Where to go from here!

Hi Shane,
G’day,
You ONLY earn about 80K per annum? That’s not a bad income to start with.
Have you investigated what the bank will offer you to continue borrowing? Perhaps a broker could evaluate your position with the three current -IPs to determine your current borrowing capacity to go and purchase +IPs.
How much are your holding costs for the -IPs? Would you need to sell all of them? Don’t forget the CGT if you do.
I earn a little less than 80K pa. I have managed to achieve three properties in Brisbane in last two years one PPOR and 2 -IPs. I am now buying +ips and have had no issue going about getting the lending.
As I see it – with only the brief info you have given us:
1. Keep IPs and get bank to lend for +ips
2. Sell one or more -Ips to access cash to deposit for +ips
3. Sell all -IPs to be able to access more cash
4. Better yet, consider accessing the equity in IPs without selling and use this as deposits for future +IPs.
Your decision to sell or hold the -IPs will really depend on things like:
do you think the market has peaked?
How much does it cost to hold them? do you think that the net growth will be greater than holding costs if you continue to hold?
how much disposable income do you currently have to show the bank to get more borrowings/
how much equity is in the -IPs that could be used to redraw to pay for deposits on +ips?
Lots of things to consider, and a full proof answer can’t come from any of us really – especially with the brief info given.
I suggest a mortgage broker to look at: where you are at now, and possible scenarios if you moved on one, two or whatever IPs or redrew against equity in them.

Good luck

CD

CastleDreamer

Hi Shane,

You need to look a little further than simply looking at your weekly cashflow on your existing properties.

Sure they may be ‘costing you’ money each week – but if they have grown by more than they cost then you are in front – consider it a little like savings and placing money away to be used later or even better releveraged into something else.

I would also ask have you taken every step to minimise the weekly outgoings; depreciation report, interest only loans, tax variation completed, maximised rent etc If you haven’t considered these matters then address them and then see where you currently stand.

Now back to your original question – you will be surprised by your borrowing capacity.

I wonder how extensive your investigations about your borrowing capacity have been. While you may believe, or your lender has said no – there are a number of lenders out there who will, in all likelihood, be able to find you a symapthetic lender with policies more suited to you and your situation.

Lenders will consider your total asset value and will consider a large percentage of your rental income. They will also consider the expected rent whenever you apply for a new property loan.

Derek
[email protected]

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Dear Shane,

We cannot offer a solution to your problem as we are in practically the same situation. We too want to concentrate on +ve geared properties but have three -ve geared – but on serviceability we are about maxed out.

Kiwi mentioned negative geared rescue solution -what does this mean?

I have jsut been reading a book by Wakelin – ‘Streets Ahead’ where they believe the answer is in purchasing property with high capital growth, and hanging on for the long term.I can see the sense of hanging on to what we already own which are all in high capital growth areas.

So we are at the point where I can see possibly a combination of both ideas possibly working but we need to now get the funding to commence purchasing +ve geared or +ve cash flow as Margaret Lomas says in her book.

So Shane, we are like you – looking for a solution.

Looking forward to other ideas from other members.

Peter G

Have you worked out the figures as to when each of the -ve properties will become +ve. Maybe you could use some of your good income to pay extra off the mortgages for a while. Once 1 becomes +ve, then pay off the next one……until all are +ve. Alternatively, do all the calcs for each property for current and projected figures and then compare. Keep the 2 best ones, sell the other and use the net proceeds (remember CGT) to get the first two into +ve, and keep some cash for deposit for future purchases. whatever you keep, consider to fix the interest 3-5 years so you have some control over costs. Magpie