All Topics / Help Needed! / Heavily negative geared! Should i sell???

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of PosEnterprisesPosEnterprises
    Member
    @posenterprises
    Join Date: 2006
    Post Count: 290

    Hi folks my IP is quite heavily negatively geared and losing alot of cashflow each month.  I have LOC against it but is slowly running out. It may take another 3years before i can see some positive results.  With RAMS and they have put up rates again and have a big break fee if i sell or refinance.

    Any idea what i should do?  The House and Land has potential for future growth but should i wait for another 3 years before i can purchase another property?

    What should i do?

    any help appreciated thanks

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hi. A lot would depend on your LVR and the property value before I could give you my personal opinion, but if you have a bit in it, and want some cashflow relief, depending on the actual Rams loan you have, biting the bullet and refinancing into a fixed rate loan with the likes of NAB or St George @ current fixed rate specials  (7.59%) may be enough to grin and bear the discharge fee, (against future gains??) and get the repayments down for you to hang onto it. However if you have to go lo doc, (I am assuming your loan is variable) you will likely be better off just leaving things as they are. Sadly, I don't envisage you getting a cheaper rate from your current lender in the near future, and their new fixed rates are not at all competitive. Without more specifics though I'll leave it at that. All the best, and hope you get some growth down the track. Cheers.

    Profile photo of The ContrarianThe Contrarian
    Member
    @the-contrarian
    Join Date: 2005
    Post Count: 97

    Can you improve the yield on it somehow…? ie. increase the rent, to minimise repayments?

    For eg:

    1. a quick makeover… Paint, lights, steam clean ?

    2. Rent by the room

    3. rent furnished etc…

    Just ideas.

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi PosE

    If your negative gearing has you in an uncomfortable position, it may be possible to on sell your property(s) utilising vendor finance.  If you have multiple negatively geared properties, it may only be necessary to on sell one of these, as the positive cash flow from the sale may support the other property.

    I'm sure you'll find a number of Vendor Financiers on these forums that may be able to help you put a vendor finance sale together, eg a Wrap or a Rent To Own.  In our experience, these sales have always produced positive cash flow.  Good luck.

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of ffc1883_1996ffc1883_1996
    Member
    @ffc1883_1996
    Join Date: 2007
    Post Count: 24
    If you sell you'll regret it forever. Perhaps you can get your LOC limit increased to give you some more breathing space. Or perhaps another loan can be taken out if you have some equity somewhere. This is where a broker can help you.

    Suffering break costs with RAMS would likely be cheaper than selling a good asset.

    Profile photo of hbhb
    Member
    @hb
    Join Date: 2005
    Post Count: 179

    wow heavily geared, the last thing you'd want happening is whats happening here……………

    http://www.youtube.com/watch?v=10WoQZKZkNs

    good luck

    Profile photo of bardonbardon
    Participant
    @bardon
    Join Date: 2004
    Post Count: 557

    Interetsing stuff my cousin just bought a couple of waterside homes down there and he reckons its a once in a lifetime opportunity

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871
    ffc1883_1996 wrote:
    Suffering break costs with RAMS would likely be cheaper than selling a good asset.

    Mmm. I think at the moment that is 110% correct…….even for a dud asset!

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