I can't find the map!!

[PI141]

I have looked ( yes done searches ) but still cant work out how to own 1 if not more IP if they are not Neutral or +ve geared.

How do you all do it?

I realise that there is no one way to do this but our situation cant be different that everyone here???

We have a PPOR that has about $500+ equity but we are CF poor and we cant afford to cop a loss of 1000 a month. If I was to buy a property at say $300 000 and rent it out for 300 a wk it leaves me with a loss of nearly 1000 a month. Now I can draw down that loss from my LOC but that cant go on for more than a year or so and I think it would take about 5 years at least for the rent to catch up with the interest.

I have just signed and gone uncond on a large block 20 km from city centre with a run down house - I plan to sub block, flick land, reno house and sell house make about $100 000. Then go buy a property that I can afford to keep - I hope?

Is this the only way forward for me? Is there another?

Thanks all !!!

 

[JamesGG]

If you're convinced that the negative gearing thing is for you, then perhaps look at submitting a PAYGW variation to get the tax benefits back in your paycheque instead of at year-end. That could help cashflow somewhat (and even make a negatively geared property into a cashflow positive one, in some cases), particularly if there is high depreciation available.

A question for you, now; how long will it take you to make the $100k on the deal you've got going at the moment? If you can make that sort of coin in a reasonable amount of time, maybe it's worth doing more of that kind of deal, instead of buying something that's going to cost you money, instead...?

 

[toony]

When i started, i made a loss every month. But the loss was halved as i recieved a big tax refund every year. I focused on reducing non deductible debt.

I also had two properties working for me. Sure it was not easy, but i focused on the gross assets and was prepared to loose $12k a year if i had $1m of assets (PPOR and rental property).

If property rises on average 5% then i am happy with ($50k less $12k).

 

[The Y-man]

. If I was to buy a property at say $300 000 and rent it out for 300 a wk it leaves me with a loss of nearly 1000 a month.

How did you figure that out??

300k at 6% = (18,000) pa loan
300 per week = 300 x 52 * 92% (to allow for management fee) = $14,352 pa
Allow another $1,200 for BC, rates etc

That's $4,848 out of pocket PER YEAR
Divide that by 12 = $404 per month or $93 per week (without any tax benefits allowed for)

So I'd hate to sound like one of those seminar presenters but.... can you afford to put aside $100 per week? It might mean killing that night out etc etc etc....


Cheers,

The Y-man

 

[Propertunity]

...... or $93 per week (without any tax benefits allowed for)

.....and going on from there, assume 33% tax rate and that is $62 per week or $8.85 per day. Hey, if you go to McCafe and order a latte and a biscuit you'll pay that much.

Give up the latte & bikky and you'll be making big bikkies soon enough out of your RE investments. Now where did I leave those steak knives?

 

[PI141]

Remaining loan 328,499

Expected rent 15,000

Interest costs 24,637
Rates 2,000
Other 2,000
Total costs 28,637

Net gain/loss -13,637

Loss per month -1136



Here are my cals

If I had a loan for 330 that would cover the cost of house/stampduty and legals along with 5000 buffer to cover some small repairs ect

I dont earn a lot - so tax ben is not all that great for me

I think I can turn over property in 18 months and no I dont make $100 000 in 18 months so its a good earner but I do want to keep property most of all not just buy and flip.

Interest is cal on 7% yes its not that now but need to work out how to afford if and when it gets there again

 

[Hooray]

I dont earn a lot - so tax ben is not all that great for me

Do you make at more than 50k a year?

 

[PI141]

No only about 20 - 30 and deductions bring it down to just about 10

 

[Hooray]

Then you're right. On your pay alone you can't really afford to hold a property with those numbers.

But if you can flip a property and make 100k, bank the net, and that will last a couple of years of negative gearing.

For that matter, with 500k equity you can capitalise interest. Riskier, but possible.

 

[PI141]

Yes I thought if I could do this project and then next time do it again ( split large block ) but keep the house and by then the loan will be under 200 000 and the rent will cover it - its a long road but I really think I need to do it.

So then I am guessing that everyone pays down 12 000 a year from own earnings to fund properties?