Forum Replies Created
Ball park allow 5%
Exact stamp duty can be obtained from the office of state revenue (or equivalent) for the state the property you are buying in.
Spill should have extended to the whole of parliament and let the people decide.
The farcical games this lot are playing are amazing – they are there to govern for the people and not their own egos.
Seriously – none of those options looks particularly attractive.
In replying below I have assumed you have cash for all options.
First one – nets $8.5K and little or no growth. Studios generally only suit cash buyers and by extension the pool of potential buyers is limited.
Second one – nets $10.5K on a $420K investment with questionnable growth prospects.
Third one – after recent brushes with flooding in Qld/Brisbane area I doubt many (if any councils) will allow redevelopment on flood prone land. Even if you get the development passed by council buyers are more diligent with investigating, and steering clear of, flood prone areas.
Been a while since I looked closely at Brisbane market so cannot give any direction for you. Others will come along with a more comprehensive knowledge of the areas to make recommendations.
Hi Paul,
Fixed rates are pretty low right now and I don't see a lot of value in trying to time the trough to perfection.
If the numbers work for you at the moment then lock in. At least you'll have certainty for the duration of your 'fix'
Having said that be mindful you do not fix for too long as break costs can be expensive. From my perspective I reckon 3 yrs is a good timeframe – not too long not too short.
Obviously your plans will have a key role in determining what time frame best suits you.
Agree with Freckle.
Single house/property not worth the expense of a legal challenge.
I would also add some of the modern building materials look outstanding.
Just need to rethink your thinking.
HI Kristy,
I might be well off the track but reading your more recent comments would suggest, to me, that you need to make some serious changes to your money habits.
1. FHOG used to pay out personal loan,
2. Thinking of a new personal loan for a car.
3. Needing Dad to go guarantor for approximately 20% of property purchase price.
I reckon you need a more of a savings focus in your life to such an extent you save for the things you want. A little delayed gratification will not go astray.
Now onto the subject of your current loans – what I am about to say is somewhat contradictory to my previous comment.
An option that may be worth exploring is to ask your broker if it is possible for you to sell your property and after paying out as much debt as you possibly can shifting your Dad's guarantee back to his own property on the understanding that you pay off the debt as quickly as you possibly can. Shahin may be able to say if this is possible.
Also working against this option are the break costs you are likely to incur getting out of your fixed loan.
Another option may be to see if Dad can help you out for the interest on the $44K – I must admit I am not really in favour of this but it may be an option.
But as I said at the outset I think a review of your spending habits may be in order. I can assure you it will be worth it in the long run – having had to some serious work on my folks spending habits when their money ran out. That is not to say you are heading down the same path but there are some alarm bells there for me.
Hope this helps.
Hi Tom,
If you are chasing private funding I would start by talking to your broker. They often have private funding sources available to them.
A key component of the philosophy of an interest only loan is to hold onto an investment property that should increase in value over time.
Using an interest only loan to buy furniture/carpet etc means your debt level will be greater than the value of the underlying 'asset'
Think carefully about this one and consider the bigger picture.
Hi Fingers Crossed,
Someone ahead of me has already suggested a more thorough examination of the situation.
Have heard of builders rubble, dried concrete being found in pipework after the builder has left the scene. Could be circumstances combined in a mini-perfect storm scenario and resulted in a blockage.
Hi Kristy,
A few points that maybe of assistance.
1. Start your PAYG form now. They take a couple of hours to fill in and the effect of them takes about 6 weeks to come through. This means you'll have two months with a lower rate of tax. While this may not be the perfect solution it will release some of the pressure.
2. I also am confused by your loan position. What you have said (and your brokers comments added in for good measure) have me lost. How did you buy the property originally? I cannot understand how your broker is suggesting your LVR is less than 80% – that just does not add up. Might be worth your while going back to your broker and getting clarification on this – how has he/she worked your loan to be less than 80%?
3. My concern is you do not seem to be in a position to ride out any unplanned expenses (eg dog). Now this may seem a bit harsh – but are you careful with your money? It could be the other side of your life can do with some financial pruning too. This may help out in the short and long term.
4. Certainly investigate rent to buy, vendor finance etc as an option. If this does not work out then I would seriously consider selling up. Sure you'll have a deficit to address but do the maths, explore some options to cover the shortfall and get creative.
PS – sorry to hear about your dog.
Agree with Jamie – assume the funds are borrowed from line of credit or similar.
kochy1983 wrote:My boyfriend is in a fair bit of a better situation than myself with his place but being a uni student does make it tight also. He seems to be against interest only loans.I see you are in Perth but you wouldn't know any financial advisors in adelaide would you? Do you think it would help us to see one?
Hi Kristy,
Oops about hubby V boyfriend.
Re: Interest only loans. You need to slap your boyfriend. Seriously if he converts his loan to interest only it need only be for the duration of his studies.
