Economists - Decade of house pain predicted
- Thread starter bluestorm
- Start date
Actually the best thing for you (very generally) to do is keep the PPOR and borrow off it to invest in other investment properties to maximise your tax deductions.
But I don't know what type of properties you are looking for, where you're looking at, or whether you even want to buy property at all!
But I don't know what type of properties you are looking for, where you're looking at, or whether you even want to buy property at all!
I just want to confirm my main holdings are metro, $200k stok with solid rents. I have seen positive markets and negative. Seen rates at almost 10% and was lookin at the property market since i was 13 yrs old.
I buy on number and MUST have capital inbuilt and a solid cf position. I will not buy on emotion, thats a bonus...
I buy on number and MUST have capital inbuilt and a solid cf position. I will not buy on emotion, thats a bonus...
Hi Aaron,
Yes, understand. Would like to hold onto current PPOR but only a 2 bedder (land 9m x 30m). Myself, husband, two sons tripping over each other (add in two dogs and you get the picture).
Could do small update reno and stay put and, as you say, use equity to purchase IPs (would like to purchase them inner Melbourne area if possible - St Kilda touted as an area with growth potential).
Currently my earnings pay for PPOR household running costs. At least 90% of all other income being saved (majority earnings in company name, husband and one son working as employees of the company, drawing small wage each - not being spent though). Other son also saving. All up, as mentioned above, have $280 k saved. Prahran PPOR worth $1 to $1.2 mill ($90k mortgage between self and husband). Looking for best way to structure our situation, taking into account PPOR that we can all live in for at least five years (prefer bayside or inner Melbourne) plus tax considerations.
Hope that gives you a more complete picture.
Yes, understand. Would like to hold onto current PPOR but only a 2 bedder (land 9m x 30m). Myself, husband, two sons tripping over each other (add in two dogs and you get the picture).
Could do small update reno and stay put and, as you say, use equity to purchase IPs (would like to purchase them inner Melbourne area if possible - St Kilda touted as an area with growth potential).
Currently my earnings pay for PPOR household running costs. At least 90% of all other income being saved (majority earnings in company name, husband and one son working as employees of the company, drawing small wage each - not being spent though). Other son also saving. All up, as mentioned above, have $280 k saved. Prahran PPOR worth $1 to $1.2 mill ($90k mortgage between self and husband). Looking for best way to structure our situation, taking into account PPOR that we can all live in for at least five years (prefer bayside or inner Melbourne) plus tax considerations.
Hope that gives you a more complete picture.
What I think is irrelevent. It's all what the Banks think.
All I know via my MB, is that post-GFC, banks will only look at Level 4 borrowers or above, and that is still pretty much the case from what I'm told..
Anecdote; the unit next to ours in Frangers sold last week. We are trying to sell ours too, but have had virtually no interest in almost 3 months.
The unit next door's sale fell over due to not able to get finance this week.
Since the age of 13. That would make it about 13-14yrs, in prosperous times with credit driven growth. You were in primary school the last time Australia was in recession.
I'm sure your well positioned to take advantage of tougher economic times. But I'd argue that many in property are not (over extended, and over leveraged), and relying on CG.
We had the large credit driven boom of the last 20yrs. Now governments world wide are faced with the reality of that credit indulgence. I still see Europe heading for trouble (Italy is the 7th largest economy in the world), and the US on the edge. All these global problems will slow Chinese growth, and hence impact Australia.
I also think that were another GFC to start, and share markets to suffer another drop, than a lot of the baby boomers on the eve of retirement may cash out on large property CG and protect some wealth. We are starting to see a downturn in property already. I think this will only accelerate the next 17mths. But then I'm a D&G.
People are spending less and saving more. This is already affecting retail, but I also think it can't be discounted from impacting property prices as people become reluctantly to just keep bidding property up indefinately. For me, I find property in the near term a poor investment.
So you are self-employed? The next question of whether you can afford a place now depends on whether you have the 2 years of financials etc.
But assuming you have those and you are a good borrower, you can really afford to buy something quite substantial, even in St Kilda. For me, a property purchase, no matter what the area, should be AAA given that location - for example in St Kilda you'd want something that has views or is in a prestigious street etc. Lots of bargains to be had.
Thanks Aaron,
Yes, self employed, and have the 2 years of financials, and good borrowing history.
Do not mind IPs being in St Kilda but prefer not to live there. Hoping to make shift to bayside if we sell PPOR in Prahran. Weighing that up against doing small cosmetic update and staying put in Prahran. Only real reason for selling is so we can live a bit more comfortably. Places in bayside (Hampton, Sandringham) are larger although not renovated but liveable, compared to Prahran, and similar price range. Basically we are really only contemplating selling the PPOR for the extra living space a bayside PPOR would provide. We would then borrow against equity to purchase one, perhaps two IPs closer to inner Melbourne (e.g. St Kilda or similar).
Yes, self employed, and have the 2 years of financials, and good borrowing history.
