- SonyaParticipant@bonzasonzaJoin Date: 2014Post Count: 6
Hello lovely forum folks.
I am hoping you may be able to offer some general advice for me in my current situation, or answer a couple of my questions.
I am 31, just returned to my full time job (of 10 years) after taking a 2 year maternity leave absence (I have 2 under 2). My husband was made redundant just before our second child was born, but because our son was quite ill as an infant he did not return to work initially, and then we received small inheritance that enabled us to cover the mortgage payments and scrape a full year off work together. It was tight, but it was an opportunity that we made the most of and has given us the motivation to build up enough passive income to be able to take time off work together again. My husband also obtained an ABN about 6 months ago and has done some occasional consulting work back to his previous employer and clients, but he is now a SAHD. Until 8 weeks ago we’ve had a year with no steady income.
We have two investment properties:
Property #1 is a 2×1 unit purchased 2010 for $351K, owing $304K and currently valued at $425K. Long term tenant paying $330/week
Property #2 is a 4×2 house purchased 2011 for $425K, owing $384K and currently valued at $525K. Not currently tenanted, will be advertised next week for $460/week.
I have just recast the loans out over 30 yrs and switched both to IO loans. The interest costs are now ~$2,680 per month.
Gross rental return $3,425/month.
Currently $15K cash in an offset account. My income ~$100K pa
We have found a potential investment property in a major regional centre in NSW for $150K where IO repayments are $130/week and current tenant is paying $250/week. The house is structurally sound but in original commission housing condition, and there is definite scope to increase value. The maximum sale price in that suburb in the last 12 months was $380K for a 3×1 (albeit in much nicer condition). I have run the numbers through several online calculators and this property appears to be cashflow positive each week after all expenses and allowing $2K pa for maintenance.
I have approached the big 4 banks and they have all indicated they would be happy to use the equity I have and lend me 100% of the purchase price, plus capitalise in the stamp duty and purchasing costs.
My long term plan is to maintain IO payments until the rental income is sufficient to switch to P+I and still be positively geared, then slowly pay down the debt over time. I want to own at least 10 properties in 10 yrs time. I haven’t much thought beyond that because I am very new to this, and I don’t know enough to have a definite strategy yet. I do know I’m a long-term investor type.
My questions are:
1. I have arranged an appointment with an accountant to discuss setting up a trust and/or company arrangement for property investing going forward. What are some things that would suggest I have found a good accountant (or any red flags for a bad accountant/bad advice)? Are there any specific questions I should ask about investment and taxation structure?
2. I am in WA. The investment property is in NSW. My father has inspected the place and I trust his judgement over even my own when it comes to a critical inspection. BUT. If we go forward I’ll be buying the place site unseen. Has anyone ever bought site unseen, and what issues might I face? Anecdotes of deals gone well/badly?
3. How do I know if our current loans are cross-collateralised? Is it possible to use use equity to purchase the new property without cross-collateralising (and without using our cash reserve for deposit)?
4. I want to purchase the property in both names, but I know the banks will not lend to both because my husband is newly self-employed. Is it possible to ask for a mortgage in my name only but the asset be held in both names? Does my husband become a guarantor in that instance?
5. What can I do to help purchase the next property sooner? I don’t want to wait another 5 years! Easter next year is my goal as I will be visiting at that time. So, between now and Easter 2016 what can I do (that doesn’t rely on outside markets etc) to buy another property?
6. Generally, what can I do better if I want to get serious about property?
I have just purchased Steve’s book bundle and I am so impressed with both the information there and on this forum. I wish I had found this ten years ago! I’m sorry if I have asked too many questions; thank you in advance for any advice that’s given.
SonyaTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
1. Trusts are legal relationships – see a lawyer. Only lawyers can set them up, especailly in WA – there is caselaw on this. If the property is in NSW think about trusts very carefully.
2. I have purchased many – but you are taking a gamble as you won’t see who is next door for example
3. Look on loan documents if there is more than 1 security then they are crossed. Best to uncross before going ahead.
4. Yes with spouses one can be on title and both on loans or both on title. But what by inn both names? It can hold you back. If he is self employed with no income having him on the loan is pointless from a servicing point of view and it just doubles the risk too.
5. Plan ownership structure and loan struction. Buying in one name could allow the 2nd person to be clean for the next one.
6 learn more.