Hi all,
My partner and I purchased our PPOR in Nov/ Dec 2011. We only had 5% deposit and have only made the minimum required P&I payments on the property as I had thought we'd turn it into an IP in a few years.
My partner got injured at work and has now been made redundant. He was an adult apprentice and has been frustrated with his lack of options due to not finishing school. So, he's planning on going back to school next year, and then onto Uni. He has a debt of about $20k on his car, so he'll need a part time job for that, but in terms of paying the mortgage, I'm on my own.
We're extremely lucky in that the in-laws are turning their garage into a flat for us, with everything we'll need for only the cost of our portion of the bills.
My partner wants to sell the property and get rid of all that debt hanging over our heads (around $285k). I don't like my job and want to do something else.. I'd like to keep the property, and if we got renters in, I think we could get around $260 – 280 per week, which would cover his half of the mortgage.
I feel like it's pretty much guaranteed that we'll lose money on the house if we sell now. So many people are telling me that I should rent it – family, friends, colleagues – which makes sense to me, but I also know that just because we have a property doesn't mean it'll make a good investment.
What I really need is some recommendations of a property adviser (I'm in Melbourne, but interstate is fine if I can phone/email), a third party who can give me a well informed opinion.
Any recommendations?
Suggestions on my situation would be great too
I asked this same question a few months back. Look at it here.
https://www.propertyinvesting.com/forums/help-needed/4348254
I decided to rent out my place and it worked out to be the best decision for my situation.
Hope it helps
Hi LJF
Sorry to hear about your predicament.
It sounds like you're leaning towards keeping the property but just need someone to verify that you've making the correct decision.
Personally, I think if you can afford to hold onto it than do so.
You also don't need to seek advice from a property adviser. Chances are they'll just try and spruik some sort of off the plan development – something that you don't need right now! (or ever for that matter).
You just need someone to work out how much this property is going to cost you to hold onto if you decide to keep it as an IP and what you stand to make/lose if you decide to sell it.
In terms of the holding costs – there's a few factors to consider. Look at:
– The interest repayments
– Body corporate fees (if applicable)
– Rates
– Land tax (if applicable)
– Landlords insurance
– Building insurance (if applicable)
– Depreciation (call a local quantity surveyor to find out whether a depreciation schedule is worth doing for your property)
– An annual fee for maintenance (allow say $1k)
– Any borrowing costs within the last 5 years (such as mortgage insurance)
There's also a couple of things that you can do to reduce the cost burden.
Firstly, convert the loan to interest only – this will reduce the minimum monthly repayments. If your current lender offers an offset account product – perhaps take advantage of it and start parking any spare funds you have in the offset account.
Secondly, if the property is negatively geared (ie. it's costing you money to hold onto) than you could look at arranging an ATO PAYG withholding variation. It allows you to reduce your tax bill each pay instead of claiming a large tax return at the end of the financial year.
I hope this helps.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thank you both for your replies.
I will find out the expenses of selling vs renting. I have a real estate agent coming over on Thursday night to tell us what we could expect to sell or rent for.
I've been so confused trying to figure out the best way forward, and now I have have a plan.
Thanks again
Hi,
I am happy to have a chat with you on the phone with no obligation to you to try and answer some of your questions and to give unbiased feedback if you like, what you do with the feedback is up to you, but I am happy to assist if need be.
Regards Grant
ljf wrote:Thank you both for your replies.I will find out the expenses of selling vs renting. I have a real estate agent coming over on Thursday night to tell us what we could expect to sell or rent for.
I've been so confused trying to figure out the best way forward, and now I have have a plan.
Thanks again
Hi again
Don't be surprised if they push you towards selling.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie,
Thanks – I'm expecting that!
A quick sale at $6-8k commission vs a pittance in comparison as property manager.. I'll try to keep in mind how much I hated paying stamp duty and LMI to enter the market in the first place
ljf wrote:A quick sale at $6-8k commission vs a pittance in comparison as property manager..
Yep, spot on. That's what will be going through their heads – it's all about getting the listing.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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