Help! not sure what do with my investment property!
- Thread starter Poppy0421
- Start date
Apologies, i know that wasn't the correct wording for that phrase- "I consolidated my car loan when i refinanced my home loans"- would have been the more appropriate terminology.
My parents are amazing, i have already acknowledged that fact. I am INCREDIBLY fortunate for their love and support. That is not up for dispute, i am here for advice on my financial situation. I feel bad enough for the stupid decisions i have made, please don't make me feel any worse, i am trying to fix the situation.
You need to grow some financial sense and leave the nest, methinks.
As to cars, you'll pay far less for your car just paying out the loan on the original term, the payments may go down when you roll it into your home loan but over the long term you pay far, far more.
Real scrooges buy cars cash and renovate with an aim to profit - time to start hanging around the adding value forum (if you ever renovate again) and learn from the masters of scrooge
As to cars, you'll pay far less for your car just paying out the loan on the original term, the payments may go down when you roll it into your home loan but over the long term you pay far, far more.
Real scrooges buy cars cash and renovate with an aim to profit - time to start hanging around the adding value forum (if you ever renovate again) and learn from the masters of scrooge
The car loan and the Broadview house loan aren't all rolled into the one are they?
So how does your accountant differentiate between the deductable and non deductable debt?
You (and your accountant) do realise the car debt is non deductable debt, and it's now mixed in with the IP debt?
You're being optimistic that there's an accountant involved here Weg ...
Hey weg, I picked up on that too.
Poppy, selling that property and discharging the debt will also give you the opportunity to get your finance structure correct next time (if there is a next time), so FWIW, I'll go with the concensus that you need to sell that first property.
You mentioned trying to hold for a year or two in the hope that the market will improve. One common quote around this forum is "hope is not an investment strategy!" I think this has been mentioned, but you also would need to consider whether any possible higher selling price would cover the holding costs during this time.
Good luck with it. Let us know the outcome.
Poppy, selling that property and discharging the debt will also give you the opportunity to get your finance structure correct next time (if there is a next time), so FWIW, I'll go with the concensus that you need to sell that first property.
You mentioned trying to hold for a year or two in the hope that the market will improve. One common quote around this forum is "hope is not an investment strategy!" I think this has been mentioned, but you also would need to consider whether any possible higher selling price would cover the holding costs during this time.
Good luck with it. Let us know the outcome.
Hi Poppy,
I think renting both houses out and living with your parents (thus turning both properties into investment properties for tax purposes) would help your position out. You would get the depreciation benefits too and could ride out the low points of the market.
Selling involves agents fees, advertising etc... and although the costs may not be as substantial as holding them negatively geared; this may be offset by the future capital gains the properties will bring. If it were a booming market, selling may be the right choice. At the bottom of the market though, it may not be that wise if you can avoid it.
Also look to see if there is anything you can do to the houses to increase their rentability? Small reno's that give the properties cosmetic facelifts can increase the rent by 10-20% for very little outlay, and will improve the cashflow side of things. Make sure you are renting at market rates too as you can easily fall behind on this which costs you money each week.
Try and adopt a new strategy for future purchases - CASHFOW POSITIVE - you will then not have any street and can easily build a large portfolio over time.
Thanks,
James
I think renting both houses out and living with your parents (thus turning both properties into investment properties for tax purposes) would help your position out. You would get the depreciation benefits too and could ride out the low points of the market.
Selling involves agents fees, advertising etc... and although the costs may not be as substantial as holding them negatively geared; this may be offset by the future capital gains the properties will bring. If it were a booming market, selling may be the right choice. At the bottom of the market though, it may not be that wise if you can avoid it.
Also look to see if there is anything you can do to the houses to increase their rentability? Small reno's that give the properties cosmetic facelifts can increase the rent by 10-20% for very little outlay, and will improve the cashflow side of things. Make sure you are renting at market rates too as you can easily fall behind on this which costs you money each week.
Try and adopt a new strategy for future purchases - CASHFOW POSITIVE - you will then not have any street and can easily build a large portfolio over time.
Thanks,
James
Poppy, I'm not an accountant, but I can't see you paying much in CGT on that property you're selling.
You add to the purchase price your purchasing costs - stamp duty etc.
Then you would factor in the value of the renovation.
And there are your selling costs.
Also It's only been a rental property for part of the time you've owned it.
And you'll get the 50% CGT discount.
You sound pretty young, so it's not a big deal. Just get out of it and do things differently next time. If you break even this time, it's a good result. There are loads of people who have made mistakes and lost heaps.
You add to the purchase price your purchasing costs - stamp duty etc.
Then you would factor in the value of the renovation.
And there are your selling costs.
Also It's only been a rental property for part of the time you've owned it.
And you'll get the 50% CGT discount.
You sound pretty young, so it's not a big deal. Just get out of it and do things differently next time. If you break even this time, it's a good result. There are loads of people who have made mistakes and lost heaps.
Thank you all for the sound advice.
