Im at 20 year old on 600 a week and I own a unit a hour away which is currently getting rented for 180 a week and have had it for a year. I live with 3 other girls sharing a house and am paying 80 a week in rent. My house repayment minimum is 240 a week but im paying 320 because im not sure if i should be putting money away into a savings account or if im better off paying extra on my loan. At the moment its costing me a lot to have this unit and im not sure what to do about it baecause its getting hard to live off what im left with. Am i better off selling my unit of keeping it and putting the rent up? Is the rent i recieve from my unit suppose to cover my repayments and if i put the rent up do i need to do work to the unt to justify putting the rent up? Im just really not sure how to go about this atm so i would much appreciate any advice.
Only pay the minimum i/o payment, you can place the extra money you are paying into an offset account, this effectively does the same thing (with the added adv. of increased tax deductions down the track). If the unit was a good buy when you purchased it on day 1, if nothing has changed, then keep the property long term (this is where you make $$$- ask your parents about this one).
No, the rent does not necessarily need to cover the repayments. Although if you keep the property long enough this should also change….
Agree with number 8 .. As you are twenty you have time on your side. As the value goes up on your unit so to will the rent. It is hard at the start but it gets easier over time. If you can't afford the $320 you don't want to be suffering financially as you won't be able to sustain the payments long term. Maybe you could lower it to $300 a week to give you a breather.
Put the rent up every 12 months when you renew the lease. If it is put up $5 a week or $10 a week every twelve months it is better than having to increase the rent after 5 years by 25 to 50 dollars a week to catch up. Plus the tenant gets use to and can budget for a rental increase every twelve months that is a reasonable amount.
Thank you both very much it has been a big help. I do think it was a good buy because i got the unit in one of the best suburbs in the town and would like to keep it and eventually buy some more in the future if I can
mim 68
I agree with the other two posts. I would keep paying the minimum on the repayments. Are you on an interest only loan or principal and interest? If interest only then your minimums are the lowest they can be. If you are on principal and interest you may want to consider switching to interest only or re-amortising the mortgage to stretch the remaining balance once the mortgage term is up for renewal. As you pay down the balance of the mortgage and area developed the rents will increase and your cashflow position will improve. I tend to use my savings to invest into high yielding securities or high offset the mortgage if possible. I do like diversifying and investing in securities since the growth in security value may be more worthwhile than offset some mortgage interest. Just my thoughts.
Again agreed with all of the other posts that you should seek professional advice and the above is only my opinion based on my own investment property portfolio strategy
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