Having said that interest only is a common strategy employed by many property investors for a great many valid reasons and for as long as they can. They may combine an interest only loan with an offset account to have the same effect as P & I.
Secondly if your boyfriend converts his loan to interest only he can continue to make payments as if the loans was P & I – having the flexibility is to his advantage moving forward from here.
Sorry cannot assist with Adelaide resources.
Cheers for that – I am am just filing information away just in case it is ever needed.
Hi Kristy,
Apologies for the tardy come back to you – been out doing some more bushfire training with another group of volunteers.
Simply converting both of your loans to interest only will make a significant adjustment to your situation. Now before you run off and get these wheels moving a word of caution – ANZ bank (there may be others) may not let you simply change your loan to interest only without redoing an assessment of your financial situation. If this the case then take this part warily.
On this note one of the resident brokers may be able to tell you whether, or not, your current lender/s will convert to interest only without any form of reassessment.
But back to the numbers after converting both loans to interest only:
House 1.
By my calculations (using 6% interest rate) your net cashflow position would be -$5220/annum (($435/month)
House 2.
By my calculations (using 6% interest rate) your net cashflow situation would be -$1740/annum ($145/month)
In effect your total savings using an interest only option would be in the vicinity of $470/month. Note this assumes you can negotiate an interest rate of 6%. With your reduced borrowings this may be a challenge for you both.
On top of this you can also submit a PAYG tax variation to help ease the cashflow squeeze for you both. In effect you forward estimate your tax position to the ATO and they will reduce your regular pay period tax. A depreciation report would provide extra benefits to you on top of this.
Having said that the PAYG variation option would be more suited to you and your situation than hubby's but hubby could also pursue the same option too.
On top of this you may be able to make some cosmetic improvements to the properties to improve rent returns – the problem you'll have here is that funds are already tight so you will be limited in what you can do. On this note I would also check with your property manager to make sure you are getting market rents for each property. You never know if you don't ask.
have you considered 'vendor finance' – there are plenty of resources around the place that explain this in some detail. This will help to improve your cashflow.
But the key question is "is it all worthwhile?"
If, after looking at the numbers I have crunched for you, they still look unattractive then selling up is not a bad option and starting again when you are in a better financial position. Sure you are not going to walk away with a lot (if anything) but releasing the current pressure valve in your life is not a silly thing either.
Hope this helps.
Hi Sean,
Not Jamie and not a broker but it would work like this.
Establish a line of credit facility secured by your PPOR. The size of the line of credit should be large enough to cover your expected deposit and purchasing costs. This will roughly be 25% of the purchase price of the property.
At the same time your broker should be setting up another core loan (assume 80%) secured against the new IP.
If you haven't got a broker onto the job then I suggest you get in touch with Jamie. Get him to do the lot.
H Kristy,
Haven't heard that one before – are you speaking with a bank directly or through a broker?
What rents are you getting?
How much are you paying for rates, insurance etc?
Are you likely to return to live in either place in the future or do you have plans for elsewhere?
If you provide this information I'll be able to give you a more detailed comment
Hi Kochy,
Are your loans on Interest Only – or can they be converted to such? As an interim measure this will ease the squeeze a fair bit for you.
Hi LC,
Cranbourne was heavily marketed to investors. I am sure you could do better.
Hi Tuo,
There is no right or wrong answer.
One of the reasons you'll get conflicting points of view is that many people do not understand there is not a one size fits all model and that you need a combination of growth and cashflow to successfully invest in property. One without the other and, sooner or later, you will reach an impasse.
And when you hit the sweet spot you get both in the one property. Typically these would include renovations, buying under market value, small scale developments, small sub-divisions, buying under value and so on. Each of these does not come without risk but then walking across the road can also be a risk from time to time.
At your age and income you have plenty of time on your side so there is no need to rush forward and in your haste make a mistake. Step back and try and work out what is right for you.
One of your primary considerations is your current employment – while the income is very high (congrats by the way – you must have excellent selling skills) I would be very thoughtful about the level of security & certainty of employment and income in your current position. I don't know what sales area you are working in but make sure you do not over commit yourself in the portfolio building phase of your journey.
Some throw away lines (in no particular order) for you to consider in your deliberations:
1. Retain cash in an offset account as a buffer and just in case your employment/income turns south,
2. Work out what YOUR long term strategy will be. This can evolve over time but have a big picture in mind when you start.
3. Some people throw their investing net as far and as wide as they can and miss some opportunities right in front of their noses.
4. Study your preferred area so you can spot a bargain. This will take time and be prepared to wait.
5. Continue to build you cash reserves to make your eventual borrowing position as strong as it can be.
6. Do lots of reading to build your knowledge base.
7. Find yourself a decent broker so they can help you along the way. A good one will be invaluable to you as you progress along your journey.
Hope this helps.
Hi Jannan,
How long ago did you get the Urathane done?
Just curious.
