but with our personal loan and 2 credit cards its just not do-able.
Any advice would be greatly appreciated
It can be done.Just out of interest are there any investors out there that fit into the
family of 5 on 1 income cat? Can it really be done?
I'd just like to emphasise this more. I'm selling a cheap house privately and I'm up for around $2500 in selling costs and I probably paid the same in buying costs plus refinancing the loan 2 years ago - thats about 7-10% of my house value right there, money getting thrown away.I
Selling and buying again will set you back between $30K and $50K due to buying and selling costs so it's best to avoid this option at all costs.
....the family of 5 on 1 income cat? Can it really be done?
We were a family of 4 on one very low income when we started. Now, the kids have grown up and left home, we still have one income, but it has grown during that time. I do bring in a small amount from a little bit of self employment these days, but it is sporadic, and not enough for anyone to live on, but it gets fed into the loans.
In your situation, since you seem willing to move in order to get ahead, I would suggest to firstly KEEP THE HOUSE. Move into cheaper rental accommodation yourself and use this home as an IP. You can move for up to six years and you will keep the Capital Gains Tax exemptions of a Personal Place of Residence.
Doing this will help in two ways. First, the existing loan becomes tax deductable, as well as any expenses relating to the property, thus bringing your taxable income down. Secondly, the extra income, plus anything extra you can spare, should now be fed into those credit cards ASAP.
Once you are debt free, you can choose if you want to move back into your nice home.
As for the car, well I would hold onto that. A car loses value the minute you buy it. It is simply a means to get from point A to point B. If it has expensive problems, then by all means replace it, but be careful on how much you spend. They are a sure way of hindering wealth creation.
We bought a new car before we started investing. A couple of years later we bought our first IP. We learnt our lesson the hard way and still have that car. It is getting a bit long in the tooth now, but until it stops, or starts needing a lot of money spent on it, we will be keeping it. It is a reliable work horse. On a side note, I could go out tomorrow and purchase a new car if I wanted, but I don't want to. It would be a waste of money at this point in time.
We wouldnt be able to rent out the house the repayments are $425pw and rent would only fetch $350pw. We wouldnt have any cash to back us up if anything went wrong.
$350pw rent from tenants
would still leave us paying rent of aprox $300pw plus we would still have to contribute $125pw ourselves & thats before a property manager, landlord insurance, rates etc
Plus the debt repayments.