Hi SS Investors,
I would love to have your feedback on my following predicament. Please take the time to read through, I have lost a bit of sleep lately wondering if I am doing the right thing.
I have found myself, to my regret but by my own doing, in a precarious predicament financially. As some of you know, I have recently had a baby and when he was only 6 weeks old, went back to work 2 days/week, travelling over an hour each way, to try and meet the shortfall on our IP mortgages. I also have a part-time job I fit in on weekends and a couple of hour in the week.
I have an absolutely fantastic PPOR with a huge 1BR fully Dual Oc approved flat attached that we rent out. I bought it for it's Capital Growth and even in the down turn of the NSW property market have made over 200k on it by small reno's. The street is the best in the suburb with unmatched waterviews. The neighboring properties have sold for over 1.1k and 1.6k respectively.
I have a fixed rate home loan for another 2 years.
I cannot refinance, as this loan was a Full Doc and we cannot go that path anymore. A LO Doc would see a massive jump in repayments and as we have already such a huge mortgage, I prefer not to go there.(Due to using home equity to invest.)
I consider that I have two options. The second option is preferable but probably unachieveable.
1. Put it on the market and pull out 400-450k to buy and renovate a much cheaper property.
2. Approach my neighbor who is high up in one of the big banks to go into a partnership with me and buy out half of my property.
My reasoning for approaching him:
a) He showed alot of interest in purchasing the property the other side of us for over 1.1mil but "didn't think it would sell so cheaply."
b) His over 1.5mil home is a holiday house, he has just bought outright the latest BMW that he had ordered 6 months before it was even in AUS, he is not short of a dollar.
d) We have spoken about the properties in this street which range from 1.1 mil to nearly 3mil depending on views and property. (Interestingly, land size seems to be of no consequence.) He is of the opinion, as are anyone that knows the area, that it has huge potential.
c) His family and ours get on extremely well and he and hubby are birds of a feather.
I would hope that he would partner with hubby and I in purchasing our property, in which we are prepared to offer him a rental income for.
The benefits to him:
a) I would be happy to settle at 50k under market val.
b) He has tenants that will continue to maintain and renovate.
c) He has the option of buying the house next door, easy to keep an eye on etc.
d) Huge potential for Capital Growth.
e) he will have a rental income that to majority investors would not meet criteria but I daresay he will not be too worried about that.
f) We can continue putting his garbage out and mowing his front lawn!
Now hubby is flaberghasted that I would consider selling the family home rather than our IP's but I see it as bad debt, alot of it, and I simply cannot bring myself to put our latest addition to the family into daycare to work Full-time. I would probably work close to 25 hours a week as it is. Needless to say there is a bit of tension at home right now.
I have had 2 IP's on the market for 3 months, have dropped them both by 10%, they are under market value and I cannot sell them without losing alot of money. If I sell our PPOR I have made money, and there is no Capital Gains. I could pick other IP's I have to put on the market, but again, I don't think I would have any chance at selling them without suffering a HUGE loss.
I see this plan of action as a better financial option. I got us into it, I have to get us out of it!
Am I biaised, in wanting to hold onto the property? Should I sell and be done with it. The idea of having so much money in the bank is SO tempting. A well needed holiday in Bali......new shoes......buy the kids some much needed new school uniforms.....we are really living on the bread line.
I appreciate anyone who has taken the time to read this.
Regards JO
I would love to have your feedback on my following predicament. Please take the time to read through, I have lost a bit of sleep lately wondering if I am doing the right thing.
I have found myself, to my regret but by my own doing, in a precarious predicament financially. As some of you know, I have recently had a baby and when he was only 6 weeks old, went back to work 2 days/week, travelling over an hour each way, to try and meet the shortfall on our IP mortgages. I also have a part-time job I fit in on weekends and a couple of hour in the week.
I have an absolutely fantastic PPOR with a huge 1BR fully Dual Oc approved flat attached that we rent out. I bought it for it's Capital Growth and even in the down turn of the NSW property market have made over 200k on it by small reno's. The street is the best in the suburb with unmatched waterviews. The neighboring properties have sold for over 1.1k and 1.6k respectively.
I have a fixed rate home loan for another 2 years.
I cannot refinance, as this loan was a Full Doc and we cannot go that path anymore. A LO Doc would see a massive jump in repayments and as we have already such a huge mortgage, I prefer not to go there.(Due to using home equity to invest.)
I consider that I have two options. The second option is preferable but probably unachieveable.
1. Put it on the market and pull out 400-450k to buy and renovate a much cheaper property.
2. Approach my neighbor who is high up in one of the big banks to go into a partnership with me and buy out half of my property.
My reasoning for approaching him:
a) He showed alot of interest in purchasing the property the other side of us for over 1.1mil but "didn't think it would sell so cheaply."
b) His over 1.5mil home is a holiday house, he has just bought outright the latest BMW that he had ordered 6 months before it was even in AUS, he is not short of a dollar.
d) We have spoken about the properties in this street which range from 1.1 mil to nearly 3mil depending on views and property. (Interestingly, land size seems to be of no consequence.) He is of the opinion, as are anyone that knows the area, that it has huge potential.
c) His family and ours get on extremely well and he and hubby are birds of a feather.
I would hope that he would partner with hubby and I in purchasing our property, in which we are prepared to offer him a rental income for.
The benefits to him:
a) I would be happy to settle at 50k under market val.
b) He has tenants that will continue to maintain and renovate.
c) He has the option of buying the house next door, easy to keep an eye on etc.
d) Huge potential for Capital Growth.
e) he will have a rental income that to majority investors would not meet criteria but I daresay he will not be too worried about that.
f) We can continue putting his garbage out and mowing his front lawn!
Now hubby is flaberghasted that I would consider selling the family home rather than our IP's but I see it as bad debt, alot of it, and I simply cannot bring myself to put our latest addition to the family into daycare to work Full-time. I would probably work close to 25 hours a week as it is. Needless to say there is a bit of tension at home right now.
I have had 2 IP's on the market for 3 months, have dropped them both by 10%, they are under market value and I cannot sell them without losing alot of money. If I sell our PPOR I have made money, and there is no Capital Gains. I could pick other IP's I have to put on the market, but again, I don't think I would have any chance at selling them without suffering a HUGE loss.
I see this plan of action as a better financial option. I got us into it, I have to get us out of it!
Am I biaised, in wanting to hold onto the property? Should I sell and be done with it. The idea of having so much money in the bank is SO tempting. A well needed holiday in Bali......new shoes......buy the kids some much needed new school uniforms.....we are really living on the bread line.
I appreciate anyone who has taken the time to read this.
Regards JO
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