Cash flow issue

Viewing 6 posts - 1 through 6 (of 6 total)

Dragon72
Participant
@dragon72
Join Date: 2003
Post Count: 3
January 16, 2004 - 2:12 pm
Evening all,
Some input needed from the experience gathered on the boards.
We have owned a unit in sydneys east last 3 years. Rented out at 380 per week, presently ‘worth’ ~$600K. Negatively geared as wife & myself in highest tax bracket. Had to drop rent 15 months ago to get present tenants in. CF -ive $4K p.a.
The issue….
Wife about to have a kid in June so 30% income gone for a few months and she will most likely be part time for a while. THe squeeze is due to sold an IP last year and bough home in inner west 10 months ago. asset ok cash poor
Timing not great but nature has a way of doing this to us mere humans!
Would love to keep unit due to unique features/location but my income and rent will not quite covr the 2 repayments and cannot live on $0..
Options
Sell
sell part to family
borrow off family
wrap/lease option
Any others?
melbear
Member
@melbear
Join Date: 2003
Post Count: 2,429
January 16, 2004 - 2:28 pm
Dragon, another option is to establish a LOC or offset account against the IP, and borrow some extra $$ against it – BEFORE your wife stops working.
If you get, say $20K (or more, whatever) and have it sitting in the offset account, you won’t pay interest on it until you use it. then you can use this money to fund the repayments while you need to. yes, it is increasing your loan, but not by a massive amount, and enables you to keep it.
Cheers
Mel
Still in School
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@still-in-school
Join Date: 2003
Post Count: 1,844
January 16, 2004 - 9:11 pm
Hi Dragon,
Have you thought of setting up a MISA account,(Mortgage Offset Savings Account) this is another option available?
Cheers,
sis
People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million
The DIY Dog Wash
Member
@the-diy-dog-wash
Join Date: 2003
Post Count: 696
January 16, 2004 - 10:48 pm
Maybe you can acquire a cashflow positive property using the equity in the unit and have net passive income to help offset the unit mortgage.
cheers
LeighK[]
Carve your own path and lead the way …
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
January 17, 2004 - 2:16 am
Dragon
It will be hard for a few months, or maybe years (from recent memory!), but you will get thru it.
I don’t like to see people sell. I woulld do what Mel suggested, set up a LOC or redraw now just in case you need it to live on for a while.
Tax time is comming up soon so you may get a nice tax refund too. Maternity allowance also is about $900, and you will get some money from family payments.
If you really get into trouble, could you rent one of your bedrooms out to a student?
As a last resort you could sell, but the process could take around 3 months before you get your money.
Terryw
Discover Home Loans
North Sydney
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Dragon72
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@dragon72
Join Date: 2003
Post Count: 3
January 19, 2004 - 12:25 pm
thanks all – food for thought