Bank servicability on rental income

[marsmac]

Hi All,

Just wondering, I earn $40,000 from my part time PAYG job but I want to replace my income quick smart but am not sure what impact this will have on future purchases and bank serviceability.

Say I purchased a property for example $500,000 and rent is $100,000 p.a and expenses are $40,000. So it generates $40,000 nett positive cashflow.

As I'm earning $40,000 positive cash from property I quit my job.

Will my bank servicability improve or decrease in this scenario?

Thanks,

Marsmac

 

[Aaron_C]

What kind of property is this? A business? If so then it's not 'rental'.

 

[Shahin_Afarin]

Generally speaking lenders will take 70%-80% of the rental income. The biggest part missing from the above equation is your loan amount. Some will take the actual monthly amount and others will take a higher amount. So there are a few variables there. One other small thing which will aid the servicing calculation is negative gearing benefits.

What are you trying to achieve exactly?

 

[marsmac]

Well, I'm trying to work out when I can stop work but at the same time I still want to be able to purchase property. (i.e I need servicibility with the banks).

 

[atti]

if you want to stop work and keep purchasing property all your assets i think will need to be in a trust of somesort i watched nathan tinkler doco he has companies worth 1-2 dollars yet he controls 1 billion. and his personal taxable income is 10 000$ per year w00t!....

sad to see it but i pay 6x the taxes and controlls not even half a mil asset.

i suggest see lawyer' asset planner for few gee's

 

[Aaron_C]

Well, I'm trying to work out when I can stop work but at the same time I still want to be able to purchase property. (i.e I need servicibility with the banks).

Buy up when you have a job, make sure you buy well. Then after that, quit your job and live off rent.

 

[Peter_Tersteeg]

if you want to stop work and keep purchasing property all your assets i think will need to be in a trust of somesort i watched nathan tinkler doco he has companies worth 1-2 dollars yet he controls 1 billion. and his personal taxable income is 10 000$ per year w00t!....

sad to see it but i pay 6x the taxes and controlls not even half a mil asset.

i suggest see lawyer' asset planner for few gee's

You might want to consider your maths a little better. My understanding is that most of Nathan's properties are worth less than $200,000. He'd need over 5,000 properties to be in control of $1B in assets. By his own admission the figure is probably closer to 100 properties. Certainly a massive acheivement, but he's not even close to being a billionare.

Additionally his personal tax may be around $10,000, but his business related taxes are probably considerably more. Personally I pay about $20k in taxes annually, yet I write a cheque every quater for about $20k to the ATO through my businesses and trusts.

Edit: On relection it appears that I'm referring to the wrong Nathan

 

[pinkboy]

if you want to stop work and keep purchasing property all your assets i think will need to be in a trust of somesort i watched nathan tinkler doco he has companies worth 1-2 dollars yet he controls 1 billion. and his personal taxable income is 10 000$ per year w00t!....

sad to see it but i pay 6x the taxes and controlls not even half a mil asset.

i suggest see lawyer' asset planner for few gee's

You might want to consider your maths a little better. My understanding is that most of Nathan's properties are worth less than $200,000. He'd need over 5,000 properties to be in control of $1B in assets. By his own admission the figure is probably closer to 100 properties. Certainly a massive acheivement, but he's not even close to being a billionare.

Additionally his personal tax may be around $10,000, but his business related taxes are probably considerably more. Personally I pay about $20k in taxes annually, yet I write a cheque every quater for about $20k to the ATO through my businesses and trusts.

pinkboy

 

[atti]

i think you defending the wrong nathan but anywayz i think thats the go with trusts once you accumulate over 1 mil in asset.

pretty much every seminar i been to said that trust provides all forms of protection of hawking ligitation suites.. so no one can touch your money apart from your spouse.. with complicated trusts and companies what they going to sue you for ? 1 $ ?

 

[pinkboy]

if you want to stop work and keep purchasing property all your assets i think will need to be in a trust of somesort i watched nathan tinkler doco he has companies worth 1-2 dollars yet he controls 1 billion. and his personal taxable income is 10 000$ per year w00t!....

sad to see it but i pay 6x the taxes and controlls not even half a mil asset.

i suggest see lawyer' asset planner for few gee's

i think you defending the wrong nathan but anywayz i think thats the go with trusts once you accumulate over 1 mil in asset.

pretty much every seminar i been to said that trust provides all forms of protection of hawking ligitation suites.. so no one can touch your money apart from your spouse.. with complicated trusts and companies what they going to sue you for ? 1 $ ?

Q.E.D.

pinkboy

 

[MRO]

i watched nathan tinkler doco he has companies worth 1-2 dollars yet he controls 1 billion. and his personal taxable income is 10 000$ per year w00t!....

Don't be mislead by the $1 company phrase. Basically every private company in Australia is set up this way. Funds are then generally provided to the company by way of a loan from a shareholder.

$1 is only the initial capital contribution and has nothing to do with the value of the company, is credit rating, or anything else.