Job Uncertainty - Should this hold me back

[xcesiv]

I have been thinking about buying another property as an IP and then making this my PPOR after 12 months for some time now.

i currently have 2 IPs both running close to Neutral, and by March next year should both be slightly +ve.

Unfortunatly 1 thing holding me back is Job Security. My boss has made a lot of bad decisions over the last 2 years and the company has gone into a bad position. BUT.....I can see the light. My boss has been listening to myself and other consultants more and more and we are now running in the black again.

Yes we are running in the Black now, but I feel like we have 1 or 2 people with there fingers hovering over the destroy button and i dont want to get in a bad way myself.

We have some bad debts to get rid of which once gone will help move us forward.

The question is... Would you hold off buying for say 6 months and then continuing with my plan, or would u conitnue to buy now, and if there is a problem with my job just reassess how long i keep it as an IP before making it a PPOR.

 

[wylie]

If you are uncertain of whether or not your job is secure, I would be whacking every spare dollar into those "bad debts". Once they are gone (how long would it take you?) then you could reassess your position.

 

[Rolf Latham]

Hiya

Regardless of your current decision with the new IP.

I would be looking to also find an additional revenue stream (s).

Relying on just the one source of income isnt so great these days, you know that already.

ta
rolf

 

[Propertunity]

All good advice.

I have seen people with "job insecurity" complex use that as an excuse to not invest at opportune times - to their detriment. Just the same I don't think that you are in this category.

In the same position (and I was many years ago):
1. I'd sure up my revenue stream/s. i.e. get more income from either another job, an additional job, a business enterprise
2. Continue to buy cf+ or as close to neutral as you can get. That way the job situation is not so important
3. Pay down bad debt
probably in that order. But that is just me - not financial advice.

 

[xcesiv]

If you are uncertain of whether or not your job is secure, I would be whacking every spare dollar into those "bad debts". Once they are gone (how long would it take you?) then you could reassess your position.

These are not my bad debts, these are the companies bad debts. And i have been putting everything into getting rid of them.

We had a few big clients go under costing us about $50 to 80k in expenses with no income behind them. So having to pay for all these services without the customer paying us for it. (What i hate more is 1 of them is retrading under a new name and doesnt have to pay us the debt, yet has the balls to ring me under a new name and ask for service)

Forced the Boss to sell both comany cars to release funds there as they are worth more than the debt behind them, and also selling an investment project that he didnt manage right.

Close down a 3rd small company that was running at a loss. Big potential in that company, but needs the funding and we definatly dont have it.

Staff reductions have been huge, We are running Staff payroll expenses were 20% above company income per month... lol. i cant beleive he did it for over 12 months before i started the book keeping. I took over the books in november, and reduced labour by nearly 50% since then. I even gave the owner a 25% paycut for his stuff ups.

Once all these are settled, i then work on the backpayment of Tax and we we will be all good

the 2 people we are worried about is the bank and the ATO. We are now running ok with the bank. We have come to an agreement and just have to keep up the min repayments on the loan weekly and the ATO have been ok, we pay them weekly for the exisiting debt to them, and im starting to increase these payments so we can clear it to add the other debts to it.

now that we are running in the black we have a chance...

 

[stumunro]

Sounds like you are a good worker, and with good references from your boss, should have no problems finding another job.

If you are a first home buyer, and you buy well, find a property that isn't costing you a bucket load. Even $100 shortfall a week is managable if something did happen (I'm assuming you have some sort of cash buffer for emergencies & then there is always forklift driving)

 

[Nathan]

I think a lot of seasoned investors have sailed close to the rocks before.

Two tips I would suggest, not as advice, but what I would be doing in ones situation.

1) get a couple of pre approvals up your seleve. Therefore if you loose your job and get a new one, you wont have to jump hoops to get a loan and sit on sidelines you can go again straight away.

2) have a buffer.

 

[xcesiv]

Hiya

Regardless of your current decision with the new IP.

I would be looking to also find an additional revenue stream (s).

Relying on just the one source of income isnt so great these days, you know that already.

ta
rolf

I already have a 2nd income. I run my own small business providing printed advertising, signage, vehicle signage, and small print decals,

This brings in a steady amount, but being only trading for under 2 years the banks dont want to use this as part of my affordability.

 

[xcesiv]

I think a lot of seasoned investors have sailed close to the rocks before.

