Hi I would really appreciate some advice. I currently have two houses in Canberra, one we are living in which is worth 300K approx and only have 140K left owing, the other we just bought to live in 407K which we had to buy with an investment loan (don’t ask, the bank’s idea). What we are doing at the moment is to rent out the new place for 6 months so we can get half the stamp duty back in our tax and then switch houses and live in our new one and rent out the old. I want to know if this sounds like a good idea and when will my current place be cashflow postive, rent expected (on old house) is between 250 and 270. We have already tried to sell our current house, but no buyers are around, we’d rather keep it as an investment anyway. I have also tried looking for cash positiev houses in canberra, there are none! Are they only in small towns? Thanks! D
Hey Scullie,
A coupla quick thoughts – if you are keeping the old house as an investment with debt level of $140k, it would go close to being +CF on those rents you mention. Suggest you change your repayments to Interest Only on this loan asap – there is no point reducing this debt if you are going to keep it, and about to have a large debt
on an owner occupied property (no tax concessions there..). see if your bank will allow you to pay extra/100% offset to start reducing the new loan asap – reducing the new loan should be your priority if it is to become your residence..Cheers,
theloanarranger
Hi theloanranger,
Thanks for replying. Well that’s good news that my current house is almost cash positive. Just so I get this right, I should stop paying regular repayments (Line of credit) on my current place and put them towards the new place instead and just pay interest on my curent place. Is this becuase once my current house is rented out it will be paid for by the tenant and all the interest etc will become tax deductable etc and the new place will not. I see, that is very good advice thanks! Is there any chance your good at working out cash postive properties and can tell me approx when my current house will become one?
DScullie
use Steve’s Cash On Cash Return calculator, and plug in your property figures..easy, Cheesy, Japanesie..[buz2]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Hey Scullie
I’m looking for a rental in Canberra – will you let me have my two dogs? Is it in Belconnen?
When you ask about your new place being cashflow positive, it won’t will it? You’ll be living in it, and therefore will receive no rent etc.
Before you stop making the payments on your soon to be IP, I’d check your loan terms let you do this – or you might need to get that sorted with the bank.
Cheers
Mel
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