Hi Guys,
I don't think I've posted since I last bought a property in 2009! But since you're all good company and give great advice, I thought I'd step up the game and throw more challenging questions at you.
It's a very long story, but I'll try to boil it down as much as possible. Basically, in 2009 we bought a unit first as an investment property for 1 year, then since then as a PPoR. Late last year, junior decided the womb was too small and decided to take over our spare room, and most of the rest of our unit. For someone who is only 60cm tall and weighing only 7kg, he sure does take up a lot of room!
Anyway, we're now thinking that one day, Junior might like a backyard as well, so we're planning in advance for that. Basically the strategy is to buy soon, negatively gear it until we need it, then move into it. It would be nice for the unit to then become an IP, but if it can't be done, we're not that attached to it.
I can't see any way around being frank with my figures here, so excuse me if I commit faux pas by disclosing the numbers.
I current have a base salary of 140k. My OTE is 180k, but I am on target this year to hit 200k. I have a pre-negotiated payrise to 150k to take effect at the end of this year.
My wife is currently on mat leave on full pay. Her employer has agreed to a three day return to work plan starting July 1, and we have secured child care to enable that. Our child is a very happy easy going person, and has never had any problems being left with relatives, so we don't foresee any difficulties. We calculate that three days a week is approximately $57k per year before tax.
Our unit is valued at between $440k and $480k - No gain since we bought it in 2009, not even inflation adjusted. This is based on three sales in the past year in our unit block. I don't think we overpaid, since sales before and after also were between these values. We simply didn't get a bargain and the market hasn't moved. Our remaining mortgage is approximately 220k. We have another ~55k in other investments.
We are looking at houses in the 800k-1m range, returning $650-$800/week. Our calculations that with a modest depreciation schedule, out of pocket per week will be $150-250 after tax.
Ideally, our mortgage would look like this:
1. In my name only for taxation purposes
2. Cross collateralised or otherwise secured with the PPoR (in my wife's name) to eliminate the need for a deposit as well as eliminate LMI. Redrawing equity unfortunately, would mean we are taking money out of a non-deductible loan, to decrease the balance of a deductible loan, so that is out of the question.
3. Interest only
4. Fixed interest for up to five years.
5. Not having to pay a significant penalty for creative financing would also be good. (Within 50bp of what I can get as my discounted variable rate from CBA vaguely fits that description)
Does any broker here think they can land a deal like that? It seems like I'm asking the earth, though I'm sure that many deals have been done that have been more complex and risky. Reading through these forums, it would seem I am massively under leveraged for our household income. (But we knew Junior was coming, so we played conservatively.)
Also, how does one choose a good broker? There is only so much free advice you can expect from a forum, so I would feel better going to a good broker, and knowing they are likely to get a commission out of it if they are good enough to get enough of the features I need at a reasonable rate.
Thanks in advance for your advice.
I don't think I've posted since I last bought a property in 2009! But since you're all good company and give great advice, I thought I'd step up the game and throw more challenging questions at you.
It's a very long story, but I'll try to boil it down as much as possible. Basically, in 2009 we bought a unit first as an investment property for 1 year, then since then as a PPoR. Late last year, junior decided the womb was too small and decided to take over our spare room, and most of the rest of our unit. For someone who is only 60cm tall and weighing only 7kg, he sure does take up a lot of room!
Anyway, we're now thinking that one day, Junior might like a backyard as well, so we're planning in advance for that. Basically the strategy is to buy soon, negatively gear it until we need it, then move into it. It would be nice for the unit to then become an IP, but if it can't be done, we're not that attached to it.
I can't see any way around being frank with my figures here, so excuse me if I commit faux pas by disclosing the numbers.
I current have a base salary of 140k. My OTE is 180k, but I am on target this year to hit 200k. I have a pre-negotiated payrise to 150k to take effect at the end of this year.
My wife is currently on mat leave on full pay. Her employer has agreed to a three day return to work plan starting July 1, and we have secured child care to enable that. Our child is a very happy easy going person, and has never had any problems being left with relatives, so we don't foresee any difficulties. We calculate that three days a week is approximately $57k per year before tax.
Our unit is valued at between $440k and $480k - No gain since we bought it in 2009, not even inflation adjusted. This is based on three sales in the past year in our unit block. I don't think we overpaid, since sales before and after also were between these values. We simply didn't get a bargain and the market hasn't moved. Our remaining mortgage is approximately 220k. We have another ~55k in other investments.
We are looking at houses in the 800k-1m range, returning $650-$800/week. Our calculations that with a modest depreciation schedule, out of pocket per week will be $150-250 after tax.
Ideally, our mortgage would look like this:
1. In my name only for taxation purposes
2. Cross collateralised or otherwise secured with the PPoR (in my wife's name) to eliminate the need for a deposit as well as eliminate LMI. Redrawing equity unfortunately, would mean we are taking money out of a non-deductible loan, to decrease the balance of a deductible loan, so that is out of the question.
3. Interest only
4. Fixed interest for up to five years.
5. Not having to pay a significant penalty for creative financing would also be good. (Within 50bp of what I can get as my discounted variable rate from CBA vaguely fits that description)
Does any broker here think they can land a deal like that? It seems like I'm asking the earth, though I'm sure that many deals have been done that have been more complex and risky. Reading through these forums, it would seem I am massively under leveraged for our household income. (But we knew Junior was coming, so we played conservatively.)
Also, how does one choose a good broker? There is only so much free advice you can expect from a forum, so I would feel better going to a good broker, and knowing they are likely to get a commission out of it if they are good enough to get enough of the features I need at a reasonable rate.
Thanks in advance for your advice.