Hi,
My wife and I have 5 properties between us in the Sydney metro, we are 35 yrs. We live in 1 and rent out the others. They are all on % only loans and have approx $100k in combined equity available to us. We supplement approx $200/wk to maintain the loans and receive negative gearing benefits, all were bought in our names with no trusts.
The next purchase we want is the family home and plan on purchasing approx $1.2 million house. With our equity we would have a deposit but our cash flow can not service the new purchase until our wages go up in the future in combination with the rents (this will take too long for us). We have considered selling a property but have gotten to the stage if we do it will actually lessen our cash flow, as such it does not help toward our goal to sell a property. Our super will not be able to be used as it has other purposes for the future.
I want to know if anybody has any suggestions on how to achieve our goal in the next 1-3 years? And can anyone suggest a competent accountant to assist in tax minimisation and management?
Hi foodfinger
May I ask how many dollars per month you're short in relation to your comment "but our cash flow can not service the new purchase" ?
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
From some rough calculations if I were to borrow $1.2 mill at 6.53% it would cost approx $1510/wk to repay. If we continued to live in our residence and were to rent out the $1.2 mill property until we could afford to move in, the current comparable average rent for the property we are looking to buy is approx $900/wk. This means a short fall of approx $600/wk. I understand the increase in negative gearing would help to further reduce this $600/wk deficit but not enough for us to commit yet.
Any ideas? Thanks for your interest.
Adam
Hi Adam
I was think of turning two of your five properties to positive cash flow, by selling them with an Instalment Contract (IC) but I'm not sure if this would generate sufficient extra cash flow to cover your needs.
Selling with an IC usually allows you to sell at a premium price, with the trade off being, the time over which you get the money. Selling two properties would normally generate anywhere from $30K to $50K in deposit payments to you, from the IC buyers as they move in.
You could probably expect $300 week week positive cash flow from both properties. And you could expect your fixed capital gain in 3 to 5 years, i.e. when your IC buyers refinance into a traditional home loan. Your fixed capital gain is the difference between what you owe on the property and what you sell it for with an IC, less whatever your IC buyers have paid off their loan, while they're with you.
As mentioned above, approximately $300 per week may not cover your needs but you never know
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
I am talking with a current tenant of one of the IP's towards a possible IC. She has been renting it for awhile now and loves the place and would like to buy it. My wife and I have been thinking it might lessen the overall serviceability and allow us to get into the PPOR we are after. Where could I learn more to ascertain if an IC is a 'fit' for our situation and how can I clarify the potential figures (rent, deposit, CGT, etc) and see its viability and check if its worthwhile proceeding? Great suggestion and appreciative of your time.
Cheers,
Adam
Hi Adam
Would you mind sending me your email address from the Contact page of our website:
http://www.jvpropertypartners.com.au/index.php?option=com_contact&view=contact&id=1&Itemid=63I'll then get back to you with a bunch of questions about the property and we can see what turns up.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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