I have a property that is currently negative geared. Rent is $200 per week and the loan is 125k. I have access to some savings. Should I reduce the loan amount to make it positive gearing or search out new properties to positive gear?
Isn’t $125k over 25 yrs at 6.57% = $196 per week repayments. There are lower rates than this too.
With a good accountant he should be able to get you some tax deductions as well.
Wouldn’t this be positive, then.
Not positive in the sense of +ve cashflow. Remember there are other costs associated with owning property over and above repayments. Need to include rates, insurance, maintenance etc etc, which $4 a week probably won’t cover.
(I also hold my bat aloft and wave to the crowd upon reaching the ton! I want to thank my mum and dad, my fans………)
Guieseppe
Using a professional package with a discount off the Standard VR the payment would come down to approximately $185/ week.
Whilst you stil have to cover the other costs if the property is in a good area and easily rented why not consider using the equity and purchasing a positive cash flow property. A bit of balance and diversification never did anyone any harm.
Cheers Richard
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http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Isn’t $125k over 25 yrs at 6.57% = $196 per week repayments. There are lower rates than this too.With a good accountant he should be able to get you some tax deductions as well.
Wouldn’t this be positive, then.
[^]Sorry it has taken so long to get back a reply. The property is slightly -ve geared and when I posed the question I guess I was thinking along the lines of about 10% +ve gearing. A small reduction on the loan will bring it in to positive but only by about $6 a week. My question perhaps should have been do I try to get it more like $20 a week?[?][?]
GuieseppeUsing a professional package with a discount off the Standard VR the payment would come down to approximately $185/ week.
Whilst you stil have to cover the other costs if the property is in a good area and easily rented why not consider using the equity and purchasing a positive cash flow property. A bit of balance and diversification never did anyone any harm.
[
]Thanks for that advice, It is a possibility I didn’t consider.[^]Cheers Richard
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http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundGuieseppe
It depends how risk adverse you are. Some people like to buy as many properties as quick as they can. If you changed the repayments to IO it would be about $144 per week. This would free up some money for the next one. In my opinion it won’t matter too much if it is positive by $10 per week or negative by $10 per week, as long as it is growing you are doing alright.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
]Thanks for that advice, It is a possibility I didn’t consider.[^]
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