Iam from sydney (renting and haven’t yet used my FHOG) but have two investment properties in W.A. They are both negative geared properties, I get approx $540 per month so basically I fork out close to $500 each month to maintain it. The second property is a bit better its only slightly negatively geared. I also have personal debts of approx $30,000. My question is this….to get out of this whole and start on the path of buying positively geared properties would I be better off selling the first property and using what little equity I have to pay off the remaining personal debts…..and then wait another year and sell the second property. I’ve had the first property for two years and the second for 3 months.
I’m also in desperate need of a good accountant, live in Sydney South-West if anyone knows of an excellent accountant PLEASE let me know.
Steve I would love your feedback on this….I want to get somewhere in life but i think iam going backwards real fast.
Joeanne I would sell the property that is taking the money out of my pocket if there is a little profit or equity payout my personal dept and start to look for +cash propertys . Also try to stay away from personal dept it is a big part of being finacially free . Only borrow money for things that make you money, thats my advice .
It is difficult to make suggestions/ assumptions on the information provided, but here a few.
You will need to supply figures of your equity in both places if there is any to receive better advice. You say you have 30K in personal debt but how long are these loans for? Are you able to combine them in to one and shop around for a lower interest rate. You may also need to think about down grading your lifestyle a little or changeing to a cheaper car and removing some of that personal debt. It is difficult to make suggestions/ assumptions on the information provided.
I would definitely not sell, unless the $6k/year NG loss is causing pain. Even then there are ways to ease the burden. WA has great CG prospects, why swap it for CF+ properties that have very limited growth potential.
Here’s a couple of options to think about
1) Open a new $60k LOC, secured against the property you’ve had the longest as it would have had good growth. Use that LOC to fund the NG shortfall for years to come. Remember as rent rise the shortfall will decrease over time.
2) Open a $100k+ LOC and invest in some high yielding (9%+) shares or LPTs. The income generated is going to go a way towards funding the shortfall, plus you will hopefully get CG form the shares. Plus you are nicely diversified.
Selling should be done as an absolutely last resort.
Keep the perth properties, you may regret it if you sell them! Dont believe everything you read, both the CF camp and the Cap Gains camp have good points that will help you with your decision, as long as it fits in with your long term goals go for whatever you feel comfortable with!
I use my Perth Accountant he is awesome, if you want his details PM me otherwise try one of the suggestions on here [grad]
Dev * [kid]
PS – You wont get the FHOG now as you already own properties… Keep renting tho, thats a great idea.
Thanks Dev for your post. But I was under the impression that as long as the properties are investment properties only and not your prime residence I can still use my FHOG to purchase my own property to live in down the track if its still around then.
Great advice on this topic. I’m also a fan of not selling – unless the -c.flow is causing too much pain.
Perth is apparently still growing and a great market according to many.
I have an absolutely awesome accountant. Knows all about property, is an investor and developer himself and a structuring expert. Located near Parramatta. Send me an email and I’ll give you his details.