 30 days is quite sufficient to begin with, you can always extend the time if you are happy with the work the agent is doing for you. If not, be sure to terminate the agreement IN WRITING and keep a copy.
Marg

Just done a quick add up of your figures. Total valuation is $1,040K, total loans $932K which is a difference of $108K. Which also means your LVR is not 80% but just under 90%.

How conservative are your valuations? Even if you manage to get contracts at valuation, you are up for agents commission, which would be…what…$8,000+ per property? That leaves $84K.

What is your “gut feeling” about how the market where your properties are is heading? Remember there is every likelihood of another interest rate rise next week. But just remember that your crystal ball is just as good as anyone else’s – no-one knows for sure where the market is going.

The only practical suggestion I can make (if you decide to sell) is that you consider keeping the 2 bed unit at Auburn, and bring the loan to 80% which is $160,000. This should give you roughly $40K left over to consolidate your position and kick off again when you are able to. Or maybe the Chiswick property, but it may be a squeeze with one bedroom and possibly not affordable.

It is not all doom and gloom, you have certainly learned some lessons along the way and at 29 you have lots of years ahead of you to catch up. At worst (if you decide to sell everything) you will come our with approx $75K, not bad for someone your age.

Here’s something I have learned along the way – I call it the “sleep at night test”. If you are so worried about an investment that it keeps you awake at night worrying then it is not worth it. You should be focussing on the new little person in your life.

You have already absorbed all the buying costs, so explore every avenue to keep the properties before selling.
Can you and your wife juggle jobs so that someone is home at all times?
Can your wife work in the evening or at night?
Can you take on a second job?
Would any family members or close friends be able to help out, even one day a week so that your wife can do casual or part time work?

$10K would be a more practical emergency fund, I don’t know many people, even well off ones, who would have $100K sitting waiting for an emergency.

Get professional advice, I am no expert. At the very least speak to your financial providor, they may have an idea you have not thought of.
Good luck!
Marg

Best to check with your accountant or telephone the Taxation Office or even check out their website – http://www.ato.gov.au

My understanding is that rent, interest etc are claimed in your income tax return each year, and the capital gains tax is calculated on the profit, i.e., difference between purchase and selling prices with buying and selling expenses allowed for, then reduced by 50% if you have held the property for more than 12 months. This amount is then added to your taxable income for the year and tax is paid at your marginal rate.

Watch out if you are selling close to 30th June. The capital gain is triggered when you sign the contract. By signing in July you don’t have to declare the profit (and pay the tax) until the end of that financial year.

But I’m no guru, check it out.
Marg

Sorry , I would have no idea. Perhaps contact a local bank and ask, most financial institutions would have similar rules. Or check out the bank sites on the web. Also check out the interest rates applicable.
And at the same time, I recommend you check out the insurance situation to make sure that suitable insurance is available in a rental caravan situation.
Margaret