Safety net



From: H T

My wife an I have 4 ip's with a debt of around 1.1m and equity of about 200k in these properties.
With them fully tenanted 12 month a yr, it runs about even shhtephen
The reason we're allowed to gear up so much is that we own our home outright and have above average incomes. I know about good and bad debt but this amount sounds a fair bit for a pair of 30 somethings. We have a combined income of about 170k, but this may go to one in the not to distant future.

How much would be enough in case things "go wrong" like dud tenants, dud economy, loss of job etc..
Would enough to survive for say 6 months be sufficient??? 1.1*.065% = 72k int pa say 40k?
Sorry, its an airy-fairy pessimistic post but the way i see people in such a hurry to take on debt...well if things went pear shaped - its fire sale city here I come.
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Reply: 1
From: Rolf Latham


Muchos exposure yes, many risks too, but if properly managed then will be ok.

1. Insure your income (personal and IP)
2. Manage your rate risk - dont be left a sitting goose when rates move
3. Ensure you have excess borrow capacity buffer of at least 20 to 50 k to cover for the eventualities that may arise.
4. Manage your rentals properly - dont leave it all to an agent, at the end of the day its YOUR money not theirs.
5. DO not use cross collateralised finance. If the poo hits the fan you want to be able to move quickly without upsetting the whole apple cart - rather just remove a crate.

If all fails and the financial market go to custard - just think you could have a share portofolio that you could sell down at 1/10 of its initial value :eek:)


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Reply: 2
From: Paul Zagoridis

Glad you are thinking of that HT. I went broke in 1992 when my bridging funds hit 33%.

So the question really is how long can you survive without a job?

What if your rent situation shifts?

I aim for 6 months unemployment. After that I'll pull lattes to pay the rent.

But if you have extended vacancies it will be fire sale time. So I do not want places to stay vacant.

I'd rather have $10-$20 per week less than sit vacant for two weeks. That's my current approach, it may change, it has in the past ;-)


Oz Film Biz is at
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Reply: 1.1
From: Owen .

How many fruit, condiment and fowl references can you have in one posting Rolf? You've got the whole enchilada in this one.
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Reply: 1.1.1
From: Rolf Latham

I Like my food !

Totally unintentional - like some shares on Franklins ?

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