lifexperience, I’m wondering how it is that your company can keep the rent? If all they are doing is ‘collecting’ it for you, then any that they keep must surely be their ‘management fee’ which wouldn’t be allowed to be excessive?
imooney, welcome to the forum, and congrats on your purchase.
If I were you, while ever you had a PPOR debt, I would keep the IP as interest only. Put all extra money towards the PPOR debt, and you can then reborrow it as a tax deductible loan to purchase further IPs.
You just renegotiate with your bank when the term is up, or refinance altogether to another bank.
As Celivia said, I would first find some clothes. []
2. I would make sure that my puppy dog was ok – and the rest of the family’s puppies too, and make sure they had food.
3. I would find a place to ‘set up tent’ or a friend’s lounge/floor to crash on. Or maybe move rural to a ‘cheap’ house.
4. I would go and ask Macca’s for a job []
5. I would look for a joint venture partner, and buy some CF+ places – even if they were mining towns with short life spans. Money needed NOW!
6. I would then look at more JVs, but also leapfrog into the next house via renos, or CG etc.
7. Then I would buy a motorbike, and make a little ‘box’ that will sit in the back, that my puppy can sit in (saw one on tele tonight on the ‘stupidest drivers’ show, and travel with my puppy.
In answer to SIS’s original question – I am so a negative gearer it’s not funny!!! In fact, it’s not funny cos it’s cost me quite a bit over the years!
However, I would not buy a house with less than a 6.5% rental return. This used to mean that at least the rent covered the interest. Not quite anymore though.
At present, my portfolio (3 townhouse, a 2 x 2 bed flats, 3 2 bed units) is running at slightly positive in the rent vs interest. I have to pay the other expenses out of my pocket – although my tax return covers all costs.
I’m more than happy though, as my equity has quadrupled in the last two/three years.
Desk Top, when Simon was talking about the 65%, he was suggesting that the bank would take both properties as security – your current $240K one, PLUS your new $240K one, and will happily lend you up to 65% of the total value of $480K. This would cover purchase price plus costs, and perhaps give some ‘sleep at night’ money.
OPM is simply Other People’s Money. Banks, friends, credit unions, solicitors funds etc. Not yours.
Mini, when/if you talk to that valuer again, ask him which bank they would provide the ‘highest’ valuation for, and check out their terms – you may get a good deal from that bank for a loan, and if you get more than the other banks will lend – well, laughing….
ok, so in my scenario above, i’ve told the bank i earn $100K so they will give me the loan. My taxable income is $10K after all depreciation deductions etc. etc. It’s fair dinkum, and the taxman accepts that I’m not lying to him.
Then what? I hardly think they will be the ones who will charge me with fraud for telling the bank a different story. The ATO wants their taxes, they don’t care about the rest. Besides, I could actually be earning $100K before all expenses – like a business does, but manages to ‘spend’ everything to have no taxable income. Can still afford the loan though.
If you have the positives cancelling out the negative, that means any extra you were funding yourself you could put towards the next property.
If there is no growth in the positives, you will be relying on savings, and the growth of the negative to provide the equity for the next purchase, but it depends if there is any growth in any of the properties I guess.
As to the rental research, talk to the real estate agents in the town, and check out the population trends etc. this should give you a good idea of what will happen either way.
PK, that sure is some incentive not to sack your PM!!!![]
We recently sacked ours, and unbeknown to me, they charged us a 2 week ‘termination fee’, but only could charge it for fixed term leases. We also had to give them 90 days notice. Both of these conditions are different to the REIACT ‘recommended’ conditions, which say 30 days, and no termination, but that’s what the contract said.
I threatened them with REIACT, and Fair Trading etc. cos they were shite managers, and they still took our money, but eventually (with bad grace too!) handed over our files to our new agent.
With regard to the Bond, you may not have to do anything, or you may just have to fill in a form to send to the Bond people saying that you are now managing yourself.
Residex can be useful to give past sales history, however, I think the sales might be a couple of months old.
I think real estate agents subscribe to some of these services, so you may well be able to ask some of them to provide you with the same info? Doesn’t hurt to ask anyway…
I didn’t think that they were automatically entitled to half the assets that pre existed the co habiting, rather that any assets/growth achieved during the period of living together is fair game. I think it can also be looked on as who put the money/effort in to gain these assets.
If you are planning on ever making your current PPOR into an IP, then you (in my opinion!) are much better off having an offset account. this way, if you move out (to a new PPOR), you can take all the money in the offset account and use it to purchase the new PPOR. The entire loan taken out for previous house then becomes deductible because it is an IP.
If you had a LOC, and paid in, and spent, and paid in, and spent, and then redrew to buy your new PPOR, it would not all be deductible. What you redraw for investment is, but you would need to separate the loans to make it clear at that point.
If you don’t plan on making your home an IP ever, then use a LOC.
A good (fun) way to get the kids involved would be to see if you can get hold of the Kiyosaki game Cashflow 101 (board game or on computer) and play that with them. It’s ‘low stress’ learning.