Hi everyone well i am having a shortfall in my negatively geared property of about $262 a week and this is killing my cashflow.
If you were me would you sell and start again or what would you do?
I am looking to increase my income by i will still be short each week even though i have a LOC it is getting eating quite fast!
any other ideas?
I am quite tempted to sell and take a loss and start again but would be open to other ideas if someone has or is in the same situation.
thanks
as i am new to this can you please tell me what an "LOC" is?
LOC = Line of Credit
Hi There
Are there any “twists” you can do to the property, if a house, rent by room for example. How about rent, is there room to increase the rent by maybe doing a minor reno, or adding a split AC unit, carport, etc? Just some thoughts…Hi John done all that it is new property only 2 years old on a big block but even when the rent increases next year will still be negative cashflow.
Firstly, if you haven't already, get your accountant to apply for a reduction in your rate of tax on your PAYE income – at least this way you might get a few extra dollars in the hand before the end of the financial year.
Secondly, did you not understand the meaning of 'negatively geared'? Use it to reduce your tax not your lifestyle.
yeah done all that! I have might have to bite the bullet and sell though with a big loss but hey you have to learn sometimes!
How about the depreciation?
have you had a Depreciation Schedule prepared?
This can knock lots of dollars off the neg cashflow.Yeah done that also, I might have to refinance as a last resort and increase the debt. Is that better than selling? I will be eating into my equity though!
what are your thoughts on that?
LOC is really good if you want to quickly draw down to purchase a good deal. I have done it twice now and it is really working for me. But the danger with LOC is that you start losing track on what you purchase it for. But I do know that Suncorp has something similar to LOC but does it differently. It is worthwhile to talk to a representative.
It is sometimes OK to hold a negatively geared property. If we do our homework right there may be other factors at play that may give you good capital growth ie. nearby development such as what is happening in Port Adelaide or a mining town boom nearby. There are lots of experts who do not believe in selling as they like drawing the equity down. The purchase power is from what they believe is larger there than selling and possibly get capital gain tax. I guess it is what you prefer and how you want to manage your risk. I personally do not like selling but there come a time where there is a need eg. mining boom is coming to an end or reshuffling of properties to gain a better return. Margaret Lomas got this down to an art. It is definitely worthwhile reading her books.
Depends exactly how much you have to refinance it at, LVR wise. If there does not appear to be any long term growth potential, maybe you should bite the bullet and sell. THat is a lot of money to be negatively geared really, unless you are on 50k+ per annum, and own your own home outright…….
How much lazy equity do you have?
One strategy a number of my contacts use is to get their lazy equity working to gear into an income fund which covers the negative gearing shortfall.
This is not for beginners but works well in the right hands. I can send you some links if interested – just email. I am not selling anything here nor making any money. Just info.
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