In regards to those who have suggested i move back with my parents, that is not a feasible plan as i am 27 with 2 dogs, 2 cats and 2 birds and a house full of furniture. I have lived out of home since i was 18 and although i love my parents dearly the thought of returning home feels me with dread.
Also, i am a homely person, i take a lot of pride in my home and want to remain there- i just want to do so with as little stress and pressure as possible and without having to live pay check to pay check.
I have no desire to get back into the property game, i just want to cut my losses and enjoy living! When i sell Broadview, and repay my parents, it will reduce my mortgage to a comfortable amount. And i will be in a beautiful home that i can continue to live in for many years to come.
In regards to those who have suggested i move back with my parents, that is not a feasible plan as i am 27 with 2 dogs, 2 cats and 2 birds and a house full of furniture. I have lived out of home since i was 18 and although i love my parents dearly the thought of returning home feels me with dread.
Also, i am a homely person, i take a lot of pride in my home and want to remain there- i just want to do so with as little stress and pressure as possible and without having to live pay check to pay check.
I have no desire to get back into the property game, i just want to cut my losses and enjoy living! When i sell Broadview, and repay my parents, it will reduce my mortgage to a comfortable amount. And i will be in a beautiful home that i can continue to live in for many years to come.
That sounds like a good positive plan Poppy!
You are still young, so cut your losses now. At some stage, sit down to reflect on your experience and LEARN from it.
Don't let this put you off property. Have a good read of this forum and come up with a better plan next time.
BTW, I would strongly suggest start paying your own petrol. I don't even know how logistically your parents even pay for your petrol when you are not living with them
You are still young, so cut your losses now. At some stage, sit down to reflect on your experience and LEARN from it.
Don't let this put you off property. Have a good read of this forum and come up with a better plan next time.
BTW, I would strongly suggest start paying your own petrol. I don't even know how logistically your parents even pay for your petrol when you are not living with them
*snip*
BTW, I would strongly suggest start paying your own petrol. I don't even know how logistically your parents even pay for your petrol when you are not living with them
A fuelcard or account. Easy!
(My Dad paid for my fuel for years - it helped that he was the owner of a fuel distributor and I worked for him!
)Sounds like you've answered your question.
I tend to chase positive cashflow property, and have had done fairly well over time with it. When you have everything under control, come back and join in and learn about how to make investing really work. Between now and then, don't take advice from people who haven't successfully done what you are seeking.
hi all,
an update-
I had a real estate agent tonight value Broadview at $360K!!! This is terrible news, considering the bank valued it at $400K this time last year. Agent said prices have fallen 10% this year and she doesn't expect the market to recover for at least 2 more years.
So, after doing some more research, i found out i have 5 more years to have the property rented and not pay any capital gains tax. So new plan is to keep the house rented (and i have an awesome tenant who is taking great care of the property). I will get the house appraised every year and when its the right time to sell i will sell.
So i will consult an accountant and make sure i have the properties set up correctly and am getting the full benefits of having an investment property. If anyone can recommend an accountant in Adelaide let me know!
Thanks!
an update-
I had a real estate agent tonight value Broadview at $360K!!! This is terrible news, considering the bank valued it at $400K this time last year. Agent said prices have fallen 10% this year and she doesn't expect the market to recover for at least 2 more years.
So, after doing some more research, i found out i have 5 more years to have the property rented and not pay any capital gains tax. So new plan is to keep the house rented (and i have an awesome tenant who is taking great care of the property). I will get the house appraised every year and when its the right time to sell i will sell.
So i will consult an accountant and make sure i have the properties set up correctly and am getting the full benefits of having an investment property. If anyone can recommend an accountant in Adelaide let me know!
Thanks!
Hi Poppy,
Once again you are letting emotions come into play with your decision not to move back in with your parents.
There's a lot of good predictions for the Adelaide market in the coming years so I think you should grit your teeth, suck it up and move back with your parents for a few years. Sell your furniture if you need to - you can buy it back later after you've got a few properties!
Learn about the property market and start buying +ve cashflow properties. You will then look at this part of your life with a wry smile knowing that you beat it.
Maybe you can build a granny flat out the back in a couple of years and live there (its very cheap in SA) - in either your parents house or one of your IP's?
It's far better to slowly build an empire than to live comfortably now for the next 10 years and still only own one or two properties! The opportunity cost is too high for you to look at any other option imo.
Once again you are letting emotions come into play with your decision not to move back in with your parents.
There's a lot of good predictions for the Adelaide market in the coming years so I think you should grit your teeth, suck it up and move back with your parents for a few years. Sell your furniture if you need to - you can buy it back later after you've got a few properties!
Learn about the property market and start buying +ve cashflow properties. You will then look at this part of your life with a wry smile knowing that you beat it.
Maybe you can build a granny flat out the back in a couple of years and live there (its very cheap in SA) - in either your parents house or one of your IP's?
It's far better to slowly build an empire than to live comfortably now for the next 10 years and still only own one or two properties! The opportunity cost is too high for you to look at any other option imo.
are you talking about the rule that allows you to be absent from you ppor for 6 years and be CGT exempt? it only applies if you have not bought, and living in something else.
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