澳洲Australia property What to do am i in too deep | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Hi everyone

Not sure if someone can give me their view on how i should handle my current situation. I am getting a bit concerned that i just can't seem to get ahead even though i have a couple of IPs. I got caught up in GFC1 and this blew my debt out and of course my equity use.

Right now i am not sure weather to sell at least one of the IPs and stay have some cash or perservere and just not do anything at this time.

My situation is this.

IP1.....Current Val $541k

Loan..$344k

Considering refinancing the new val @ 80% which would give me some buffer
[email protected]%=432800-344000=$88000 either loc or offset

Rent $430pw


IP2....Current Val $371k

Loan $210k
Loc $40k

Rent $330pw

[email protected]% 296800

my main concern is GFC2 could be lurking and my DSR is under pressure as banks are tight.

hope to hear from someone
SG  

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How under pressure is your DSR? Have you spoken to a broker about getting these loans topped up to 80%? On the face of it, I would be getting the buffer together to tide you over if possible, but it's very difficult to say without knowing your situation. If you have no income coming in, for example, I's be thinking of selling one.  

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DSR is flexible

LVR generlaly isnt

If push comes to shove one can make more income preety much straight away, but its hard to make more equity straight up ?

ta
rolf  

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Thankyou for the replies.

I have income.

If i wanted to move forward as in buying another property my borrowing is limited according to my broker as i have come to my maximum borrowing capacity.

I currently rent myself so no PPOR.

My debt has increased due to the GFC1 as i indicated when i used equity to enter the sharemarket. Now buffers are tight so would be going to 80% again creating more debt.

What i am concerned about is after having these properties for a few years and if i sold and including CGT considerations i wouldn't be left with too much at these current prices.

If prices take a dive im in trouble.

If they increase then i have some cushioning i guess.


SG  

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Hi Stargazer,

From the figures you've given, it seems that you LVR is sitting at around 65% - which is fine, provided you can service the loan.

What is the shortfall each month between your mortgage payments/holding costs for the properties? It's difficult to work this out without knowing the interest rate your loans are set at.

If you can comfortably afford the holding costs, and have enough money to live on, is it possible for you to stash any spare cash into an offset account to reduce interest?

As to whether you should sell, it really depends on what your original reasons were for buying the properties. Are they long term investments? If so, I'd just hang on and probably stay away from the share market for a while!!

Regards Jason.  

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stargazer said: ↑
My debt has increased due to the GFC1 as i indicated when i used equity to enter the sharemarket.

SGClick to expand...
What is the status of the shares?

Do you still own any?

It may be easiest to offload these - even at a loss to regain some funds to pay off some of the existing debt.

You LVR's seem reasonable and there are the rents still coming in.

The level of debt is only relevant to the ability to service it. If you can service it and even pay some of it down, then you are traveling ok I'd say.  

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Hi there Stargazer,

You mention you have income. Do you mean cashflow?

When you mention "get ahead" - Are you on P&I?

You can say all the "if's" you like but like shares, property is long term. It goes down but will go up. You just need to workout what your cashflow is and how interest rates will affect you.

In my opinion you need to factor in interest rates of 8% (always worse case scenario). If your cashflow does not allow for this, then refi and donot touch the extra cash in your Offset account unless you need it.

Make sure all loans are on IO -- but keep payinig P&I if possible.

Regards JO  

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Hi

Thankyou all for your constructive replies and some real options to consider.

all the best
SG  

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Hi all

Thought i would update:

My income is from wages

My rents get basically swallowed up with interest and expenses of IPs.

My current interest rate is 6.71%.

Have had quite a few issues with properties. plumbing, tiles falling off, locks not working.
Its amazing i lived in one of the properties for 5 years and never had an issue now just 6 months and one thing after another. PM says its your responsibility.

The shortfall currently about $150pw this is with letting fees and all property outgoings etc

I cashed in my long service leave which has given me some breathing space.

Bank will not lend me anymore money as my wages aren't enough and i have reached my maximum borrowing capacity according to my mortgage broker.

Things have tightened again.

SG  

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If you dont want to sell a place maybe get a second job or do a small business for while.

Obviously, right now, you cant make the hole bigger even of you wanted to, so it does look like you need to do something to balance the cashflow

ta
rolf  

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stargazer said: ↑
Hi all

Thought i would update:

My income is from wages

My rents get basically swallowed up with interest and expenses of IPs.

My current interest rate is 6.71%.

Have had quite a few issues with properties. plumbing, tiles falling off, locks not working.
Its amazing i lived in one of the properties for 5 years and never had an issue now just 6 months and one thing after another. PM says its your responsibility.

