Hi all, we are in the following situation, and we would like to plead for your help in guiding us to better future decisions as we have made enough blunders! Will provide you with anything else you need to know.
Hubby and I built our ppor in Adelaide 5 years ago. We subdivided our block.
- in order to also build a house for hubby's parents to rent from us. It probably should be renting for $235pw but we give it to them for $180. We saw this simply as a way of forced savings, we knew squat about investment. We worked hard at paying down our own mortgage over this time. ( old school thought was debt is dreadful )
In September 2005, whilst still ignorant of investment principals this what we did:
Purchased a house from a friend at the eleventh hour. She was about to have her house reposessed by bank to recover unpaid motgage payments. Made snap decision to do this and NEVER recognized until now (too late) what a bargain we got it for. $162K. Bank would likely have sold it for about $155K. Thought according to the agent we had come in, to do a quick appraisal that it would have been worth $180K under normal circ. with some time on the market. Rented it for $190p/week after a weekend blitz to spruce it up. We kept the property for a year and a half, but were stressing over the rent shortfall.
This wasn't because we had to find $$ to cover it's costs but because we decided to build 2 project homes in new sub division and didn't "think" we could borrow the money,whilst still needing to top up the above loan payments. STUPUD! Note to self : always consult professionals, read books and ASK lots of questions before acting. Anyhow, we sold it.
But then went ahead and borrowed to build these two homes. We decided to build these initially because we could see, in the not too distant future, our source of income was going to be sold as we have absolutely had enough of our retail business! We figured if we built 2 homes for a quick profit this would buy us some time whilst we worked out where we were going to derive a future income from - ie. new business or get new job etc.
One of the houses is due for hand over nxt week. The other in about 8 wks.
Again, on set up we were still clueless about tax implications on loan structure! So here is where we stand now:
PPOR value $360K Debt $28K ( yes 28 )
IP 1 value $245K Debt $155K rent $180k
IP 2 value $360K DEBT $253K rent expected $335pw
IP 3 value $365K DEBT $305K rent expected $340pw (Ready 8 wks)
all of these properties are in Aldinga Beach.
Total equity $569K Total asset $1330000. We have a car loan of $35K (mostly for tax purp.) and a business loan of $34k. We will hopefully soon sell the business and expect around $260K from which we need to pay all stock and sundry business debt around $75k. plus cap gain which could be costly as we set the business up.
So, FINALLY question is how do you think we should move forward? We do not have friends who invest, a decent property accountant, (our current accountant is lovely but he's only all for super which we don't have) nor do we know how to fix our loans to work in our favour and who to see to do this Is it possible to live off some of the equity, somehow? We don't require more than $50k nett to live ( providing we don't need to contribute to property loans etc. and we have 2 kids.
In Conclusion, thankyou to anyone who bothered to read my hideously long rambling and looking forward to your pro active responses. Regards Jo and Mike
Hubby and I built our ppor in Adelaide 5 years ago. We subdivided our block.
- in order to also build a house for hubby's parents to rent from us. It probably should be renting for $235pw but we give it to them for $180. We saw this simply as a way of forced savings, we knew squat about investment. We worked hard at paying down our own mortgage over this time. ( old school thought was debt is dreadful )
In September 2005, whilst still ignorant of investment principals this what we did:
Purchased a house from a friend at the eleventh hour. She was about to have her house reposessed by bank to recover unpaid motgage payments. Made snap decision to do this and NEVER recognized until now (too late) what a bargain we got it for. $162K. Bank would likely have sold it for about $155K. Thought according to the agent we had come in, to do a quick appraisal that it would have been worth $180K under normal circ. with some time on the market. Rented it for $190p/week after a weekend blitz to spruce it up. We kept the property for a year and a half, but were stressing over the rent shortfall.
This wasn't because we had to find $$ to cover it's costs but because we decided to build 2 project homes in new sub division and didn't "think" we could borrow the money,whilst still needing to top up the above loan payments. STUPUD! Note to self : always consult professionals, read books and ASK lots of questions before acting. Anyhow, we sold it.
But then went ahead and borrowed to build these two homes. We decided to build these initially because we could see, in the not too distant future, our source of income was going to be sold as we have absolutely had enough of our retail business! We figured if we built 2 homes for a quick profit this would buy us some time whilst we worked out where we were going to derive a future income from - ie. new business or get new job etc.
One of the houses is due for hand over nxt week. The other in about 8 wks.
Again, on set up we were still clueless about tax implications on loan structure! So here is where we stand now:
PPOR value $360K Debt $28K ( yes 28 )
IP 1 value $245K Debt $155K rent $180k
IP 2 value $360K DEBT $253K rent expected $335pw
IP 3 value $365K DEBT $305K rent expected $340pw (Ready 8 wks)
all of these properties are in Aldinga Beach.
Total equity $569K Total asset $1330000. We have a car loan of $35K (mostly for tax purp.) and a business loan of $34k. We will hopefully soon sell the business and expect around $260K from which we need to pay all stock and sundry business debt around $75k. plus cap gain which could be costly as we set the business up.
So, FINALLY question is how do you think we should move forward? We do not have friends who invest, a decent property accountant, (our current accountant is lovely but he's only all for super which we don't have) nor do we know how to fix our loans to work in our favour and who to see to do this Is it possible to live off some of the equity, somehow? We don't require more than $50k nett to live ( providing we don't need to contribute to property loans etc. and we have 2 kids.
In Conclusion, thankyou to anyone who bothered to read my hideously long rambling and looking forward to your pro active responses. Regards Jo and Mike