advice please for someone with equity

Viewing 4 posts - 1 through 4 (of 4 total)

slash
Member
@slash
Join Date: 2011
Post Count: 1
November 6, 2011 - 10:06 am
Hi
I have a home that currently, realistically in this market is worth 745k and we have 200k equity in the property.
We were thinking of selling the house and unlocking the cash to purchase a cheaper house to increase our cash flow. However after 0-130 houses cam to our attention we would like any advice anyone can give as to whether we woudl be better off renting and using the 200 k to purchase houses or whether we should stay in our home and struggle with the mortgage but attempt to positive gear some properties for cash flow? is that even possible in todays market?
as you can see our cash flow is the main issue with our current home and size of mortgage is a burden. We were looking at getting student renters to ease the mortgage payments but that causes other issues with privacy etc.
Any suggestions?
Regards
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
November 6, 2011 - 10:55 am
Read more widely and I think you should do the sums on staying and investing v selling and investing.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
November 6, 2011 - 9:53 pm
Hi slash
Our "numbers" were similar to yours when we became interested in vendor finance. We used that equity to buy some houses and on-sell them with vendor finance which generated some attractive positive cash flow. Of course we eventually ran out of equity to keep growing and it was then that we really had to learn this business However the resultant cash flow from our vendor finance business now supports our lifestyle and our buy & hold portfolio. Happily we now work in the business full time.
While the positive cash flow is attractive we do realise that it's the equity we own in real estate that's our real long term wealth. With this in mind we use vendor finance to accelerate our portfolio building.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone Me
An alternative way to finance your home.
Ryan McLean
Participant
@ryan-mclean
Join Date: 2010
Post Count: 547
November 9, 2011 - 9:53 am
Increasing your cash flow is obviously the major priority here. Be careful about selling and renting because it my increase your cash flow short term but rents go up over time so it might have a negative effect long term.
It might be an idea to get the property officially valued by your lender. You may think it is worth $750k but the lender may be more conservative. I know that many investors set up lines of credit up to 80% of the value of their property so they can access it as soon as they find a positive cash flow property.
If you do sell do you know that you can find a property that will be positively cash flowed? If you don't know then is selling the best strategy?
A line of credit will give you time to look and if you find a cheap property you might only need to take $40k out of your house for the deposit…who knows???
In the mean time look for ways to increase your cash flow. Getting in students is one idea.
You could also start a side business
Or you could look at an interest only loan to lower mortgage costs (then when your situation improves move back to P&I)
Good luck
Ryan McLean
Free eBook "How To Find Positive Cash Flow Properties in Australia"
http://CashFlowInvestor.com.au
Ryan McLean | On Property
http://onproperty.com.au
Email Me