Do not mind IPs being in St Kilda but prefer not to live there. Hoping to make shift to bayside if we sell PPOR in Prahran. Weighing that up against doing small cosmetic update and staying put in Prahran. Only real reason for selling is so we can live a bit more comfortably. Places in bayside (Hampton, Sandringham) are larger although not renovated but liveable, compared to Prahran, and similar price range. Basically we are really only contemplating selling the PPOR for the extra living space a bayside PPOR would provide. We would then borrow against equity to purchase one, perhaps two IPs closer to inner Melbourne (e.g. St Kilda or similar).
I understand. Buying bayside would definitely be more of a PPOR decision because generally bayside property yields are pretty awful (2-3% gross yield).
I think we can safely say that borrowing for you won't be a problem because of the additional rental income from purchasing future IPs. The more, pertinent question is where to buy the investment properties? That will dictate everything else.
I think we can safely say that borrowing for you won't be a problem because of the additional rental income from purchasing future IPs. The more, pertinent question is where to buy the investment properties? That will dictate everything else.
your unit has been around for a while from what i recall. how come the unit next door sold where else yours didn't (just a curious Q)
that was an IT boom and bust during that period. Also, - there is technology that is the "in thing" and technology that is not in.
Got a mate - earing 1500 a day doing SAP consultations and implementations. Tell you the truth. IT is another area of major rip offs - they just charge whatever etc.
The unit next door was advertised at $269k. It has recently been renovated and looks nice. Sale fell over and is now back on the market for $269k.
Ours - we did a reno on it just after we bought it in 2003, and has been rented ever since. Originally advertised at $269k with another agent (the one next door wasn't for sale then).
It is now advertised as "$245k-270K buying range". It is worth about $260k.
Now, at $245k, you would think there would be at least one hopeful offer at this price.
We are giving it until the end of this month, and then we put a renter back in.
Last edited:
If you guys are earning this much per day (call it a Grand per day for the sake of the point), why are you even here? (other than the discussions and being addicted
)You don't need to be concerned about the vagueries of property investing; where to buy, what's a good deal, how can I improve my strategies, the PM did this to me, the tenat did that, the rates are going up/down.....
Property investing (at least the type requiring being on this site) and all it's headaches is for the folk on shoit wages, who will never be rich unless they get cracking and take the PI punt.
They need this site most likely.
On a Grand a day, you've made it.
Live off $500 per week (or less), and chuck the rest at an ING account/any suburban residence with a rentalbility/superfund/managed share portfolio....wouldn't really matter with those sorts of numbers, and wait a bit.
If you guys are earning this much per day (call it a Grand per day for the sake of the point), why are you even here? (other than the discussions and being addicted
You don't need to be concerned about the vagueries of property investing; where to buy, what's a good deal, how can I improve my strategies, the PM did this to me, the tenat did that, the rates are going up/down.....
Property investing (at least the type requiring being on this site) and all it's headaches is for the folk on shoit wages, who will never be rich unless they get cracking and take the PI punt.
They need this site most likely.
On a Grand a day, you've made it.
Live off $500 per week (or less), and chuck the rest at an ING account/any suburban residence with a rentalbility/superfund/managed share portfolio....wouldn't really matter with those sorts of numbers, and wait a bit.
Why am I here? Good question.
I am here to learn more about property investing. I've managed to purchase 7 IPs over the past 7 or so years, and am now working through the idea of renovation to lift value (done some already), and trying to get some clues as to how the economy will go over the next 10 years or so (already have some opinions here). I like the discussion, too, as it gives me ideas.
My plan is still to use property as a major component of my strategy getting me toward $150k per year (in 2005 dollar terms) passive income by 2020.
So what I do with all this income? It's actually pretty simple:
1) Pay tax, and lots of it, even with tax planning
2) Pay off my PPOR, which now has less than 12 months to outright ownership (because I currently pay about $15k per month off it)
3) Invest in shares and property
4) In the last few years I've started taking a nice OS holiday each year, and bought two new cars this year also
My wife (who earns comfortably into 6 figures herself) pays all the bills, buys all the food and sends some dollars to our savings also.
The thing with contracting is that it is, by nature, more risky than having a full time job (although not by much if you are good at what you do). I don't know how long I will be on such a good wicket, so my plan has always been to take advantage and save/invest while I can.
EDIT: Let me just add that investing is much easier when you have a good income you can use to support your habit.
spoken like an IT guy who has been around the block
i dunno how you do it... but the conversations on packets, servers over the last few years has really bored me.
why dun you go below 245K if it means you need to get rid of it?
haha quote of the year!
We would like to sell it because it would ease a cashflow problem we have, and allow us to finish the new PPoR off completely when we move in.
I have had cashflow problems many, many times in my life, so this is nothing new.
It'll just mean a few months of blankets on the windows, and only one tv instead of 3.
Hey Bayview, if you are willing to divulge, at $245k sale price what gross yield does this represent?
Last edited:
