hello, im a newby to the investing game but i have managed to get my hands on two properties in the northern suberbs of Adelaide.
Im looking for some ideas to better my situation with PI’s and move forward.My Situation: i have 1 very average property 3×1 which i paid $125000 for and have spent a little on the inside of the house ( new paint, floors etc) this one has nothing external like carport etc. i have just stopped renting ( $175p/w) due to having used my first home owners grant.
the second property i paid $162500 for, 3×1 nicer house, good layout but due to having purchased with a tenant ($180p/w) i havent been able to paint inside or do any diy. this one is on strata title but is a stand alone house. i think because the block is an odd shape. has potential for a good tidy and paint with bathroom and kitchen updated.
the houses have an estimated value of around $340000 as they are now. ($165000 and $175000). ballpark figuresThen i decided to join the navy so i now live i WA and have a morgage of $295000 ( $1100p/f) on my salary of $63000 per annum ($1700 p/f after tax)
Im after any suggestions on how i could use what i have to better my situation or even sell what i have and start over. no matter how out there any suggestions very welcome.
any questions please askthank you
YOu make $63k and have a debt of $293,000???
Man you will be close to bankrupt is interest rates go up. How did you get the bank to loan you so much money? Just rent those places and you should be fine it you can afford the extra repayments. Else I would just sell one and pay off the other.
Hi, especially Dacium,
63K pa & $295K mortgage is not bad, depending on the tax situation, especially if the rental is not part of the 63K.Navyboy, what is of concern is not so much the total debt but how you manage it.
It’s the type of property you own. What will you do if you have vacancy?
Your properties are likely to be in Elizabeth, Parafield Gardens or thereabouts. Their value is too dependent on the overall economy.
If you sell, there’s not much profit. The ATO will see to that! The low vacancy rate is in your favour & will likely do so for quite some time.
Your position will be very strong if you direct the rent monies into an offset facility.
If your $63K income is reliable & doesn’t include rental income, you can buy a ‘better’ property, either a block of land to build (I saw 2 blocks at Seaford for $80K ono) or a house & land package. You can get a new 3BR home for $230K
You can work it out yourself. The $230K home will have immediate excess equity. Rental will be easy. Even if vacancy rates go up, your property will still be competitive. You will have tax effectiveness because the new house is fully depreciable. It is a far ‘safer’ investment, if there’s any such thing.
Seaford & Christie Beach are at present undervalued. Infrastructure is good. The ocean is nearby.
At the end of the day, everyone can offer suggestions but it’s you who have to do the numbers & manage the debt. Repayment doesn’t sound so bad.
Good luck,
Kum YinOriginally posted by dacium:YOu make $63k and have a debt of $293,000???
Man you will be close to bankrupt is interest rates go up. How did you get the bank to loan you so much money? Just rent those places and you should be fine it you can afford the extra repayments. Else I would just sell one and pay off the other.
I must be missing something becouse i dont think that is too bad.He owes just under $300,000 on two properties which he could rent out at around $300 to $350 PW. Thats not bad.
I owe $200,000 on my PPOR worth $345,000 ans i just borrowed$300,000 for a IP which is 100% borrowed.And i only earn a bit more. Maybe i have over commit too[blink]hello, thanks for the responses.
firstly the 63k i get a year is my wage from the navy. any rent on top of theatis just extra. i pay the loans out of what i earn then get the rent at the end of the month. i dont rely on the rent. i still have enough to live and pay the morgages.
the idea about christies is what i was after. would it be a good option to spend about 10k on the houses just doing minor work and presentation stuff then sell off and buy and build at say christies beach. i know that i will have to pay the tax man and fees so from where i stand i think that i would have to increase the profit a bit for it to be worthwhile.
the reason why i have so much debt is because i work in the Navy and i have the two properties rented out. the bank seen that as extra income so they where more than happy to give me more. i could have accessed another 100 to 150k but it would put financial strain on me. not good
thanks again for your replies[biggrin]
Hi again,
1st, Navyboy, no sense selling to buy again. Either don’t buy, save into an offset account or buy either to build or a new house ready for immediate rental. Your 2 IPs are low priced, sell & the agents/tax man get all the profit. If your tenants are not unhappy, why spend extra to get almost nothing in return? Renovate only when you have a vacancy.Buying land to build may be difficult for you because of distance. You might want to use an agent. Pay about $6000.
