Hi, hoping someone here can check these figures are ok and my line of thinking is correct.
IP: est value 490k. using 475k as base price (15k costs if sell)
Loan: 300k
Rate used: 6.96%
300000 @ 0.0696 = $20880 int paid p.a
$430 rent (conservative) - 7% agents commission x 52 weeks = $20794.80 rent rec'd
Let's call the above EVEN.
$3k expenses - rates, water, insurance
ie. $3k loss p.a
@ 30% tax bracket, refund of about $1k.
Total cost p.a = $2k p.a
BUT:
If I sell for $475k and pay back $300k loan, I will have $175k cash in hand.
My loan outstanding on PPOR is $180k so pretty much I will have my PPOR paid off.
By not having the $175k in my PPOR, I am paying $12180 interest p.a on my PPOR.
Total cost of keeping the IP = $2k + $12180 = approx $15k.
So in view of all the above, my IP would have to grow (capital growth) by $15k p.a (3%) for me to "break even"?
Is this the way I should be thinking to see what growth I would need in my IP to break even?
IP: est value 490k. using 475k as base price (15k costs if sell)
Loan: 300k
Rate used: 6.96%
300000 @ 0.0696 = $20880 int paid p.a
$430 rent (conservative) - 7% agents commission x 52 weeks = $20794.80 rent rec'd
Let's call the above EVEN.
$3k expenses - rates, water, insurance
ie. $3k loss p.a
@ 30% tax bracket, refund of about $1k.
Total cost p.a = $2k p.a
BUT:
If I sell for $475k and pay back $300k loan, I will have $175k cash in hand.
My loan outstanding on PPOR is $180k so pretty much I will have my PPOR paid off.
By not having the $175k in my PPOR, I am paying $12180 interest p.a on my PPOR.
Total cost of keeping the IP = $2k + $12180 = approx $15k.
So in view of all the above, my IP would have to grow (capital growth) by $15k p.a (3%) for me to "break even"?
Is this the way I should be thinking to see what growth I would need in my IP to break even?