Looking at purchasing positive rent to reduce my negative

Hello,

I purchased 2 properties in 2007:
400k Purchase 3bdr Pascoe Vale - Approx 520k now
400k Purchase 3stry 2bdr Pentridge Village Coburg - Approx 500k now

The Coburg house only settled in December so was an excellent purchase considering 40k deposit and at settle was valued at bank valuation of 480k.

I originally lived in Pascoe Vale until I went to Sydney for a year for work, since coming back to Melbourne I am living with my parents. The Pascoe Vale mortgage just a few weeks ago reverted from being an interest only to being principle + interest. Since realizing that is an extra $600 per month out of pocket I have been thinking that is easily another property if I was to rearrange this loan back to Interest Only.

I personally earn $6500 after tax a month from my job, plus $1500 rental income from Pascoe Vale & $1500 rental income from Coburg, giving me a total income of $9500 in the bank each month.

$6500 Wages
+1500 Pascoe Vale Rent
+1500 Coburg Rent
------------------
$9500 Total Income
-2600 Pascoe Vale
-2100 Coburg
- 400 Rates/Water/Body Corp
------------------
$4400 Income after investment per month (but still need to find a place to live)

I am looking at buying myself an apartment in the city currently as I am sick of wasting hours of my life getting into the city and the $300/m on train/car etc for work but I would really love to buy another investment property at the same time as I feel like I have hit a brick wall with not being able to continue buying a property every year like you see so many advertisements saying that its possible.

If anyone has any decent suggestions please advise, below I have written some basic thoughts that are going through my mind.

Option 1:
I have thought many times that maybe it is time to sell Pascoe Vale for 500-540k and reinvest that into many smaller 250k units in the city? I would potentially purchase 4 and live in one?

Option 2:
Sell Pascoe Vale and straight swap it for an upmarket 500k apartment in the city for same value and live in it & purchase a cheap

Option 3:
Buy myself a 250-350k apartment and just be happy with what I have?

Option 4:
Are those 150-200k Hotel leaseback for 10-20 years worthwhile purchasing to get some positive income, it is not like I care about capital growth as I have the first 2 properties that are growing very well?

Option 5
Heck I don't know just looking for suggestions. :confused:
I really just want to figure out how to start getting some positive income gearing and still move into the city by rent or buying without needing to relying on the tax return at the end of the year.


I am looking at buying something anyway in 3 months time after Ive gotten some big shopping spree's out of my system :D
 
Here's a few suggestions:

1. I'm in the buy & hold forever camp. I don't understand why anybody would sell a perfectly good property and buy another. Firstly the properties you have now, have proven themselves to be good investments - they grew! Can you guarantee what you buy next will do as well? Secondly, you have stamp duty going in and RE commissions and GCT going out - all eating up your equity. Just hang onto them and refi cash out for deposits on more as you can afford it.
2. Convert P&I loans to IO - definitely!
3. Most people find they can only hang onto 2-3 negatively geared properties. So you have a choice of 2 options (in resi anyway).
Option 1. Wait until the rents grow, and cover, and then exceed, your costs of holding.
Option 2. Buy positively geared properties. In Melbourne you can buy a house and bungalow with 2 lots of rent coming in - these are often cash flow +ve. If you are overweight with Victorian properties, and beginning to hit Land Tax then consider doing the same in another state/s.
4. Apply for a PAYG Withholding Variation so that you do not wait until you get a tax refund at the end of the year - but get it each pay period.
 
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