Looking for feedback on our situation.
Currently own property valued at $429,000 paying interest only(short term) at 7% loan amount $248,850.Refinanced so we could build another property approx value $340,000 at 6.39% interest only (short term) loan amount $256,604.
Initial idea was to sell $429k property and move into $340k property to bring mortgage down so we could do some cosmetic reno's.
Having spoke to an accountant he is suggesting that we rent out the $429k property at approx $380 pw currently our ppor and keep it for 10 years waiting for the property to reach approx $700k in value.
Move into the new build and continue living there for approx 10 years or more and then sell one of the properties giving us a property to live in and money to invest bearing in mind I will be 64 by that time.
My initial thoughts as I mentioned was to sell the $429k to help reduce the new build and so we could be more of an active investor and not a passive one just waiting for capital growth. The $429k rental value would pay for the mortgage we have over the property.
Any thoughts?
Firstly why are those interest rates so high? Secondly, speak to a your banker and broker to do the numbers and see which scenario adds up. Thirdly, have you considered other strategies such as purchasing property under an SMSF or NRAS?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Depending on your borrowing capacity you may be able to keep both properties and extract equity to purchase more.
The only immediate issue that springs to mind is your age.
This isn't always an issue – particularly when purchasing investments rather than a PPOR but it needs to be carefully mapped out by your broker/banker when they put the application up to credit.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Shahin,
Thank you for taking your time to reply.
I will certainly give this some thought.
Interest rates are because I am self employed and went for Lo doc.
Thanks! It was a strategy I had in mind
Jamie strategy is great, I would also look for some LO or IC properties to boost cash flow – that's how I become full time property investor.
All the best.
Sorry pert, but are you only 44 years old and not 64 ?
I'm 54 years old.
Hi, what is LO and IC property?
LO / IC = Lease Options / Installment Contract.
Just bear in mind Prime come from the UK where you don't have to be Licensed to carry out such an investment strategy.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I think that is still high. If you are 54 then there are a lot of pros with buying property under an SMSF.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
pert wrote:Interest rates are because I am self employed and went for Lo doc.
If your finances are up to date and you qualify for a full doc – it would probably be worthwhile refinancing to a more competitive product.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Interested in your comments. I am looking at a few different scenarios.
1/ keeping my ppor and renting out investment property, problem is this scenario is not going to create much in the way of capital growth in the for seeable future.
2/ Sell ppor, move into investment property set up an interest offset account putting in approx 200k.
200k could be used for deposits for future investments. (as seen on property success with Margaret Lomas).
Any thoughts?
May we ask where this property of yours is located, and also I am interested in knowing how you decided there will not be much in the way of capital growth in the foreseeable future?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
One of the props in Leopold at approx 12 squares and the other is in Drysdale.
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