Hi Guys,
I’ve read Mc Knights 0-130 properties and Kiyosaki Rich Dad, Poor Dad. I’ve just come back from seeing a mortgage broker and can’t see how anyone can just keep buying properties?. The whole using Trusts to leverage income time and time again is a load of crap.
Don’t get me started on Veda either. Because I shopped around for a better interest rate a few years ago, there are several “queries” on my file and because there are so many in a short space of time banks may think I’m a bad risk?. WTF?.
Where to now?. I have:
– Tahmmoor property $530,000 $400 weekly rent
– Buxton property $440,000 $350 weekly rent
– Cash Money $200,000
– Mortgage $266,000You might say “Pay $200,000 off the mortgage”. I’m trying to avoid positive gearing as my child support and income tax go up. I’d like to buy 3 properties with $50,000 deposits.
Pete
Firstly….use a condom or be prepared to pay…..minimizing income so you don’t have to pay child support…..you sound like a dick.
This being said….and in the interest of helping you get more income so you can afford to pay child support I have a few questions.
1/ where are you living now? and do you have any equity in that property as you mention 2 x IP’s and rent….but nothing about your current primary residence.
2/ If you only have $266k mortgage @4.5% then you only have outgoing IP mortgage of around $12k a year.
3/ Your current rental income $750pw = $39k a year, allowing for expenses of approx 12k a year and interest of $12k a year then you should have $15k a year free cash flow, more than enough to be able to go to the bank for a 3rd investment property…..
4/ Why are they knocking you back? I think something must be wrong with the figures you’ve provided, you should be able to walk in drop $100k on a 20% deposit of $500,000 for IP number 3 and then have the next $400pw property (20k pa) pay for itself more or less eg $400k around $18k @4.5%
5/ Stick the 100k in an offset account “for bad times” and the interest reduction should cover costs for the next 12 months.
6/ June 2017 you’ll have 12 months growth on $530k+$440k+500k or around $70k capital growth which you can draw down on for IP number 4
7/ June 2018…..do the same, rinse and repeat.
So is there something wrong with this cash flow neutral plan OR is there something else we are missing out on?
Hi Dean,
Thanks for your reply. But you shouldn’t draw a conclusion with only limited info. I didn’t use a condom because when I married my wife I had every intention of getting her pregnant because I wanted a family. I never regret having my kids, I love them like you wouldn’t believe. When we married I brought $600,000 equity + $200,000 cash to the marriage, my wife brought nothing. 4 years into the marriage my wife demanded I sell both properties so we could buy a better house closer to work, buy a $90,000 car and go on an overseas holiday (all this to out do her sister). She didn’t understand about capital gains tax, losing rent etc.
When I said “No, wait until June ’16 and the inheritance I will receive will payout the mortgage, and the $750 week rental income will pay for the fancy house/catr/holiday” she packed up and left, took the kids, and refused to talk to me in marriage counselling. She demanded a $400,000 settlement and took an AVO out on me, which automatically suspended my Firearms Licence that I need for work (I work for Armaguard) and stopped me from seeing my daughter 3 years and son 4 months. I haven’t been able to work or see my kids for the past 9 months.
Is it unethical to minimize child support? A lot of people minimize tax that pays for hospitals and schools. I don’t think it’s unethical in my situation because I know my wife will spend it on herself going out to cafe’s with friends etc. When she first left I visited the in laws to find grandma looking after the kids why she was out socializing. I had to go and buy some nappies for the kids because grandma was down to the last one. If I knew my wife was going to spend it on the kids I’d have no problems paying. The way I see it, every dollar I withhold and invest now, is $5 they’ll have towards a university education or a house of their own.
Summary:
– Demanded I sell houses cashing in $600,000 equity + $200,000 Cash
– When I said “No” Left me, and wouldn’t let me see the kids
– Took out an AVO costing me my job
– Put Caveats on the houses so I couldn’t refinance to draw back a little to live on
– Can’t claim Newstart Allowance because I have to much in assets.
– Demanded $400,000 settlement after 4 years of marriage even though she contributed nothing before or during marriage
– Had a $80,000 pa job to go back to. But hasn’t gone back, so she can claim Single Parent benefit, and legal aid, and avoid paying me child supportNow this isn’t a relationship forum, it’s a property investment forum.
The broker said another 500k house wouldn’t be a problem. But I was hoping to buy 3 houses with 50k deposit and 50k safety net. Serviceability seems to be the main concern with my 2 casual jobs, and as explained above, lack of income for the past 9 months.
Pete
I just read points 6 & 7 and that makes sense to me now.
Wow about the AVO and losing your job with armaguard because of the need to be carrying….. interesting conundrum.
As for the breakdown of assets, no idea how that’s going to go down, my advice is to wait….you’re probably going to need that 200k to buy out your wife and as you seem to have your head screwed on right you wont want to be selling property you’ve already paid stamp duty on in order to do so……
Stick it into an offset to help you save outgoing interest payments and try to “move forward with amicable settlement asap”
This being said once you get back on your feet…..yep read points 6&7 if you try buying 3 properties with $50k deposit each like you wanted serviceability becomes the issue, do it like suggested in 6&7 AND make additional payments each month for 12 months then you demonstrate to the bank you can take on an additional place every 12 months and let inflation do all the heavy lifting for you.
Its not sexy…..but you get there in the end.
Pete
Not many people can keep on buying properties these days. Even with high incomes. I had a client the other day on $250k with 5 properties with 50% LVR. I though serviceability should be fine for another, but after checking it was very tight. We were just able to squeeze in one more.
You will probably tap out very soon.
Do you mean you have a loan of $266,000 in total? If so that is a good LVR. You would almost be debt free taking into account your cash.
What about your home where you live – renting or paid off?
It is probably better not to use your cash as deposits but to borrow the deposits – you have plenty of equity it seems
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Guys,
Some really good info. I guess I’m just feeling restless and keen to jump in head first. You are right I need to wait a little until I get the divorce soughted.
But it’s hard when you see an old (but tidy) fibro house in the middle of a 1400m2 block that no one likes because it’s not modern, new, or fancy. I think “Build new brick piers and pick the house up and move it to the left boundary fence, and put a fence up the middle, and PRESTO an extra block of land and $360,000 capital” Borrow against that $360,000 to build a house on the new block and hardi plank the old fibro place.
TerryW: Yes $266,000 mortgage on BOTH properties
Pete
I noticed someone reported Deans post. There is no animosity towards Dean. I can understand how he can draw the conclusion he did. I hate dead beat dads too ;) All good
lol maybe they didn’t like the use of the word “penis” :)
This being said not sure if you saw my post about the issues we are having with St George Bank as of last Thursday…..so proves my advice was worth the paper it was written on as well :)
If you get into trouble for saying dick, what happens if you call someone a pussy?
lol nothing if its a cat…..out to the woodshed for a whooping if its something else :)
good to see you can joke about the situation. good luck with your decision, be sure to circle back and post how it all works out in 6-9 months once the solicitors have finished dueling it all out.
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