The shortfall currently about $150pw this is with letting fees and all property outgoings etc

I cashed in my long service leave which has given me some breathing space.

Bank will not lend me anymore money as my wages aren't enough and i have reached my maximum borrowing capacity according to my mortgage broker.

Things have tightened again.

SGClick to expand...
If you are negatively geared and have had to cash in LSL for "breathing space", you are in strife. Sell one.  

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Have you got a depreciation schedule for the one you moved out of? Have you done a tax variation?  

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Hi all

Thanks for your replies much appreciated at this time.

Rolf
Yes i have been looking at what to do in addition to what i'm currently doing. Small business i am not too sure as what to get into as you hear of so many not travelling too well. Im sure there are those that are doing well. Any ideas what would be the easiest area to start in.
I have already been scammed with online internet home based business so am cautious unless proven by someone of course especially the members of this form that have some integrity.

Token
I hear what you are saying but gee its not easy will try all avenues first before selling but i understand how you see it.

JRC
No i haven't asked accountant and he said not worth doing if i am going to move back in or sell withing 3 years.

Some options i have considered as things are is to do a tax variation the old 221d. not sure what they call it these days. This would help some cashflow.

Depreciation but accountant is saying not worth it.

After that the other options as mentioned above.


Thanks again
SG  

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stargazer said: ↑
Some options i have considered as things are is to do a tax variation the old 221d. not sure what they call it these days. This would help some cashflow.Click to expand...
http://www.ato.gov.au/download.asp?file=/formflow/forms/nat2036.htm


stargazer said: ↑
Depreciation but accountant is saying not worth it.Click to expand...
Ask either Depreciator or BMT - I believe that both have a guarantee to make it worth your while, or they won't charge you. So on that basis, it certainly won't hurt to ask.  

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Can you rent somewhere cheaper? downgrade your car? Sell some of your stuff? Can you get overtime/bonuses from work, a promotion? Can you get a second job in hospitality or similar? Can you increase the rent? I'd do the tax variation straight away.


I'd have a serious look at all avenues before selling an IP IMO.  

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Stargazer, not sure from your posts just what the problem is.

Is it that you are having difficulty in meeting current expenses?

Or is it that you wish to make more investments but are finding this difficult?

If the latter (as I suspect) then there is nothing wrong with sitting out a period of consolidation. In any financial downturn "cash is king" so sock away all you can in offset accounts to give yourself a greater buffer.

If things are getting tricky maintaining your IPs, then you may have to consider selling. Borrowing to pay expenses will only take you so far before you hit with wall, with a bigger debt.

Maybe a second part time job - behind the bar, stacking shelves....
Marg  

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Stargazer,

Many on this forum have the Charlton Heston mindset when it comes to the prospect of an unplanned disposal of a property....."From my cold dead hands!"

Given the purpose of the forum, this is not altogether surprising.

However, properties are a dime a dozen. Your credit rating is not. I run a large lending business and it is rare to find a borrower in serious trouble where you cannot go back to a point where they could have got out of trouble and avoided what will be a long term difficulty in obtaining further credit. If you are genuinely in a stressed position and cannot meet your current debt burden, - never mind the rate rises on the horizon - reduce your debt.

There are plenty more fish in the ocean.  

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Token Funder said: ↑
Stargazer,

Many on this forum have the Charlton Heston mindset when it comes to the prospect of an unplanned disposal of a property....."From my cold dead hands!"

Given the purpose of the forum, this is not altogether surprising.

However, properties are a dime a dozen. Your credit rating is not. I run a large lending business and it is rare to find a borrower in serious trouble where you cannot go back to a point where they could have got out of trouble and avoided what will be a long term difficulty in obtaining further credit. If you are genuinely in a stressed position and cannot meet your current debt burden, - never mind the rate rises on the horizon - reduce your debt.

There are plenty more fish in the ocean.Click to expand...
Here here,

You will probably buy better next time too  

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Hi, TK, much as I respect your experience in financial matters, I find your stance on property/debt ratios etc very hard to bear. And I'll be insufferable enough to point out that that stance has lost out plenty in the last 5 years.

It is not Stargazer's property debts that's causing concern but the stock mkt losses.

Whether he should and how he should use his property assets to bail out the stock losses is the issue he's discussing.

KY  

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stargazer said: ↑
I cashed in my long service leave which has given me some breathing space.Click to expand...
This has me worried. If you are getting to this stage, I'm with TF - be looking at offloading. I was in a similar position - and despite not making much profit on the sales after CGT etc, it was just great to ease of the cash flow strain.

The Y-man  

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