I’m about to slash my wrists…

Hi Andy

After reading many…many replies to this both unfortunate (negative equity…on paper) and uplifting (new baby etc) I thought I’d add my two bobs worth.

First off I agree wholeheartedly with one respondent who mentioned that you did buy the property for a reason @ $500k+. Think back to why you bought…does that still apply? Are you still happy with the place? Also, unless you sell (or are foreclosed) your loss is only a paper one and most replies I read advocate keeping the property because, if you sell, you will still have to pay back the difference to the bank (approx 50-70k) or declare bankruptcy. And bankruptcy is not a pleasant option.

Consequently I’ve seen multiple replies with the view of lowering your expenses to avoid this happening. I’ve seen others with extra income suggestions to raise your ability to firstly cover your debt load and while making your family (god bless your soon to be new arrival) as comfortable as is possible.

I believe you need to do both.

On the expenses side take on board ALL of the suggestions to lower your monthly costs. Think about what is really important and budget budget budget. If, after doing that, you find your personal income / expenditure balance sheet says your income will barely cover the interest on your home (which I suspect is probably the case) then you will need to suppliment your income or your wife will have to do some sort of work so you can put food on the table… even if she is pregnant. Sorry.

Further on the income side you mentioned renting out your unit and then renting out somewhere else. This would be an excellent thing to do ONLY if your rental cost (where you will be living) is less than what you will recieve in rent of your unit. That should add money to your income side of your personal balance sheet and also allow the biggest of your unit expenses – loan interest to be tax deductible (I’m 99% certain…ask your accountant). If the unit is new(ish)…then the depreciation schedule can help immensely in getting back income tax without having to actually fork out any cash…again accountant.

Your situation is not unique. I remember interest going from under 10% to over 17% on the first property my wife and I owned and it nearly killed us paying the interest bill. And we had new ones coming along similar to your situation. You will just have to bite the bullet and work, scrimp and save just as I’m sure most of us have had to do at some time in our lives. But there’s one thing you must never do :- Give up!

Thanks

Ben

Thanks andymitchell figured you were made of sterner stuff.
Glad to see that you have taken action for with this I know solutions will follow.

On a slight tangent here I found a great investment opportunity while away on holidays about a month ago (yes I was on holidays).
The catch expensive and my businesses are growing as fast as cash becomes available.
Now I realize to invest into property I need to slow or even stop reinvestment back into my businesses but when the returns are compared business is given the priority.

However in this case I decided to find a way and so I went looking for an answer to my problem and well lets just say I became quickly involved in another adventure.
“Adventure” = advertising venture or a marketing opportunity.
In this case 3 friends said they would go guarantor for the loan and then they would make the monthly loan payments provided that I lent some of my time and ideas back into marketing their businesses.

On the surface this looked fantastic as I get exactly what I wanted and all I had to do was some thinking and some time each month however the reality is that I would end up being locked in tighter than any bank lender could ever do.
However it did give me a glimpse into other business opportunities that were in front of myself all along but didn’t notice.

For the last month I have been working to set up a promotional marketing business.
Yes its yet another business but rather than my friends businesses locking in my services why don’t I offer them their second years service if they pay for the first year in advance.
I expected some resistance but ended up with 4 referrals one of which demonstrated the use of the power of a granted loan.

Many of us have read how Donald Trump went back to his creditors and said put in more money so I can make it work or we all take a loss.
Now this power is impressive but not for the super rich as I had previously thought.

You see this little business has a government client who pays quarterly.
Ok you can adjust your business operations around the payment structure easily enough.
But often business growth waits until there is cash flow.
But what about a business that is faced with an opportunity but can’t take it.

In this case they went back to their lenders and asked for the last 6 months loan payments back and for the existing loans to be adjusted.
This request was made at the accountants office so all figures could be made available upon request.
Naturally someone asked why they needed the money.
At this point their creditors were sold on the opportunity before them.
Not all agreed and those that realised the potential picked up the slack and or refinanced out the unwilling lending parties.

I am impressed as I witnessed a business with less than 1/4 million in turnover ask and receive a loan for $1.3 Million with out a deposit and their lenders also payed back about $30,000 in cash so their office could be geared to handle the extra work load.

Sorry andymitchell about getting of track but I thought it might help to point out that thinking outside the square can open doors.
In my case I have a fresh business to work with when the old business was starting to feel stale.
Don’t get me wrong it’s a great business but the challenge is worth more for life.

andymitchell please keep us informed as things progress.
The next time someone thinks they have hit a brick wall they can be directed back here and see the results.[offtopic][upsidedown][thumbsup2]

Your friend Colin,
Email [email protected]
Home 02 46531376.
Fax 0246531079
Mobile 0425201055 (best contact as always working).
For all your CLEANING and GARDENING work.