Advice needed please

[Deb]

Just asking for some advice as to what to do - so far we seem to have done everything back to front and now not sure what to do to rectify our situation.

We bought a townhouse 3 years ago for $267,000, paid $100,000 deposit. Lived in it for a year then used the equity in that to buy a house (now PPOR)for $365,000. Townhouse IP now worth $320,000 with $160,000 owing, PPOR worth $370,000 with $380,000 owing (borrowed more to pay other debts). Very big mortgage, not unsustainable but restricting. I know, I know, I can hear you all groaning from here!!

The IP has been fully tenanted up until recently and we have noticed that the area is becoming very rough.

My questions are: (all with paying the PPOR debt down in mind)
Do we sell the IP and pay down the PPOR with all the proceeds of the IP, or
Do we sell the IP, pay down the PPOR with half the money and invest the other half in another IP?
Do we keep both IP and PPOR and continue to struggle with the PPOR mortgage?
Do we sell the IP, pay down the PPOR with all the proceeds and then use the equity in PPOR to buy another IP?

I guess we are the model for not what to do in the PI game

Thanks for any advice/options forthcoming ...

Deb

 

[aussierogue]

Its pretty normal stuff.

I think your main mistake was to put down 100k deposit! That limited your cashflow from there on. An offset would have been much better

If you sold now you would have made nothing at all taking into account transaction costs. Having said that your cashflow would be better.

My gut feeling is hang on for atleast another 12-24 months (if you can). There is a big chance you are at the bottom of the cycle and see some nice gains soon.

But I could be wrong - im no Steven Keen!

 

[jingo]

Do we keep both IP and PPOR and continue to struggle with the PPOR mortgage?

Deb

I think that's your answer there. If you are struggling it really isn't worth it. I'd sell off the IP and use the money to pay off debt on your PPOR. Your SANF will be much better this way!

Regards Jason.

 

[Jonril]

My questions are: (all with paying the PPOR debt down in mind)
Do we sell the IP and pay down the PPOR with all the proceeds of the IP, or

Is owning your PPOR the main and only goal you have for your property investing? if so then this would be the most straight forward method.

Do we sell the IP, pay down the PPOR with half the money and invest the other half in another IP?

In my opinion this would be going backwards as, selling and buying costs would put you behind, all in the effort of trying to re-finance your mortgages.

Do we keep both IP and PPOR and continue to struggle with the PPOR mortgage?

I would advice speaking to an accountant to see if there is a way of re-financing that could make your IP more tax effective and/or if it is possible to re-finance to shift the equity from the IP to the PPOR

Do we sell the IP, pay down the PPOR with all the proceeds and then use the equity in PPOR to buy another IP?

Again in my opinion this would be going backwards as you'd be wasting money on selling and buying costs.
Deb

Depending on your financial goals you have a lot of options and you were able to get decent amount of Capital gains from your property so I wouldn't be upset in your position at all.

A talk with a good accountant will sought out most of your queries I would think.

Depending on your personal circumstances another option would be to move back into the IP and rent out the PPOR, again this all depends on your personal and financial goals.