Advice...Please!

[fourofhearts]

I have recently discovered this website and I LOVE it.
I really appreciate people's valuable contributions and sharing of their experiences.

I was wondering if people might have some suggestions on the best places to get some financial advice.

We paid 372K for a 3 BR unit in Allawah in October 2003. We have a loan for 271K. At the end of this financial year we looked at our interest charges for the year which was $17 000 per annum! We are only paying about $4000 per year in principal.

We are now considering moving out and renting a place ourselves and renting out our unit as a way of being able to offset some of these costs and trying to get ahead.

Does anyone have any advice or advice on the best place to get such advice?

Thanks in advance.

FourOfHearts

 

[Simon]

Well this is certainly a great place to start.

I know you feel you aren't getting your mortgage down very quickly. But remember that inflation is on your side. Imagine if you hadn't paid anything off your loan - in 20 years time it will seem a much smaller amount. I can recall my boss still owing $25K on his home he bought in the 70's for not much more. He wasn't at all fussed on paying it down - rather he was keener to buy more and wished he had done at that price. I wonder if we will look back at our $400K homes the same way. I think we will regardless of how unlikely it seems today!

You have equity available. When prices start to rise again perhaps you may be in a position to have two or more properties rising for you?

Will you be able to get more rent than you will pay out if you decide to rent yourselves?

There are some ways to pay down a mortgage quicker - I think this is discussed in the current or next issue of the Money magazine. It was on telly tonight.

Check out all of the books by Jan Somers. They may be in your library or you can buy them on this site. I would strongly recommend them.

Lastly I would encourage you to think a bit bigger and not focus on the immediate obstacles. What are your real goals from real estate? Will paying down this loan quicker help you?

Remember that none of the above is financial advice. It is just generic info provided as food for thought and discussion!

All the best,

 

[fourofhearts]

Thanks Simon

Thanks Simon for your response and "food for thought."
We've been thinking of the merits of renting further out for $235 per week and renting our place our for $260 per week. Even though this is not alot of difference rent wise - we were thinking this might benefit us in being able to claim tax on the interest/strata/rates whicle this is still our PPOR.

I have one Jan Somers book, which I will re-visit and I'll look into the others.
I've just finished "Ordinary Millionaires" by Jim McKnight which I loved. Its a biography of inspirational stories about people who have become wealthy through property and one of the first chapters tells Jan and Ian's story.

Thanks Again.
fourofhearts

 

[geoffw]

When paying back a 20 to 30 year loan on principal and interest, the capital repayments at the start are very small. The repayment period can be reduced a lot if you pay off the capital more quickly.

However, I was in a situation when, after six months, the pricipal repayments were virtuall nil. I found out that that they had been charging me the wrong interest rate.

 

[Smile]

If you are going to rent it stop paying the principle of now and put it in an off set account instead, saved for a rainy day.

 

[The Y-man]

Hi 4ofhaearts,

Similar to how we got started. We were renting, and bought a place to move into.... only to discover the new place could generate more in rent than what we were paying.

As to Financial Advice, what are your expectations?

Cheers,

The Y-man

 

[fourofhearts]

Hi 4ofhaearts,

As to Financial Advice, what are your expectations?

Cheers,

The Y-man

As to financial advice we really need to weigh up the merits of our situation and decide whether to sell and use the equity to buy something cheaper and a little more positively geared and rent it out. Or whether we should try and hold onto this place and rent it out (negative geared).

Our goal is to learn as much as we can about property investing and start as soon as we can with something positively geared. My ultimate goal is to not have to be in paid employment. I'm a tired old Social Worker who wants to spend more time with her twin boys (who are 4 and adorable). My husband currently works full-time and I work 3 days a week.

Thanks for all the posts everyone.

Kind Regards,
fourofhearts

 

[Aceyducey]

fourofhearts,

Go see Steve Navra - www.navra.com.au

You can look up his posts in the forum.

