Hello forum members,
As I am reasonably new to property investing, please forgive me in advance if I seem nieve. I am at a loss as to where I should go / what I should do now.
I am 38yo, got the standard stay at home wife and 2 kids, and I dont want to work anymore. Laugh i hear you all……….but this is the reason I got into investing. I have a goal and that is to replace my income with investment income so that I can retire asap.
The facts and figures:
I have PPOR in Perth, worth approx $500 to $550k, owe $305k, and an IP in Melbourne, worth probably $285k, owe $275k. Positive geared by around $50 / weeek. We have had the IP for almost a year now. Both loans are interest only as we did not intend to stay in Perth forever. We used the equity from PPOR to get IP plus a little cash. Currently have -$20k in LOC acct, $15k in savings and no other debts. The LOC acct should be back in the black come end of April. The reason I submit to the forum is we are looking at moving to Whitsundays and dont really know the best option in what to do.1) – Should I sell PPOR to build in Qld and use the remaining cash to reduce the amount oweing on the IP? We can build a comparable house in Qld to our PPOR in Perth for almost $100k less than what it costs to build PPOR, leaving IP loan with only $150k+/-
2) – Should we keep our Perth house and rent it out? Market rent for area is approx $350 / week. Loan repayments for PPOR at the moment is about $1500 / month (Depreciation I would think end up making it positive geared just) Then borrow again to buy / build in Qld (although I dont think the banks will lend me anymore as we tried to get another IP 4 months ago and we got knocked back on finance due to credit card debt etc, which is now gone)
3) – Is there a better way to achieve what I want to achieve by keeping both residences?
Those in the know, please share with me the best way to reaching my early retirement
As you have sizable debt on your ppor, you could always look to move to qld without selling but consider renting thus turning your existing loan into an investment loan. Sure you will be paying rent but in regional qld that shouldn't be too bad. You still have a chunk of equity between both properties (owing $580k/$800k or around 30%).
I have looked at that option but I cant help but think paying rent is wasting money. It sort of defeats the purpose of having IP's. I pay someone else's IP while someone pays mine. I may end up doing that in the long run anyway, begrudgingly i must say, but at least it would only be for a short term untill we found something we like.
If I was to do that, how would I be able to borrow again seeing though the banks probably wont lend me at the moment, or will I just have to knuckle down and increase equity by reducing loans? I have read about "no money down" finance but I dont understand how that can be!
Remember Lowry because 1 lender said no doesnt mean you stop right there and give up.
I deal with clients all day long who say our Bank said we couldnt borrow any more and often there is a way around it as long as the loans are set up correctly.
Richard Taylor | Australia's leading private lender
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