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Viewing 19 posts - 1 through 19 (of 19 total)
  • Profile photo of RickstaRicksta
    Member
    @ricksta
    Join Date: 2003
    Post Count: 41

    Hi

    heres a quick rundown of my situation.

    I have 2 investment properties that are neutral geared on the Sunshine Coast. I live in a rental which is owned by my parents and rent it cheap. We are on a single income and my partner is off to Uni this year so we need to move to Brisbane or commute there 3 hours a day.

    Here is the problem :/

    I want to purchase a property to be PPOR for 4 years in Brisbane then convert it to a rental but dont have the income to aquire a quality property (the bank will finance me but thats because they know they cant lose out).

    However I can afford to buy another investment property because we would have rent to subsidise the repayments.

    If I use the equity in my existing properties to finance the PPOR it still doesnt help because where ever I get the money from (savings or equity) I would be stretched to meet the repayments.

    Is there a simple solution to this – of course I dont want to sell my investments.

    Any ideas?

    [blush2]

    Profile photo of foundationfoundation
    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153

    [confused2]This is not a catch 22. You want something that you can’t afford, that’s life! It sounds like you’ll either need to sell one of your units or rent.

    Profile photo of RickstaRicksta
    Member
    @ricksta
    Join Date: 2003
    Post Count: 41

    hmmm I know your right Foundation but renting in my opinion is such a waste of money. Maybe I’ll have to change my direction and look for a cheaper alternative. eg: townhouse or unit not a freestanding house [glum]

    Profile photo of pfsfinancepfsfinance
    Member
    @pfsfinance
    Join Date: 2004
    Post Count: 171

    I’d be looking to buy something cheaper in Brisbane. Also remember in moving to Brisbane you will also save money on petrol/public transport costs. Which can also be factored in.

    Financial Wellbeing Coach
    W: http://www.pfsfinance.com.au
    E:[email protected]
    E:[email protected]

    Development Finance Specialist

    Profile photo of luckyoneluckyone
    Member
    @luckyone
    Join Date: 2003
    Post Count: 148

    Have you thought about buying the place in Brisbane in a trust and renting the property from the trust for you and your partner?

    Thanks,
    Luckyone

    Profile photo of RickstaRicksta
    Member
    @ricksta
    Join Date: 2003
    Post Count: 41

    Thanks luckyone. Does this then mean that the trust can then claim for negative gearing purposes even though I would be a director of the trust.[cap]

    thanks

    Profile photo of foundationfoundation
    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153
    Originally posted by Ricksta:

    hmmm I know your right Foundation but renting in my opinion is such a waste of money.

    In my opinion unnecessarily high interest payments are far more wasteful! Who would you rather the money goes to – the bank or to one of the wonderful ‘investors’ on this forum?[cap] You can rent for less than an interest only (IO=Rent) loan, save the difference, and watch the price of property continue to fall around you. When it bottoms out, use that saved money to pick up a bargain![king]
    Go on, you know I’m right, do yourself a favour.

    Profile photo of Big UnitBig Unit
    Participant
    @big-unit
    Join Date: 2005
    Post Count: 2

    Have you thought of approaching your accountant and discussing a section 15/15? This will aid with serviceability and is accepatable to some Bank lenders. The section 15/15 allows a monthly return from the ATO on your annual interest claim (negative gearing), hence improving your monthly position substantially.

    Regards,

    Kurt

    Profile photo of byronent_2byronent_2
    Participant
    @byronent_2
    Join Date: 2004
    Post Count: 337

    Trust can claim negative gearing even though you are the trustee, it is a seperate entity in the eyes of taxation. I am not sure how this will help your problem.

    I would like to see numbers go with this query, at this point too hard to help on info provided.

    Byronent
    Adelaide SA

    Profile photo of salacioussalacious
    Member
    @salacious
    Join Date: 2003
    Post Count: 373

    A little bird told me you can get a loan with no interest repayments?

    Dom[biggrin]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Trusts can negative gear only if they have other income. losses have to be quarrantined in the trust, so these cannot be offset against other personal income. A Hybrid trust may be a way around this.

    I don’t really think renting is a waste of money as long as you are investing the difference (renting is usually much cheaper than paying off a home loan on the same place).

