What to do am i in too deep

Hi, TK, much as I respect your experience in financial matters, I find your stance on property/debt ratios etc very hard to bear. And I'll be insufferable enough to point out that that stance has lost out plenty in the last 5 years.

It is not Stargazer's property debts that's causing concern but the stock mkt losses.

Whether he should and how he should use his property assets to bail out the stock losses is the issue he's discussing.

KY

It doesn't matter what got him where he is...it is all about what options he has to remedy the situation.
 
And I'll be insufferable enough to point out that that stance has lost out plenty in the last 5 years.


KY

And i will be insufferable to point out that just because that stance worked very well in the last 5 years doesnt mean it will work at all in the next 5 years.

If people want to arrive at their destination 'long term' point they first need to get through the short and medium terms.
 
Seriously man, take a small LOC so you can sleep at night. Thats what I do and it works like a charm, I'm telling ya.

Hell I don't even have a job at the moment.

I took 2% of my profit/equity so far and that will last me around 2 years if used just for investment shortfall purpose. And it's tax deductible if I'm working and thus pay tax at the time. Whatever you make from your job is yours, and if your portfolio is currently valued at around $800,000 you can generally add 7% which is $50,000 per annum (more or less depending on market conditions) while you might spend $3000 on your shortfall after tax.. There are investors who do this and never use any of their own money. True capitalists I say. I'd hate to hear of you selling when there are much smarter ways is all.

Eliminate both problems of sleeping at night and holding on for the long term by capitalising interest is my 2 cents. But I know it will make you much more :)
 
Hi all

Thankyou all for your replies and i understand all your perspectives.

I had been reasonably careful with setting up LOCs and making sure there was plenty of buffer.

Without the stock market losses i was with reasonably low LVRs around 55%.

With the stock market losses it has increased because i used equity. Buy shares spread the risk with different sector that was the thinking and then pay down debt by these profits. Well that didn't happen. However despite this i was still managing alright.

What made things go to uncomfortable levels was a seperation and i bought out the partner so this pushed my loan amounts to the maximum.


-At this time the banks won't extend my LOCs even though i have more equity to draw out if i bring the loans out to 80%.
-Mortgage Broker has said its the DSR, now that i am on one wage so bank won't extend LOC.

So i have to service the shortfall, whereby before my LOC was. There is still some credit left but not alot.

Hope that gives some understanding how this has come about.

So i have to consider some options, and start thinking about what ifs.

SG
 
Hi all

Given the information as disclosed, any one have any creative ideas how i can get this equity.

If no replies i guess nothing further to add and i thankyou all for your contributions.

SG
 
uncreative I know...............

speak to some other brokers or lenders to ensure that yoru servicing is the problem.

Obviously, your actual cashflow position isnt good, so selling one to realise equity is possibly not a bad option.

ta
rolf
 
My situation is this.

IP1.....Current Val $541k Loan..$344k Rent $440pw
IP2....Current Val $371k Loan $210k Loc $50k Total #260k Rent $330pw
Interest only loans at 6.71%.
My wages $55000

I rent $260pw.

Both Mortgages are with ANZ.

My Problem: Bank says i have reached my DSR (serviceablilty limit).

Based on Bank valuations i have properties valued at $912,000 @ 80% lend would give me $729,600.

My total debt is $604,000

This means i have $125,600 in equity i cannot access because of bank policies.

Is there a way around this to be able to release all or part of that equity remaining.

I feel frustrated with this as that would be a good buffer to have realeased. My income and rents i thought would be enough, but there you go.

Any suggestions?

SG
 
Hi SG

ANZ serviceabilty is on the lower side, based on the very surficial data u may be able to get some more rope until u can improve your cashflow position.

Some other lenders will have a much better service model for you

Speak with an independent broker.

What is your current cash burn rate ? You really need to assess if the upside cash injection fix will tide you over until you get out the other side, or if the hole will just get deeper.

No different than a business thats in trouble. Its best to have an active way of trading out of the problem, rather than waiting for some accidental. statistical or organic occurence.

ta
rolf
 
SG, sorry if I am missing it written already but what are you wanting to do with the equity?

