Gday all.
I'm looking for some advice please. My partner and i own 2 houses, both rented out and we are renting ourselves. I study full time and receive Austudy ($400 a fortnight) my partner works part time and earns about $500 per week. We have $70K in the bank. We are wanting to buy another investment property for about $350K, we are wondering can we borrow this much on such a low wage. Or should we just invest into something else until we get a better income. Any advice is good advice. Cheers
Hi dotkangaroo,
it would all depend on your rental income from your other two houses? Are they still mortgaged as well? Would need a fair bit more information.
May very well be possible but depends on any other outgoings you have also
Hi
Yeah both properties are mortgaged, both at about $185K, rental income on the first is $180 per week and repayments is $250. The second gets $220 per week and repayments are also about $250 per week. The first property is bank valued at $250K and the second is bank valued at $210K.Hi dogkangaroo,
So both of your IPs are negative geared, plus you have to pay rent for the place you are living. Based on the current tight lending policies, you may have a difficult time getting a loan for a 350k place (even if it is a 80% loan and you use all the 70k as 20% deposit). And you will need extra 10-15k to cover the legal fee,stamp duty and some other fees.
if I were in your position, I would use the cash to increase cashflow in the existing two IPs by doing some value-adding, such as install aircon, do a simple renovation on the bathroom and etc. Then buy a 3rd IP at a budget of 200k-250k and positive gear or neutral gear, that way you will still have some cash left in hand and income position is better than now.
from a strategic point of view, at this stage cashflow is more important to you rather than capital gain, so more negative gear IP will not help your future purchase.
hope it helps!
Why not go for a low doc loan
There was a post in the Overseas Deal part of the forum with the title "Is it safe for Australians to buy foreclosed Property in the US?"
In this post the person outline a very interesting point in which he asks the question, why would you want to lose $22,000 compared to making $77,000 a year?
The same principle applies to investment properties, by negatively gearing your investment property, you are actually losing money on the property and betting that the value of that same property goes up in value faster than the rate at which you are losing money on it, in order to make a profit in a few years when you sell it.
danviv1 wrote:Hi dogkangaroo,So both of your IPs are negative geared, plus you have to pay rent for the place you are living. Based on the current tight lending policies, you may have a difficult time getting a loan for a 350k place (even if it is a 80% loan and you use all the 70k as 20% deposit). And you will need extra 10-15k to cover the legal fee,stamp duty and some other fees.
if I were in your position, I would use the cash to increase cashflow in the existing two IPs by doing some value-adding, such as install aircon, do a simple renovation on the bathroom and etc. Then buy a 3rd IP at a budget of 200k-250k and positive gear or neutral gear, that way you will still have some cash left in hand and income position is better than now.
from a strategic point of view, at this stage cashflow is more important to you rather than capital gain, so more negative gear IP will not help your future purchase.
hope it helps!
Hi dogkangaroo,
I agree with danviv1. Use your cash to update your two existing IPs to maximise rental income. Switch your loans to interest-only if you have not done so.
When you are done with your studies and am back into full-time work, then you can start looking for another property and will be in a better position cash-flow wise to do so.
Regards
Daniel Lee
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