Davo76 is really who my return post is for. I was in a similar position to you not that long ago. Except that I was only $10K short on my $240K PPOR. I borrowed $200K to buy another house price $175K. Rented out PPOR and got to work chipping away at the mortgage.
Read this: I was on a loan @8.5% with a 2 year balloon repayment.
Dacium will think I was mad. I wasn’t. I was very confident I could save $100000 in 2 years.
Davo76, what concerns me is that you bought at the plateau of the property boom. When I bought, I was absolutely certain that houses could not go down any further. They had languished for 10 years! I had been looking for 7 out of the 10 years.
We are in a very mature phase of the property market. Davo76, I may be too longwinded & saying something that you already know. Do protect yourself by cashing up asap, in an offset account sounds really good.
May life bless you because you’ve taken steps to financial independence. Good luck,
Kum YinOriginally posted by kum yin lau:Hi again,
1st, Navyboy, no sense selling to buy again. Either don’t buy, save into an offset account or buy either to build or a new house ready for immediate rental. Your 2 IPs are low priced, sell & the agents/tax man get all the profit. If your tenants are not unhappy, why spend extra to get almost nothing in return? Renovate only when you have a vacancy.Buying land to build may be difficult for you because of distance. You might want to use an agent. Pay about $6000.
Davo76 is really who my return post is for. I was in a similar position to you not that long ago. Except that I was only $10K short on my $240K PPOR. I borrowed $200K to buy another house price $175K. Rented out PPOR and got to work chipping away at the mortgage.
Read this: I was on a loan @8.5% with a 2 year balloon repayment.
Dacium will think I was mad. I wasn’t. I was very confident I could save $100000 in 2 years.
Davo76, what concerns me is that you bought at the plateau of the property boom. When I bought, I was absolutely certain that houses could not go down any further. They had languished for 10 years! I had been looking for 7 out of the 10 years.
We are in a very mature phase of the property market. Davo76, I may be too longwinded & saying something that you already know. Do protect yourself by cashing up asap, in an offset account sounds really good.
May life bless you because you’ve taken steps to financial independence. Good luck,
Kum YinThanks kum yin. You say cash up?. Do you mean pay more off?
I am paying max off my PPOR which has a offset account. But im paying min off IP as i have a high wage and want too negative gear.If me and my wife meet the minimum payments alone it leaves us over $900 per week plus rental return so cash flow is not a problem. I bought for two reasons. Forced saving as we waist alot of money and to minimise tax.I have a appreciating asset worth $80,000 which im happy to pay into my PPOR but its value has doubled in one year so im waiting for it to go higher before i sell so that would reduce our PPOR loan to $100,000.WE bought or PPOR before the boom but the IP after although the market did drop and has now shown signs of improving.We have good equity in our PPOR but except we will have to wait a few years befor we see a gain on the IP. Sorry for hijacking the thread.[glum]Originally posted by dacium:YOu make $63k and have a debt of $293,000???
Man you will be close to bankrupt is interest rates go up. How did you get the bank to loan you so much money? Just rent those places and you should be fine it you can afford the extra repayments. Else I would just sell one and pay off the other.
Not a large loan at all – I have clients earning less who comfortably support IP loans of more.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
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.
Hi Devo76,
You’re doing what I’d be doing for exactly the same reasons. Again, your results will be a tad slower because the boom has been & gone. But no problem. All through 1999 to 2002, hardly any gain was made in my case. I was still happy to hold for the forced saving & the tax benefits. I was going to live on the rental income when I retire! And I’m doing that now, with a higher yield than I’d originally thought because the boom raised the bar for me.If you’re already paying into the offset account, well done! I tried that in 2006 & I’m a dismal case because I keep dipping into it.
Bless you & may you reap good rewards for the discipline you put into saving.
Kum YinI think you should look at the positives rather than the negatives, personally if i wasnt living comfortably i would look to perhaps refinance and look to earn a larger income, i am looking for a few leaders in WA and SA to expand business with you may be interested yourself if not you may know someone who is open to earning a residual income on top of what they already do, regardless i wish you the best of luck Navyboy
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