Hi Guys
We have 3 IP’s 1 own home.
Could someone tell me when we can have kids, and repay our mortgage on one income of $50K.
Selling an IP is not the answer.
My wife was out of work for 4mths without income, we felt the pinch.
Our own home has repayments of $600pw.
So other than down sizing is there any suggestion.Thanx Heapz
Rayson
If you want an answer you will need to be specific on costs, rents, amounts owing etc etc
hi Rayson,
It’s funny when i had no child (it took years to get one) i only had 1 IP & rented and we had good incomes, but struggled. Now i have a beautiful son a beautiful home 3 IPs(but selling 2) and make less than $50k but somehow survive??? I guess what i’m saying is your answers will show up, go be a dad if that is what you want and trust the money will take care of itself.
On the finance side, you may be able to wrap, or lease option some of your properties for positive cash flow. Also selling bits and pieces on ebay (a pain) but is a good option for stay at home mums & dads and can make you an extra $50-$200 p/w
When we becomes 3 you just find a way.
I
hope this helps,Good luck!
Cheers,
Don
Originally posted by crj:If you want an answer you will need to be specific on costs, rents, amounts owing etc etc
Total Mortgage $1.2M repaying IO $7000 aprox pm.
Rental $3500pm.
Cost of living ? priceless.[biggrin][biggrin]Thanx Heapz
Rayson
Hi Rayson,
Are the IP’s positive or negative cashflow?
600pw for own home!!!! yikes!!! 50K/year will not cut it I guarentee it!!
Im about to have my first child (about 4 weeks away) and have just gone through the process of “can we afford to keep the IP?”
We could easily keep the IP cos it was +CF however our PPOR costc $1800/month and we were looking at going back to a single income of $50K/year. Luckily ive got a payrise since then which makes it easier, but there are other ways to keep them all.
So, are your IP’s positive cashflow? Can you detail each IP and PPOR saying how much theyre costing you and/or not costing you per month. And do you have any equity available in your current portfolio, be it PPOR or IP’s?
Any other info, post it here, lay it all out on the table for us to see…eg personal loans, credit cards, everything.etc
Hopefully we can help ya out
Cheers,
Damon
In theory, there is no difference between practice and theory, in practice, there is….
You can increase the income from your properties (at least one of them) by giving the tenant an option to purchase, wrapping or providing vendor finance.
The extra income can service the other properties so you are not left pulling the plough.
Once your portfolio is overall positively geared, your wife can use her time at home to find more properties to buy.It worked for us : )
Xenia Ioannou-Mena
Adprop Pty Ltd.
Property Management and Sales
E: [email protected]
M. 0412 437 582[upsidedown][laughing]
So you’re living in a house with a $450k mortgage attached? On $50k, the answer to “when we can have kids” is uh, never.
Why on earth would a couple with no kids need such an expensive house? Bizzarre. I’ll bet my hat it’s on interest only too – ie renting from the bank.
Bah, crazy crazy world. Bring back the days when those with irresponsibly large debts were stigmatised, not idolised.
F.[cowboy2]Hey Rayson,are we missing something?
How are u paying $875 per week interest out of $960 income total?
How do u pay for rates,repairs, etc and food for yr family etc,now lettlone later with a baby?
I would down size the PPOR definately ,even rent something at a cost less than interest payments would be.
To me all that constant pressure would not be worth it!
Maybe u have other income?
Sorry,just re read yr post.
I see ur wife is still currently working bringing in an income most of the time which allows u to cover yr current mortgages.I would do the figures on what it will cost to live with the 50K and the extra costs of having the baby.Then reduce it where u can,eg you may have an IP that is not growing in CG and is cashflow negative (even slightly).Work out yr figures if u didnt have this property.
We’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Rayson,
If you have $7000 t pay of PCM, and only half of it $3500 in rental incomce…. how are you paying for the difference ($3500 at least including expenses) on only $50K?????
Sorry this is not a pick but I’m just curious!!! [inlove]
Snowflake
Well… I know the answer exactly…
If you don’t like your financial situation – the only solution is…
(wait for it!.. ) minimise expenses and increase the income! That’s it! Easy!Did you know all the unswers? No really, do you expect to hear something new? The hard part is that you actually have to do something about, or just leave it as it is and complain about your life.
1. Try to increase profit from the property (but usually you have to invest s in first to increase value)
2. Rent your house and move on the rent. Weather it’s a PG or NG – financially it’s quite a privilege to leave in the own property until you are financially free. By renting it you either get additional income and or get a tax break (yes… I love my house too.. and yes… I rented it too.. and yes my tenants messed up my floor… get over it!)