    Interest free loans are still not available yet!

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
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    Profile photo of foundationfoundation
    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153
    Originally posted by terryw:

    renting is usually much cheaper than paying off a home loan on the same place.

    Only at this point in the market – the last gasp of a bursting bubble. In a stable market rent is very closely correllated to the cost of mortgage repayment. This is why the phrase ‘rent is dead money’ came from. If the market climate of the last 6 years had dominated the long term such a phrase NEVER would have added up!

    Interest free loans are still not available yet!

    And NEVER will be! Anybody care to buy a solar powered torch that recharges itself with its own light?

    Profile photo of RickstaRicksta
    Member
    @ricksta
    Join Date: 2003
    Post Count: 41

    SALACIOUS – can you elaborate on no interest repayments!!

    thanks :)

    Profile photo of woodsmanwoodsman
    Member
    @woodsman
    Join Date: 2004
    Post Count: 714

    Ricksta,

    Go the the Finance section and you will see a plethora of commentary, insults & verbal sparring over interest free…..

    Each time someone asks a question or makes a comment about that topic…I hear re-runs from Faulty Towers…..don’t mention the war!!

    Profile photo of aussierogueaussierogue
    Participant
    @aussierogue
    Join Date: 2003
    Post Count: 983

    please – rent money is dead money. this is just one of those stupid terms designed to push someones vested interest. the only reason you dont hear ‘interest on mortgages is dead money’ is because landlords dont have a combined voice…

    Profile photo of Michael WhyteMichael Whyte
    Member
    @michael-whyte
    Join Date: 2004
    Post Count: 269
    Originally posted by aussierogue:

    please – rent money is dead money. this is just one of those stupid terms designed to push someones vested interest. the only reason you dont hear ‘interest on mortgages is dead money’ is because landlords dont have a combined voice…

    Aussierogue,

    Here here!

    I decided to buy my PPOR, but only when I realised that the interest on the loan would be about the same as I was paying in rent, but that I would be living in a big house instead of a crappy little unit. The reason they ended up being the same is because I put $400K down on the house. If I hadn’t then the interest on the loan would have been MUCH more than the rent on the unit.

    Of course, I saved all that deposit by renting a cheap place and investing the left over funds. Isn’t brain surgery, but again its amazing how many people would rather pay their “rent” to a bank instead of a landlord and at a much inflated price…

    Cheers,
    Michael.

    Profile photo of salacioussalacious
    Member
    @salacious
    Join Date: 2003
    Post Count: 373

    Rent versus ownershipp?

    Has been discussed extensivley. Would like to hear more views on this topic, very interested especially in this climate of property investing.
    My view which is not important is, if you are a first home/ip buyer then buy.
    If you have 10 positive geared properties then you have a choice.
    No real answer for this just a matter of circumstance but im sure i will have to be correected.

    DOM[biggrin]

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    Hi Ricksta,

    Here is an idea…
    Get a property on a lease option for 36 – 48 months. These are the following benefits (if you negotiate the contracts correctly):

    1. Some of what you pay will come off the house price if you buy the property.

    2. You get control of the property

    3. You get the capital gain if you buy (but pay the old agreed price)

    4. You get to rent it (if you choose to) out to someone else at a higher rate than your agreement commitment amount.

    5. You can sell the property if you wish to and profit from the higher price difference between your agreed sales price (in your contract) and the new sales price.

    6. If you choose to….you can simply onsell your option (for a fee of course)

    7. No stamp duty is payable.
    8. No bank loan required – WOO HOO
    This gives your time to allow your current financial situation to change and gives you plenty of “options” to exit and walk with the profits looking for hte next deal!

    Just a thought folks – best of luck!
    Cheers,

    Kiwi[baaa]

    Profile photo of myoungmyoung
    Member
    @myoung
    Join Date: 2004
    Post Count: 33
    Originally posted by Ricksta:

    hmmm I know your right Foundation but renting in my opinion is such a waste of money. Maybe I’ll have to change my direction and look for a cheaper alternative. eg: townhouse or unit not a freestanding house [glum]

    Not if you rent something that is in a low yield area and buy an another investment in a high yield one.[buz2]You’ll actually be in a better lifestyle at a lower cost.

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