Evening All - long time reader, first time poster. Only reason I've finally decided to post is because I've finally decided to started asking for peoples advice on what has been successful for them and to look at different ideas and what they might do in my circumstance. Sorry for the long post but I hope to hear a few different ways people might approach this situation considering the current climate and thinking about things they might have done now they have learnt even more with experience.
Family
Wife + 1 son (We want to try for a second at end of this year). We're both 29, turning 30 at the end of the year.
Life Goal
To earn some sort of a passive income (Potentially from other sources - if you think this is impossible from property) for myself and my wife equivalent in today's money of at least $200k p/a (Ultimate 520K if dreams came true). I'm not keen on living on LOC as I just worry that the banks will someday stop lending me the extra amount which doesn't achieve my goal. I want to retire early and start travelling and coaching kids in sport and learning new things. Want the financial freedom to give our kids a good life and opportunities too.
Salary
My Salary After Tax - $5700 p/m
Wife Salary After Tax -$2915 p/m
Total After Tax - $8615
Savings - $20,000 in savings account. Saving 2k a month, will look to add in tax return of about 5-8k in July.
PPOR (Western Sydney) - Valued by RE at $330k last November, owe 292k (Bought 5 years ago for $329k so no real growth unless latest median increase makes some small difference and RE was being unrealistic), variable rate with Westpac. PPOR is in good shape except the bathroom, the bathroom needs to renovated due to leaky shower floor, mould and minor plumbing issues which I'm assuming a renter would complain about, issues I can live with personally. Also has a large pool. 550m2 block.
Short Term Desire
The PPOR my family is struggling with room. We're keen to perhaps build a new house in the area in new development areas and look to up size so we have room for our next child. 3rd bedroom is being used as a study and there is seriously not enough room to turn it into a bedroom. Desire for next 10 years would be a two story 4 bedroom Eden Brea home (Cambridge) if we could reach it. But may have to live more to our means, thinking it would come to 550k or there abouts. Issue being we would be left with a property that has seen no growth yet and we would have to cover the shortfall. $350 p/w rent so shortfall would be $200 approx at current rates (PPOR has a pool so not sure how to handle this). (Saying that we pay full tax so should be able to do a tax deviation form for this). Having kids is also a worry as the pool is a serious hazard and also is 12m x 6m so takes up all of the backyard.
Opportunity
My mother approached me a week or so ago and was telling me that she's been having a few issues health wise and would love to see her children eventually use her inheritance while she's still alive who can perhaps enjoy it with us. My wife and I have the plan that one day both my mum and my wifes mum and dad would live on a property all together in there own addition to the house and we would help support them. My mum has since made a crazy like statement and is still pushing it that she wants to offer me to transfer her house into my name, valued I think around the $340k mark. (This gave me a real tough thing to think about obviously, as I don't feel to comfortable about taking it but perhaps we can all be better off because of it.) Her argument is that she's on a disability pension and she'll never be able to use that equity as they simply wont loan her, so why not see if she can help us out now. The other reason is she has 30k of debt against the house and she wants us to pay that off too giving her more of her pension. I have a sister though which also comes into the equation. My mum wants me to look after my sister later on in some way as she trusts the property with me to make something of it as I've been really good with my money, also my sister isn't married and she's worried her relationship may lead to her losing it, the sister also has a very bad credit rating and had her car repossessed last year. Giving back something to her that's fair that equates to half of her property later on, which is fair. P.S. Centrelink has given the green light as long as she gifts the house and we promise legally to let her live in one of our property's, she will continue to receive the pension. Our idea is she just stays where she is.
So as you see, plenty of drama's and options. Not sure if taking my mum's house and the stacks of equity is a good idea, especially seeing I'd lose my savings to pay off her debt first and then the banks may think I have no regular savings. But jeez it makes you wonder if we could get to our long term goals much faster in which we could support the whole family.
Keen to know what different people would do in this strange situation. Thinking about our long term goals. I'm more then happy just to keep doing this myself but I'm also looking for advise on what we should do if we do this also, continue to save?
Family
Wife + 1 son (We want to try for a second at end of this year). We're both 29, turning 30 at the end of the year.
Life Goal
To earn some sort of a passive income (Potentially from other sources - if you think this is impossible from property) for myself and my wife equivalent in today's money of at least $200k p/a (Ultimate 520K if dreams came true). I'm not keen on living on LOC as I just worry that the banks will someday stop lending me the extra amount which doesn't achieve my goal. I want to retire early and start travelling and coaching kids in sport and learning new things. Want the financial freedom to give our kids a good life and opportunities too.
Salary
My Salary After Tax - $5700 p/m
Wife Salary After Tax -$2915 p/m
Total After Tax - $8615
Savings - $20,000 in savings account. Saving 2k a month, will look to add in tax return of about 5-8k in July.
PPOR (Western Sydney) - Valued by RE at $330k last November, owe 292k (Bought 5 years ago for $329k so no real growth unless latest median increase makes some small difference and RE was being unrealistic), variable rate with Westpac. PPOR is in good shape except the bathroom, the bathroom needs to renovated due to leaky shower floor, mould and minor plumbing issues which I'm assuming a renter would complain about, issues I can live with personally. Also has a large pool. 550m2 block.
Short Term Desire
The PPOR my family is struggling with room. We're keen to perhaps build a new house in the area in new development areas and look to up size so we have room for our next child. 3rd bedroom is being used as a study and there is seriously not enough room to turn it into a bedroom. Desire for next 10 years would be a two story 4 bedroom Eden Brea home (Cambridge) if we could reach it. But may have to live more to our means, thinking it would come to 550k or there abouts. Issue being we would be left with a property that has seen no growth yet and we would have to cover the shortfall. $350 p/w rent so shortfall would be $200 approx at current rates (PPOR has a pool so not sure how to handle this). (Saying that we pay full tax so should be able to do a tax deviation form for this). Having kids is also a worry as the pool is a serious hazard and also is 12m x 6m so takes up all of the backyard.
Opportunity
My mother approached me a week or so ago and was telling me that she's been having a few issues health wise and would love to see her children eventually use her inheritance while she's still alive who can perhaps enjoy it with us. My wife and I have the plan that one day both my mum and my wifes mum and dad would live on a property all together in there own addition to the house and we would help support them. My mum has since made a crazy like statement and is still pushing it that she wants to offer me to transfer her house into my name, valued I think around the $340k mark. (This gave me a real tough thing to think about obviously, as I don't feel to comfortable about taking it but perhaps we can all be better off because of it.) Her argument is that she's on a disability pension and she'll never be able to use that equity as they simply wont loan her, so why not see if she can help us out now. The other reason is she has 30k of debt against the house and she wants us to pay that off too giving her more of her pension. I have a sister though which also comes into the equation. My mum wants me to look after my sister later on in some way as she trusts the property with me to make something of it as I've been really good with my money, also my sister isn't married and she's worried her relationship may lead to her losing it, the sister also has a very bad credit rating and had her car repossessed last year. Giving back something to her that's fair that equates to half of her property later on, which is fair. P.S. Centrelink has given the green light as long as she gifts the house and we promise legally to let her live in one of our property's, she will continue to receive the pension. Our idea is she just stays where she is.
So as you see, plenty of drama's and options. Not sure if taking my mum's house and the stacks of equity is a good idea, especially seeing I'd lose my savings to pay off her debt first and then the banks may think I have no regular savings. But jeez it makes you wonder if we could get to our long term goals much faster in which we could support the whole family.
Keen to know what different people would do in this strange situation. Thinking about our long term goals. I'm more then happy just to keep doing this myself but I'm also looking for advise on what we should do if we do this also, continue to save?