I've never rented out here, although I do have a property that would make a brilliant IP.
I've only ever rented in Adelaide.
I've only ever rented in Adelaide.
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Have you ever bought a PPOR??
wylie said:We do treat our tenants with respect (unless they "do us wrong" when we get very business like, but still with good manners).
To be honest, while many of our tenants have been renting while renovating, or have been young singles, many of our tenants over the past several years have been on way higher income than us, several have had IPs themselves, and we treat them like "people".
I wish my landlord was like you! Ours treats us like useless no-hopers, as if we are total scum not worth any effort or investment.
Care to elaborate?
Invest - the only thing i can suggest is this:
- get a rental appraisal from a local real estate agent
- look at what it will cost to rent another place
- look at the costs living in your house now vs renting elsewhere and costs of shortfall on your current house if it were rented out.
Once you do the comparison, you will be able to see if it's worth staying, or renting elsewhere. I would tend to think that if you are happy in your house now, and you have two people renting rooms off you.... you are in a good position to stay in your home and buy an IP.
The only better option would be if you rented a place similar to yours for $350/wk, and took the other two people with you and still charged them $220/wk like you do now.
This would make your weekly outgoings $130/wk ($250-220), vs the $280/wk you are currently forking out to cover your mortgage ($500-220).
Alternatively - you could move out and live by yourself in a cheaper property, say $300/wk. This is $20/wk more than what you are forking out now... BUT, you are living by yourself!!
The decision really comes down to what YOU want to do.
Ask yourself
- are you happy to keep sharing with other people?
- do you want to live by yourself?
- what price do you place on your personal space?
yeah you still have to pay your rates and other bills..
.... hmm, looks like i rushed through that post above. Didnt do the numbers properly sorry.
Let try again
Option 1: Stay as you are now, living in your PPOR
Outgoings:
- $500 mortage
Incoming:
- $220 rent from your housemates
# Net position: $280/wk outgoing
Option 2: Convert your PPOR to an IP, rent elsewhere
Outgoings:
- $500 mortgage
- $300 rent
Incomings:
- $300 rent from your IP
- $220 rent from your housemates
# Net position: $280/wk outgoing
However - you will be better off with Option 2 due to the negative gearing benefits.
The other variables in this situation are that you might be able to rent a better place than yours or in a better area for just a little bit more than $300/wk.
It depends on if you want to live in a better area or a better house i guess, or if you want to downgrade to something smaller.
If you are happy where you are in your house - stay there! You've got two people helping to pay your mortgage, so its working pretty well for you by the sounds of it.
the only problem with that is if you start to get sick of sharing your house with other people - but only you know that!
Sorry for mucking up the numbers before!
Thanks for running the numbers for me!
I think I will stay put and ride it out. I dont mind sharing my house. Plus if I really need more money I can rent out the upstairs room for 140 easy IMO. So that would mean that my house would only cost me 140
Now your thinking
Sounds like you've got it all very well under control.
If possible i would be saving the rent money from your housemates, or using it to pay down your mortgage above the minimum $500/wk. This will help you build up equity a lot faster to leapfrog into your next property.
Can you open an offset account and stick the $10k in there?
Otherwise your $10k is earning interest at, say, 4% and getting taxed at 30%. Which represents an after tax return of 1.3%. If you could offset your interest, that would be a much more efficient use of your money?
We rent and have 7 IP's. We will continue to rent and eventually we will either shift into one of the IP's........
LS
Ditto for us too. We sold our family home at the top of the then Melbourne property market in 2003 and reinvested the proceeds into another commercial property in the same suburb. Went from monthly mortgage repayments of $6000 pcm to rental payment of $2500 pcm, currently $2980.