hello,
I’m more of a reader than a writer, but now I need to clarify some doubts and I think this is the place.
I only moved to Oz 5 years ago and moved from Sydney to Melbourne 4 months ago. I managed to buy my 1st IP last year in sunshine coast. a 195K house with a 95% loan with ANZ. My wife and I work, $35K and $50K we earn respectively. We don’t have a house of our own. I have a $15K debt personnal loan. I don’t have any money saved because I’m trying to pay the personal loan as fast as I can and the monthly bills just keep coming….
now the questions: I want to invest again because for me is the only way of saving, otherwise my money goes out the window in dinners, shopping, my collection of coins.
1- shall I buy a small cafe I’ve been looking and put my wife working there (she’s a chef)? if I buy it in my name and rent it to her, can it be done? would it be a IP?
2 – I called and sent email to the anz branch manager to ask about reevaluating my IP in QLD and no answer. It ahs been 2 weeks.what to do?I’m getting nervous….
3-in my financial condition, can I borrow more money to buy?
4- please tell me of a good accountant in Melbourne (southeast side, if possible) who I can take my doubts to and come with answers and even tell me of other alternatives. the accountant has to know more than me, not like last time, she knew a lot but didn’t do much for me.I don’t know (yet)much about tax returns and the like so I also need a good accountant to do my tax.
5 – is better do deal with ANZ for the second loan or is it better to visit again the loan broker that helped me with the first loan?I hope someone “listens” and writes back.Thank you
Hi Chincho,
From a servicing and equity issue the information you have provided is somewhat limited and as such it is difficult to accurately determine whether or not you have the capacity to borrow additional funds.
Even if you could I would question whether or not it is the right course of action anyway. By your own admission you cannot save move or direct the surplus towards reducing non-productive debt. Without this habit under control you could find yourself in a a situation many of us wouldn’t liek to find ourselves. The key to successful investing is to get this aspect of your life ‘under control’ too.
It would be very prudent for you and your wife to structure a accurate, yet liveable, budget. We adopted this practise sometime ago and through this have been realistically reduce discretionary expenditure to a sustainable level such that it allows us to invest in growth properties in preparation for our post working life.
Without knowing the area your current Ip is located in it is difficult to determine whether or not it has increased in value sufficiently enough to realise sufficient equity. Th efact you borrowed 95% makes this set of circumstance even more difficult unless you are either prepared to pay LMI again or the property has gone ballistic.
As an accountant it would seem that you would be hard pressed to go past Dale Gatherum-Goss – http://www.gatherumgoss.com – there are a number of successful investors who use Dale’s services. Bear in mind most accountants are only qualified to ‘do your books’ – financial advice as per investments may be outside the qualifications of your current accountant.
I always use a broker for my loans – they can access the producst from a range of lenders and find a loan that suits you rather than making you fit the loan product. A borker who is also an investor is an even better source of advice – as they will be aware of your needs in the long term and can assist you to get the structure right at the beginning of your journey.
Derek
[email protected]
0409 882 958
Property investment advice and researched property in quality locations available.You cuold buy a cafe and rent it to your wife, and she could claim the rent as a deduction. But buying in your own name may not be the best way to proceed. So talk to your account. I recomend Dale too.
You maybe able to qualify for another IP loan, depending on how much rent you are paying and receiving, other debts etc. If you have some equity, you may be able to increase your existing loan to refinance the personal loan debt at a cheaper rate. $15k is a lot and may take years to pay off. Just do it with a split loan to keep it separate for tax purposes.
Terryw
Discover Home Loans
Mortgage Broker
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
I wouldn’t even consider going into the Cafe as it will take at least 6 months to establish the business enough to realise any income irrespective of how you arrange your finances.
Before you go into further debt you need to find a good reliable account and learn some financial mangement skills. You will be heading for disaster if you borrow more money without acquiring the necessary skills to properly manage your debts
Kelvin J Brennan
thak you for the feedback. No doubts I’m going to contact Dave.
Just one clarification: the personal loan was due not to spend in clothes or trips but to pay tax on the profit I got from selling my overseas home.What a rip off….and come on Derek, the coin collection is an investement as well (along with some works by australian painters). thinking of it I do save and invest a lot but probably not in things the banks are willing to look as investments.
Anyway, thanks for the advice. About the reevaluation of my IP, I keep insisting with my bank or there is another way…..
thanks.Chincho
So far your doing quite well. All you need is some financial discipline to stick with a budget. Alternatively “pay yourself first” by putting some money into a saving’s account you can’t access easily. Richest man in Babylon suggests putting a little away each pay (a couple of percent) then as you become comfortable increase the percentage to around 10%. Millionaire next door suggests 15%.
Not sure about the cafe deal Terry is suggesting. Personally I’d seek the advice of a tax expert into account. The taxman does not look kindly to “mistakes”. My missus rang the ATO and got their “advice” followed their advice and was fined. Luckily we keep meticulous records so when we said “on such-and-such date, at 11am, we spoke to so-and-so. Their advice was xxxx.” Potential big (for us) fine averted. Taxman is hated for a very good reason.
Air goes in and out. Blood goes round and round. Any variation is a bad thing
Hi there
I use and am very happy with my accountant in South Melbourne – email me if you want the details.Re ATO, yes indeed, I paid several thousands in tax mid last year and a few months later go a nasty demand for the amount I had paid plus interest. I called them, sorted it out, the problem was theirs of course, but luckily I also keep absolutely everything and was also able to send them the web receipts and evidence it had left my account 7 months previously and all was good.
Also my special technique is that the madder you are with government departments almost in inverse proportion how nice you should be. After all the person you speak to on the phone is not the ‘villian’ and they of course have to ‘speak to their supervisor’ to get it sorted, and I found that they were almost falling over themselves to bend over backwards for me (and other mixed metaphors) with almost *relief* that I wasn’t being the usual ‘this is a bloody cheek, I hate you’ that you just *know* they would get all day every day as par for the course.
Okay so on to the investment thing – yes bills going out faster than income coming in is a spending problem. Tax bills, I know that people do ‘spend’ money earmarked for tax and ‘use’ the money before it is due, however you need to be very disciplined to do this.
I think don’t do the cafe thing either just yet because as people have said business is a whole other kettle of fish. Consolidate first I would say.
If you are going to value and refinance your house, make sure the rent is at market, and make sure you have done any improvements you can prior to revaluing. Read Dolf de Roos’s 101 ways to add value to your property for some ideas. Who knows you may be able to squeeze an extra 10-15k out of the valuation if you did the right 1-5k things.
my problem is how to wait a few years and let a savings account get big and fat. I only bought my IP last year and I can’t wait to invest on something again. Where are all those oportunities of buying a lot of properties without (hardly) put any money of our own ?
MiniMogul, I’d be very interested if you could send me the contact of your account. And by the way, does anyone know a good financial manager or good broker that really works for you?
About improving the IP, I put an a/c a couple of months ago and the rent went up to a beautiful $210 a week. Next step I’m thinking of putting insulation. Let’s see how it goes….
Since I’m at it, I’m tired of poultry farming. Anyone knows a job as baggage handler for Qantas or something?
thanks
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