Hi everyone,
I have been watching this forum for a while but have only just joined and had the courage to share!
My husband and I are very keen to get into property investment but to be honest we are just jumping and trying out this and that without any real understanding of how to make it a success.
We have an older house that we have decided to rent out in a couple of months and use as our investment property. We have lived in it for about 5 years. We are building a new house and plan to move into that in a couple of months as soon as it is finished.
Rent for the old house will not cover repayments, we will have to chip in around $50 a week. We are hoping to hold on to the older house for quite a while. So we have set the ball rolling- made the first jump, but are a little scared/confused about where to go next. We hope we haven't made a mistake already!!This is all very exciting but we can definitely feel the butterflies in our stomachs.
Tambo2202
Tambo2202 wrote:Hi everyone,
Hi Welcome to the forum,
Tambo2202 wrote:I have been watching this forum for a while but have only just joined and had the courage to share!
My husband and I are very keen to get into property investment but to be honest we are just jumping and trying out this and that without any real understanding of how to make it a success.Read as many books as you can as it is a cheap way to increase your knowledge
see
http://www.businessmall.com.au/property-investing/property-investing-general/col-1.html
http://www.businessmall.com.au/property-investing/property-investing-general/tra-1.html
http://www.businessmall.com.au/property-investing/property-investing-general/lom-5.html
http://www.businessmall.com.au/property-investing/property-investing-general/wax-1.html
http://www.businessmall.com.au/property-investing/property-investing-general/tur-3.html
http://www.businessmall.com.au/property-investing/property-investing-general/tur-1.html
http://www.businessmall.com.au/property-investing/property-investing-general/the-ultimate-guide-to-buying-and-renting-houses-and-apartments.html
http://www.businessmall.com.au/property-investing/property-investing-general/tur-2.html
http://www.businessmall.com.au/property-investing/property-investing-general/what-every-real-estate-investor-needs-to-know-about-cash-flow-and-36-other-key-financial-measures.htmlTambo2202 wrote:We have an older house that we have decided to rent out in a couple of months and use as our investment property. We have lived in it for about 5 years. We are building a new house and plan to move into that in a couple of months as soon as it is finished.
Rent for the old house will not cover repayments,Rent for old house will not cover repayment for which loan ?
Many new investors have a mind set that they can rent out the old house and claim the interest on the new mortgage they borrowed to buy their new main dwelling (PPOR) (Tax office looks for this common mistake also)
You can only Claim the interest on the original mortgage that was against the original PPOR home that is now an investment home.
Also you need to get the original home valued so that you can claim PPOR exemption right up to the date and value when you changed it to an investment home. This is because the original home now is going to be liable for capital gains tax from the date you started renting it out.
Tambo2202 wrote:we will have to chip in around $50 a week. We are hoping to hold on to the older house for quite a while. So we have set the ball rolling- made the first jump, but are a little scared/confused about where to go next. We hope we haven't made a mistake already!!
This is how I see it !
You are going to live in the most expensive house you own (the new house) so that you cannot claim any of its expenses against for a tax deduction because you like to live in a new house.
You will not be able to claim 2.5% capital depreciation on the building cost of your new house each year and thus increase your cash flow (it does reduce the cost base thus increasing capital gains tax) because you like to live in a new house.
Tambo2202 wrote:This is all very exciting but we can definitely feel the butterflies in our stomachs.
It can be like that I have that feeling sometimes !
Thanks for your reply Duckster. Yep. We really want to live in the new house! (Our kids are getting bigger and we need the extra space!) It was actually cheaper to build a house than buy an existing one! I have been reading lots of posts and it seems that many of you agree that changing your investment property to an IO loan is the way to go. Makes a lot of sense. We won't have to chip in much at all of our own money if we are on an IO loan. With an IO loan the rent will cover the loan of the old house. We have just had Steve McNight's updated copy of his book sent to us and are enjoying the read. Love this forum too. Learning a lot from everyones experience in investing.
Your kids are only young for a very sort time. I have kids too and I would love to live in a bigger house with a bigger back yard so I understand where you are coming Tambo.
The main thing with property investing is time.
As time progresses your property value increases but it does take time. Unless you are lucky and buy just before a property boom.
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