Cheers,

Aceyducey

 

[fourofhearts]

Thanks Aceyducey

Thanks for this advice. It is greatly appreciated. I've visited his website and submitted a request for contact so I can book an appointment.
I'll also pour further through the posts this weekend.

Kind Regards,
fourofhearts

 

[Les]

G'day fourofhearts,

As to financial advice we really need to weigh up the merits of our situation and decide whether to sell and use the equity to buy something cheaper and a little more positively geared and rent it out. Or whether we should try and hold onto this place and rent it out (negative geared).

Take a bit of time to just trawl through this forum (these forums). Or use "Search" to look for - "renting PPOR", "positive gearing", "should I sell", etc.

As an idea, I tend to think carefully before selling as the costs involved can cruel any gains you might make on another place. As it's your PPOR, the Gapital Gains Tax shouldn't get in the way - but there'll be other costs. If it is a good property, I'd tend to try to understand HOW I can KEEP it !!!

Also, I've been able to convince myself that renting out an IP (and renting your own abode) will often be more advantageous - because of the reasons you've already mentioned. Jan has a good story in her book "Building Wealth - Story by Story" (101 stories of different people and their ways of handling different situations) that shows how two friends bought each others units and rented them to each other - but they couldn't afford to buy them outright for themselves - it's a "telling" story.... "Story by Story" is well worth the RRP (x 1000).

Do keep in mind, too, that a lot of the posts here have evolved over the last 5 years or so (with housing either "starting to move", or "screaming upward") - so not all posts will apply to today. You'll need to apply a little rational thought while reading.....

There's a wealth of info here - welcome aboard, and do come back with any more questions, won't you?

Regards,

 

[Patosan]

If the question is where to go for advice ... I've think you've already found it.
You're here where there is just so much info and not enough time, plus you're started with some great books.

If you were to go to an adviser, be it whoever, you would get one opinion. It could be good but who's to know. So keep on reading books and searching here, speak to uncle Steve but don't be in a hurry. Even only 4k p.a. off your mortgage is doing wonders for your future, so don't despair. After educating yourself not only will you be able to decide your best course of action but I expect you'll be looking at a much expanded investment horizon.

Remember the journey not just the destination is important.

 

[Merovingian]

Do keep in mind, too, that a lot of the posts here have evolved over the last 5 years or so (with housing either "starting to move", or "screaming upward") - so not all posts will apply to today. You'll need to apply a little rational thought while reading.....

Yes, definitely good advice. Definitely check the date of each post in the threads you do read — it really can put opinions in context.

 

[blossomoz]

Look at how well you have done & keep your eye on the target. Even very small amounts of money paid above what is neccesary will make a huge difference.
Look at the fact that if you pay an extra $50, that is not just $50 off the principle but it reduces the interest you will pay each month thereafter. It may mean that it is only equates to about 20 cents, which sounds ridiculous, but the 20 cents all add up . This is why compounding is so important.
Just keep paying off any axtra money that you can afford.

Remmber the old proverb 'Look after the pennies & the pounds will look after themselves'.
cheers
blossomoz

 

[fourofhearts]

Thanks!

Thank you all for the time that you have taken to respond which such great advice. I know what our plans are for this weekend......we'll be taking it in shifts to read the forum and care for twins!

Kind Regards,
fourofhearts

 

[Les]

A quick way to find THE BEST of each forum

G'day again,

I noted that you only found the forum recently - this link can be useful in expediting your search for "the good stuff"

http://www.somersoft.com/forums/showthread.php?t=20439

Do read on in that same thread though, as a lot of older material might still remain "invisible" - but it is still a quick way to get up to speed with what other readers think are THE BEST posts.

Of course, after that, go trawl through the whole lot (and then remind us all of some of the gems - there have been a bunch over the last 6 years, and they tend to get forgotten...)

And, welcome aboard, 4ofhearts and family

Regards,