Hi,
This is my first time here so I hope I have posted this in the right spot.
I want to purchase another investment property and eventually build a duplex (as it will save on land tax). I currently own my own home and have another investment property which is postively geared ( but needs about $30K of repairs or upgrades if I decide to sell).
Just wondering what advice someone might have for cash flow?
The bank wants to give me $830K but the repayments would be are nearly $5000 interest only for 5 years. Now I don't earn that much a month.
Can anyone give me some tips on how to manage cash flow from negative geared properties?
regards
JonesyWhat is the expected rental income? as this will reduce the $5000 a year to a lower shortfall
Negative gearing amount = rental income – interest costs – rates- insurance – depreciation – ect.
You may be able to do a building write down (depreciation) to get more back on tax return
(2.5% of building costs if building is new or recently constructed)
Get a quantity surveyor to work out a deprecation schedule for fittings and building if applicible.You May be able to reduce the tax taken out of your wage each week (due to negative gearing) to increase your cash flow each week.
(its called a tax variation form check at http://www.ato.gov.au)Have savings to cover the shortfall
I did this for 3 years with no income by using savings.
You need to factor in 4 months of vacancy a year in case you lose a tenant or have place trashed.
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