[YazdanParticipant@yazdanJoin Date: 2014Post Count: 5]

June 11, 2015 - 9:33 pm

Brad C wrote:

Have a look into this lady, she seems to deal with the legal side of protecting yourself from going bankrupt. I have only seen a few video recordings of her but her style of asset protection and helping people in your situation intrigued be. so have a look and touch base with her

http://dominiquegrubisa.com.au/%5B/quote%5D

Thank you for your suggestion Brad C, I have sent an enquiry through.

I won’t know if I don’t ask so I’ll wait and see what sh’e about. From what I have read about the ‘real estate rescue’ side of her business it seems it’s more around her company purchasing distressed properties, quite ironic I think considering it was one of the things we were looking into a few years ago after attending a ‘property education seminar’ now it seems I’m on the other end of that table and not the good end, how so very frustrating and sad :) and they say hindsight is a wonderful thing. I suppose this is a lesson I have to learn and hopefully I get the opportunity to continue investing in the future where I can make better choices/decisions and learn from this :)

[YazdanParticipant@yazdanJoin Date: 2014Post Count: 5]

June 9, 2015 - 1:40 pm

newandkeen wrote:

“Even the sale of a property with some equity may not be possible as it could trigger a valuation and then the bank will require existing loans to be paid down to maintain acceptable LVR – which you may not have the funds to do.”

You need to know under exactly what circumstances would such valuations happen and what the outcome would be. In particular, what would trigger a valuation of IP3?

My understanding is (based on advice from brokers) that this could only occur if the properties were cross collaterised which in this case they aren’t, therefore I could sell one of the properties and it wouldn’t trigger a val on IP3 or any of the others. The only time IP3 would be valued would be if I wanted to refinance that particular property elsewhere which would trigger the val process. I could be mis-advised, not sure???

IP1 & IP2 are with Lender 1, PPOR is with Lender 2 and IP3 is with Lender 3 all separate institutions. Also should be noted that IP4 (with same lender as PPOR) is under a company/trust structure not in our personal names whereas all the others are a 50/50 ownership.

[YazdanParticipant@yazdanJoin Date: 2014Post Count: 5]

June 9, 2015 - 10:52 am

Terryw wrote:

It sounds like all your properties are cross collateralised and you may not be able to release the mortgage even if you managed to sell a property. I wouldn’t borrow from family as it may be unlikely you will be able to repay them.

Hi Terryw,
Thank you for your suggestions. I assure you the properties are not cross collaterised. This is one rule I have never breached in investing, all our loans are separate and only secured by the property they are borrowed against.

Unfortunately the money we borrowed from family was with the best intentions to repay as soon as the reno finished however the property didn’t sell, we had a contract on it for $800k which fell through due to the agents incompetence. The reno we did on IP4 didn’t go as planned and time frames blew out by a ridiculous amount resulting in cost blowouts and increased holding costs etc compounded by no sale resulting in having to place tenants in the property to keep it until the market improved. We are considering placing it back on the market this year however not sure whether there has been an improvement in values but we are hearing that it is a good market to sell in.

Terryw wrote:

One strategy may be to stop paying the loans now or to just pay 1 loan, get this one down and sold and then let the bank take possession of the others.

Not sure how this would work exactly, does the bank not just come in repossess the property and sell regardless of whether a loss or profit which then if short we are still liable to pay. Also not sure how this helps in the IP3 situation as the property is in negative equity of $320k which the bank would then chase us for and we don’t have that kind of money just laying around to pay them out therefore we would have to declare bankruptcy which is what we don’t want to do either way we end up with a ‘black mark’ against our names forever.

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June 9, 2015 - 10:37 am

newandkeen wrote:

1) Do you have parents or people that you could move in with for a couple of years and rent out your PPOR? Perhaps even renting in a cheap share house and renting PPOR could give you enough cash flow to live in a reasonably stress free manner? OR get a border in to live with you.
2) Go pay for and talk to a financial planner and get professional advice.
3) If you are facing a situation of no-one in your IP3 for a year, I would offer some kind of incentive, whether it is a lower rate of rent or maybe first month free or something, as you can’t afford that length of vacancy.
4) My impulse would be to hold on as long as I could in the hope for capital gains in the other properties. I don’t know what your options are but if you are considering bankruptcy, I would try to hold out at least for 50K capital gains in one of the houses and sell it to repay your family debt first. In bankruptcy, your debts can be legally wiped *with penalties* but your family will still want their money, they are family…

Hi newandkeen,
Thanks for the suggestions and taking the time to respond, I really appreciate it. I have provided the answers to your suggestions below.
1) Unfortunately husband’s father resides in NSW and we cannot move there due to work commitments and my family have disowned me (long story but short version due to me marrying a non-muslim aussie :( so moving in with them is never going to happen…lol! Also we have two teenage kids a 17yr old and a 13yr old therefore the share house or boarder wouldn’t be an option for us.
2) Not sure a financial planner would be able to assist in this situation but I have considered liaising with my accountant to try and restructure some of the properties and a broker to refinance IP1 & IP2 to I/O and use the extra funds to pay down IP3 as much as we can but that’s a short term fix.
3) I will definitely be lowering the rent to keep it competitive in the current market but even so the feedback from agents in Moranbah is that even that may not work as workers are just being layed off constantly and they’re finding it difficult to get employment locally.
4) Yes I agree I wouldn’t want to let family down and would do whatever I could at any cost to repay this.

Ideally bankruptcy isn’t what we want to do as I believe the repercussions of that will be lifelong and will set us back way too much to ever succeed in being financially free. IP4 is in Daisy Hill QLD, so not sure that we will see such growth anytime soon. IP1 & IP2 are in Loganholme and out near Ipswich QLD respectively so as far as capital growth goes again unsure that this will be in the near future.
We were thinking to sell IP4 not yet repay the family debt and use the funds to subdivide the PPOR and sell off with a view to then repay the family dept of $50k and relocate ourselves to a new PPOR or even rent and pay down whatever is left on IP3 but timeframes are going to be short as the tenant will be leaving the Moranbah property in Sept 2015 and we can only sustain a vacany for so long….:(

• This reply was modified 8 years, 11 months ago by  Yazdan.