The two rents appear to be covering the interest repayments so you would just be having to cover the other expenses. What's the drama with knuckling down for a bit and trying to pay off some of the borrowings? (or are there other expenses you have that we're missing)?

Gools
 
Hi

Thanks Rolf and Gools for the replies. I actually just received an article from Bill Zeng. http://info.investorsdirect.com.au/rp//417/Content.clsp?ContentId=500000135
that is in relation to this type of problem.
Overcoming serviceability issues to obtain finance in the current market

Gools main reason is having the equity released
Its really the principle of not been able to access the equity when one wants to.

Exactly as you say what i have shown is it, the bank must be tight to knock me back i feel. Looking for options.

SG
 
Hi

Thanks Rolf and Gools for the replies. I actually just received an article from Bill Zeng. http://info.investorsdirect.com.au/rp//417/Content.clsp?ContentId=500000135
that is in relation to this type of problem.
Overcoming serviceability issues to obtain finance in the current market

Gools main reason is having the equity released
Its really the principle of not been able to access the equity when one wants to.

Exactly as you say what i have shown is it, the bank must be tight to knock me back i feel. Looking for options.

SG

Investors Direct might want to get up to date on their obligations under the NCCP if they plan to keep their licence.....
 
My situation is this.

IP1.....Current Val $541k Loan..$344k Rent $440pw
IP2....Current Val $371k Loan $210k Loc $50k Total #260k Rent $330pw
Interest only loans at 6.71%.
My wages $55000

I rent $260pw.

Both Mortgages are with ANZ.

My Problem: Bank says i have reached my DSR (serviceablilty limit).

Based on Bank valuations i have properties valued at $912,000 @ 80% lend would give me $729,600.

My total debt is $604,000

This means i have $125,600 in equity i cannot access because of bank policies.

Is there a way around this to be able to release all or part of that equity remaining.

I feel frustrated with this as that would be a good buffer to have realeased. My income and rents i thought would be enough, but there you go.

Any suggestions?

SG

I would sell ip 1 payout ip2, and all of asudden youll be earning 72000 per year and only out of pocket your rent of 260pw and expenses for ip2. imagine how much moey you could save for your next ip without the stress
 
I think that you've got two options:
  1. Reduce your outgoings: Rent a cheaper flat to live in, don't use a PM, find a better mortgage deal. (But with rising interest rates that's a temporary fix.)
  2. Reduce your debt burden: Sell one or both of your IPs.
Increasing your debt levels will increase your outgoings, and unless it's a very short term liquidity problem you're having, it will make things worse. So in that regards I'm in agreement with Token Funder and atsim.

Another suggestion would be to look at moving into one of the IPs as your PPOR, though that would depend on them being in a convenient location. If you're paying $20 to $30 per week as the PM's fee then the difference between the IO mortgage payment and your rent isn't that large.
 
hi
half of what I have read is bs and Token Funder please if this advice hold it to your self
first you need to understand your current position
and send thru a excel on it.
next your have equity i will have a look at how much but an excell will work alot better
next can I use equity
please
Token Funder will say no
why because he doesn't use equity
me yes
do you go with the Token Funder of this world
please throw me a bucket
stargazer get a grip
stop playing around you have a problem thats fine
you have equity use it
whats the problem
but I have no idea of how to use it
good
read
simple
and if you pm me I will give you a few ideas
Token Funder don't pm me as I have no idea for you
unless you want to invest if you wish to find evey other reason why not to invest thats fine
you will not come on my people to email to
ying and yang
ying can't live without yang
but if yang dies so does ying
we all have a ying and yang they call them ying and yang in china we call then couples or in business they are partners
Token Funder I see you as my yang the opposite of me this is not a bad thing as you need to have balance ying and yang
we will for the most part never see the same part( we never should)
there is alot of yangs of this forum
but alot of yings
I am in the ying group
what are you
there is only ying and yang in china
so come on which are you
stargazer you are ying
but Token Funder can say you are yang
 
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