Hi all,
Sorry for a long post. We need some guidance from you.
In January 2012, we bought a 3x1 duplex half in Langford, WA. The house value has increased by 25% to 300K now. (The initial price itself was low as it was a mortgagee sale) We used that equity gain to buy a 3x1 R20/30 in Gosnells in March 2013. The price, buying costs and renovations added comes to around 280K and it will go for 330K-340K now.
Using this equity gained we are buying again in Langford, a 3x1 needing substantial renovation, settlement next month. We have actually paid 20K more that what we should have paid for the 3rd property as it is, but it will be neutrally geared at current interest rate. But the plan is to build a GF and the property will be positively geared even if interest rates go north.
Once the 3rd property is settled we will have 765K in loans and around 200K in equity. All our loans are 80% and we prefer not to pay LMI. The reason is we are low income earners and thus prefer not to take higher percentage loans. We pay interest only.
My take home income is 38,500. And my partner makes around the same amount. We live on one income and use the second income to invest. And partner's income may drop to 12,000 sometime soon.
We are into our 30s now. And want to have kids. So we have to go to one income anyway. Thus we prefer our investments to get in some cashflow.
We may be able to get 20% deposit for 4th property by subdividing the 2nd and using that equity. But the banks may not finance a 4th property at our income levels. Even if bank fund, it is risky at our income level. So it seems boosting cash flow by building GFs would be the good strategy to move forward.
Option 1: Now we are considering selling the 1st property as it is a duplex half and buy a house with enough land to build a GF. Subdivide 2nd house, use the equity to build 2 GFs and build a house in the subdivided land after some years. The risk is that after selling, we may not be able to buy another one and thus miss out possible CG. Selling and buying will cost a lot. And we will have to rent.
Option 2: Not selling first property. Subdivide 2nd property, build GF at 3rd and then after few years build a house behind 2nd.
What are other options? What other stuff we should consider?
Singo
Sorry for a long post. We need some guidance from you.
In January 2012, we bought a 3x1 duplex half in Langford, WA. The house value has increased by 25% to 300K now. (The initial price itself was low as it was a mortgagee sale) We used that equity gain to buy a 3x1 R20/30 in Gosnells in March 2013. The price, buying costs and renovations added comes to around 280K and it will go for 330K-340K now.
Using this equity gained we are buying again in Langford, a 3x1 needing substantial renovation, settlement next month. We have actually paid 20K more that what we should have paid for the 3rd property as it is, but it will be neutrally geared at current interest rate. But the plan is to build a GF and the property will be positively geared even if interest rates go north.
Once the 3rd property is settled we will have 765K in loans and around 200K in equity. All our loans are 80% and we prefer not to pay LMI. The reason is we are low income earners and thus prefer not to take higher percentage loans. We pay interest only.
My take home income is 38,500. And my partner makes around the same amount. We live on one income and use the second income to invest. And partner's income may drop to 12,000 sometime soon.
We are into our 30s now. And want to have kids. So we have to go to one income anyway. Thus we prefer our investments to get in some cashflow.
We may be able to get 20% deposit for 4th property by subdividing the 2nd and using that equity. But the banks may not finance a 4th property at our income levels. Even if bank fund, it is risky at our income level. So it seems boosting cash flow by building GFs would be the good strategy to move forward.
Option 1: Now we are considering selling the 1st property as it is a duplex half and buy a house with enough land to build a GF. Subdivide 2nd house, use the equity to build 2 GFs and build a house in the subdivided land after some years. The risk is that after selling, we may not be able to buy another one and thus miss out possible CG. Selling and buying will cost a lot. And we will have to rent.
Option 2: Not selling first property. Subdivide 2nd property, build GF at 3rd and then after few years build a house behind 2nd.
What are other options? What other stuff we should consider?
Singo
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