My partner and I want to buy a house. He has a house worth $250K oweing $110 which we don’t want to live in – but could sell or rent out for about $200 per week.
I have no deposit but earn $50K pa. He does not work at the moment.We cannot decide what to do about finance? Do we rent his out and borrow more to buy another one? Do we sell his to have less borrowings…. Very confused.
hi – i just answered this question in your other post
“If You never never ask, you’ll never never know”
Tammy,
What are your goals?
If you want to build a portfolio of property then perhaps keeping it is a good start.
You should be able to get finance and keep it if that is what you are asking.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
In response to your answer, there are several important considerations including;
1. Debt to income ratio i.e. how much of your periodic income [monthly/annual] is paid out on living costs – will this increase your risk if you decide to incur more debt i.e. buy another house.
2. Your financial goals i.e. do you have an interest in creating wealth through real estate – the more real estate you acquire, the more time and money is required to maintain the properties.
3. Risk i.e. as noted above, the more debt you incur the greater your risk. Will acquiring another property increase your exposure/risk elsewhere i.e. if money is required for medical expenses or necessary travel, for example.
Furthermore, you must ensure any loan is sustainable and payments will not be missed, which can result in the bank seizing your assets – including the current house.
4. Location and market conditions. If the market of interest has not demonstrated an increase in valuations [comparable homes in same location] i.e. over the last 3-5 years, then acquiring another house may not be the best option.
If the market has increased and reputable advisors [not RE agents] suggest capital gains will continue, then acquiring another house could be a sound investment – taking the above considerations into account.
Likewise, your decision to sell the current house is somewhat reliant upon market conditions. If the rent meets monthly costs [give or take a few dollars] and you are confident the market will appreciate over time, then there is no point selling the house unless you have to.
5. If you do decide to buy another house, the condition of the house/property, amenities, neighboring properties, etc are important factors to consider also.
From an investment perspective, choose a house which you are confident will remain in “demand” and not incur significant cost [unless it is clearly a value-add].
Spend the money on reputable building inspectors and advisors, because it reduces your risk and generally ensures you are buying a sound investment.
– As for the deposit, speak to a mortgage broker. The equity in the current house may eliminate the need for a deposit.
— Michael
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