Two tips I would suggest, not as advice, but what I would be doing in ones situation.

1) get a couple of pre approvals up your seleve. Therefore if you loose your job and get a new one, you wont have to jump hoops to get a loan and sit on sidelines you can go again straight away.

2) have a buffer.

I have pre approval on a IP Loan, but its for about 50k short of what i wanna spend.

I am working at getting this up now. But i cant get a payrise since the company has no money to spare at this time

I do have a small offset loan which im trying to reduce, its a personal debt which im reducing very quickly, but its still a debt.

I have no credit cards or anything so thats all covered too.

 

[devo76]

I am in the aviation industry and we are getting hit hard.Some areas have dropped off 40% and many routes have been cancelled. We have had layoffs with more to come. That said i had an offer accepted yesterday on IP 2. I have buffers in place to help me through any down times. In the end nothing is certain and there will always be a reason not to jump. Just think of the worse case scenario and if you can survive it, you should be OK.

 

[xcesiv]

Lucky for me i have the support of my family. My mum is more than willing to help step in if i need to in the short term. My back up doesnt revolve around my mum looking after me, but if i was to run out of my back up plan and excess funds, then she is there aswell. This helps reduce the stress of posibly overspending a little.

With my qualifications aswell i have never had a problem finding work so loosing my job would suck, but would only be a short term issue.

The places i do the books for has had a 50-70% drop in sales, but the problem is more business management and rebuilding more than loss in income. The loss of income is not solely people not buying, i would say 50% is bad business management and customer service.

Loss of income sucks, but if managed correctly the company should still make good profits. Unfortunatly this one increased expenses, yet had a decrease in income. Both the wrong direction.

 

[The Y-man]

Sounds like you are a good worker, and with good references from your boss.....

....not after he just gave the boss a 25% pay cut and got rid of his cars!!

Cheers,

The Y-man

 

[xcesiv]

....not after he just gave the boss a 25% pay cut and got rid of his cars!!

Cheers,

The Y-man

What would you prefer

25% pay cut and 2 cars

or

100% of his pay, 100% of his business, and both cars... ohh... and his house... they will take that too...lol

 

[daniellee]

Hi, Xcesiv

In early May 09, I was told my job would be no more by Mid Aug 09, and that was a day before the Wife and I were going down to sign the contract for our first IP.

Quickly doing some calculations, we concluded that our property would be almost cashflow neutral, only costing $7 a wk to hold at the current 5.03% interest rates. We decided to go ahead with the IP, since we have been searching for about 7 months to find this deal.

Settlement is in 2 wks in early July, and I am out looking for another position since early May. At least I will walk out of the company with 8 wks severance pay to keep me going for a while.

My wife is also due with our first child in late Oct, and We have been saving up our buffer for months before hand for a rainy day. Have enough to last for 6 months, after factoring a quick reno for the IP. Have family as backup as well.

I say, if you come across a deal that is really good, and you are covered for a worst-case scenario, then go for it.

Regards
Daniel Lee

 

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Re: Job Uncertainty - Should this hold me back?

Yes

 

[asdlellel]

I think there is some good advice here, but suprised by a lot of 'go for it' type comments, especially when your company seems a bit shaky still. Also, you have a personal debt and you are approved at about $50,000 below what you want to spend.
Really, experts / economists say the economy is not out of the woods yet and there is much uncertainty about things. As you have debt, my recommendation is pay it off while you can, watch what is happening with your company, with the economy and with house prices.
Its not smooth sailing out there and many people believe the next 6 months can POTENTIALLY say alot about what will happen in the next few years.
I personally would be watching when things are so uncertain and see how those 6 months pan out. There is a lot to lose if things to go bad, why not be patient and see what is going to happen?
Anyway, prices aren't going to rapidly rise in the next several months anyway, so its not like you will be further set back. Who knows, prices may keep dropping and it would work out for your benifit in a number of ways.

 

[xcesiv]

50k below what i wanna spend is only a slight speed hump... this is easily fixed with some negotiations and proof i can afford to spend more. I havnt mentioned a 5% deposit i have hold of, and used my 2nd income at all.

Its not My LVR its affordability they reduced my loan amount

My LVR lets me borrow nearly 370k but they said on my single income only borrow 300k.

I have a 2nd income and have access to 5% extra deposit ontop to help seal the deal

Also.. if i work out a good deal where i buy a Cash Neutral or cf+ place then the rest is a bonus.