Sorry if this is a bit lengthy but looking for some buyer confidence.
My partner and I have 2 IP's and are living rent free in the NT in government funded housing (both teachers out bush).
We have a mortgage of $730,000 with two properties purchased in the last 18 months valued at 800k. We are now looking at a third IP for around the low 200k mark. We plan to live in the NT rent free for the next 2 years so will in effect have 3 IP's. At the moment our 2 IP's are taking $700 pw combined. The 3rd IP we are looking at now is returning $250pw. Our combined wages are $140,000 gross. I'm really just looking for some confidence to continue to purchase properties, knowing that when we do return to Tassie and purchase our PPOR using FHOG and possibly have children then the mortgage stress might kick in. Any advice would be much appreciated. Cheers
tuggerwaugh
Hi, it's tough, isn't it?
The target property has a high yield so to tell you not to do it is quite silly.
On the other hand, your -ve gearing on the 2 IPs amount to $40000 p.a. or thereabouts.
Serviceability doesn't seem to be an issue.
So, the questions that need to be answered are: 1) what is the rental condition of your IPs? i.e. any likelihood of vacancy?
2) Do you currently get any depreciation benefits from the 2 IPs?
In the worst case scenario of no tenants, can you support the interest payments or if you're on P+I, can you support the mortgages?
I'm sure these issues have crossed your mind already so as always, the decision rests with you yourself.
I've found that if I faithfully pay down the loan, [no easy job of course], I'm always OK. The 1st 2 years are tough & thereafter the mortgage doesn't even worry me.
Incidentally, i used to be a school teacher on a $14000 p.a. salary & then $50000 p.a. after 20 years. For more comparison, my LVR was only 67% then the lender increased it to 75% without me asking.
Your LVR is very high. You need to bring it down to 75% asap. You can't do that if all your income is used to pay interest.
Hope things work out for you,
KYThanks kum..
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Yeah we are paing P & I on both properties… we have had depreciation schedules done and both properties are at about $4500 per year for the next 15 years…. both properties are in great rental condition and the one we are looking at now has just had a reno… food for thought and some decisions to be made soon… thanks againtugger
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