I would appreciate some unbiased opinions as to what my parents should do as they are ready to retire. I am very bullish on real estate so i might not offer the most impartial advice
Current position
IP 1 Worth $450 (retail premises) rents for $24000 per annum and in the 10 years its been owned never been vacant.
IP 2 Worth $300K (residential) rents for $12000 per annum
IP 3 – 7 Block of 5 units worth $1210000 when complete (2 mths away) will fetch $55,000 they will have cost $850,000 but if we keep them all we can get a $75,000 rebate (GST)
PPOR Worth $400,000 (would rent for $18,000)
The LVR will be 22%
My parents would like to downsize and this will cost them $400K to find something suitable. If they borrowed against their portfolio and keep all the above the LVR will be 33% This is the strategy I am recommending.
I develop properties on a small scale and my belief is that they should fund another development of 3 units amongst a parcel of 10 that i will be doing and hold them for rental on interest only as they will be cashflow neutral and in 5 years draw down on some equity. (note i dont need their financial support to do the development just thought its in their financial interests)
Mum and Dad would rather sell their current PPOR to fund the purchase of the new PPOR and sell one of the units they are developing I cant see the benefit of selling as you only have to pay agency costs of say $12K for the PPOR and $7500 for the new unit plus pay tax (which if they dont sell they save the 19K plus tax and can use it as their out of pocket expenses over the first 2 years
Any thoughts or comments would be appreciated
You must be logged in to reply to this topic. If you don't have an account, you can register here.
