All Topics / Help Needed! / Cash flow issue

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of Dragon72Dragon72
    Participant
    @dragon72
    Join Date: 2003
    Post Count: 3

    Evening all,

    Some input needed from the experience gathered on the boards.
    We have owned a unit in sydneys east last 3 years. Rented out at 380 per week, presently ‘worth’ ~$600K. Negatively geared as wife & myself in highest tax bracket. Had to drop rent 15 months ago to get present tenants in. CF -ive $4K p.a.

    The issue….
    Wife about to have a kid in June so 30% income gone for a few months and she will most likely be part time for a while. THe squeeze is due to sold an IP last year and bough home in inner west 10 months ago. asset ok cash poor :(
    Timing not great but nature has a way of doing this to us mere humans!
    Would love to keep unit due to unique features/location but my income and rent will not quite covr the 2 repayments and cannot live on $0..

    Options
    Sell
    sell part to family
    borrow off family
    wrap/lease option

    Any others?

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Dragon, another option is to establish a LOC or offset account against the IP, and borrow some extra $$ against it – BEFORE your wife stops working.

    If you get, say $20K (or more, whatever) and have it sitting in the offset account, you won’t pay interest on it until you use it. then you can use this money to fund the repayments while you need to. yes, it is increasing your loan, but not by a massive amount, and enables you to keep it.

    Cheers
    Mel

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hi Dragon,

    Have you thought of setting up a MISA account,(Mortgage Offset Savings Account) this is another option available?

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of The DIY Dog WashThe DIY Dog Wash
    Member
    @the-diy-dog-wash
    Join Date: 2003
    Post Count: 696

    Maybe you can acquire a cashflow positive property using the equity in the unit and have net passive income to help offset the unit mortgage.

    cheers
    LeighK[:D]

    Carve your own path and lead the way …

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Dragon

    It will be hard for a few months, or maybe years (from recent memory!), but you will get thru it.

    I don’t like to see people sell. I woulld do what Mel suggested, set up a LOC or redraw now just in case you need it to live on for a while.

    Tax time is comming up soon so you may get a nice tax refund too. Maternity allowance also is about $900, and you will get some money from family payments.

    If you really get into trouble, could you rent one of your bedrooms out to a student?

    As a last resort you could sell, but the process could take around 3 months before you get your money.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    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

    Profile photo of Dragon72Dragon72
    Participant
    @dragon72
    Join Date: 2003
    Post Count: 3

    thanks all – food for thought

Viewing 6 posts - 1 through 6 (of 6 total)

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