3. Self-education is the must!!! If you want to do a career (good luck if so!) – get good books, types on career development; If you want to do a business or investment – educate yourself. It works!!!
4. Start your own business (even if it’s a part-time) to get a second income!!! And as it growth you can spend less time on your job and more on business. Look for the industry that will grow in future: technology, sport, services, beauty… There are opportunities around – from the part time franchising to eBay stores. I personally don’t believe in get reach quick opportunity, it takes time, and effort. But it’s very rewarding!
5. Save at least something!!! and invest it!!! Did you ever heard about putting away 10% of your income for investment? You have 50K a year? it will give you about $3,000K a year for investment. Do rare coins or shares, wine, or whatever! even if you lose half a time. Even 5% will work, just do it regulary.
Cheers,
If one of the investment properties has a lot of equity in it consider this scenario. I did somthing very similiar as I have 2 twin daughters and one salary now. Wait till next financial year when income is less for child carer. Sell investment property and CGT if joint names or Carers name will be less. Pay CGT and pay difference into PPOR house. Thus bringing down costs of non deductible interest payments on PPOR. beware of centrelink !! Capital gain will be considered income for carer and will affect family payments . Also any negative rental loss (negative gearing) will be deemed income by centrelink for working out threshold income levels. Have you ever tried to buy food at the supermarket with a rental loss. Total absurdity !! A loss is income ?
Originally posted by as41:Rayson,
If you have $7000 t pay of PCM, and only half of it $3500 in rental incomce…. how are you paying for the difference ($3500 at least including expenses) on only $50K?????
Sorry this is not a pick but I’m just curious!!! [inlove]
Snowflake
My wife is working at present with a $40K salary.
Thanx Heapz
Rayson
Thank you all for your feedback and confirming what needs to be done.
I guess I was hoping the Sydney market would pick up quicker.
You guys are great.
Thanx Heapz
Rayson
Originally posted by The Barterman:hi Rayson,
It’s funny when i had no child (it took years to get one) i only had 1 IP & rented and we had good incomes, but struggled. Now i have a beautiful son a beautiful home 3 IPs(but selling 2) and make less than $50k but somehow survive??? I guess what i’m saying is your answers will show up, go be a dad if that is what you want and trust the money will take care of itself.
On the finance side, you may be able to wrap, or lease option some of your properties for positive cash flow. Also selling bits and pieces on ebay (a pain) but is a good option for stay at home mums & dads and can make you an extra $50-$200 p/w
When we becomes 3 you just find a way.
I
hope this helps,Good luck!
Cheers,
Don
Thanks for the inspiration Barteman
Thanx Heapz
Rayson
Rayson,
You don’t mention if the IP’s are owned in your name alone or jointly with your wife. If you own the IP’s jointly and they are negatively geared, then you may be able to incur the expenses yourself. This increasing your deductions reduces the deductions that your wife cannot claim when she is not earning an income. This can be done by getting your boss to pay your investment expenses and reduce you package (ie you taxable income).
This is of no benefit at the moment while you are both in the same tax bracket, but when you only have 1 income.Don’t let the fact that you want to have kids, stop you investing now. It doesn’t always happen straight away, it could take a couple of years, it could take a month, you just never know.
Mal
Getting out of your comfort zone, can help you become comfortable
Hi Rayson,
Have you considered childcare? On your combined income you will get the complulsory 16% deduction from the gov’t & may be entitled to more. So that would cost around $10k a year. I know it’s steep, but it’s better than losing your wife’s $40k income. But that’s my oprion, I’m not a huge fan of staying home with kids!
alotti [rolleyesanim]
What are the values of all of your properties(including the PPOR).
If your PPOR is way to high for just the two of you(or maybe 3), then maybe yoiu should switch to living in one of the cheaper IP’s and then rent out your PPOR at a higher price than the other IP was, this will bring in a bit more rent and will also make the higher mortgage interest tax deductable.
This is all based on the fact that your IP’s are significantly less in value compared to your PPOR.Christopher.
Why don’t you just double your rent? That way your wife can leave work when you have kids.
Air goes in and out. Blood goes round and round. Any variation is a bad thing
I think we need to think outside the square here.
Why not take mine…now come on, the are past the nappy stage, 25 & 22, and I’m sure you will get used to the music, clothes etc.
They are lovely kids seriously…please….
Seriously though, hope the wise heads here, gave you something to go with…
i am absolutely fascinated.
Please tell us what decision you have made rayson?
Live, Learn and GrowLifexperience
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