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Advice on current situation.

Discussion in 'Property Finance' started by Famil Man, 13th Aug, 2016.

  1. Famil Man

    Famil Man Member

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    Hello,

    Current situation.
    Living in PPOR with family: Wife, 3 kids (2x2y/o & 5y/o)
    PPOR Loan = $251,000 (+ $15,000 from Top Up untouched)
    PPOR Val = $280,000
    Offset Acc. = ~$23,000 most of the time
    Car loan = ~$37,000
    Property is 3/1/2 on a corner block (750sqm) in a nice suburb Rockhampton
    Single salary of $140,000

    Short term goal: To aquire an investment property. (simple?)
    Long term goal: Nothing set just yet. To eventually have multiple positively geared properties.

    We do not live an expensive lifestyle, our only major expenses (besides paying bills/rates etc.) come from our semi-regular holiday trips (car & camper trailer) to beaches and state forests.

    So question time, what is my best approach to accessing the mountains of cash the bank has to offer? I felt like it was a struggle to get my current loan, let alone more.

    I also think it was a bad move to get the top up loan of $15,000 for 'renovations' (after reading this forum). I now strongly believe that it would be a struggle to get any more than $20,000 increase in value with that $15,000.
     
  2. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Hi @Famil Man, welcome. Wondering, why do you have a $37k car loan? And what's the interest rate on that?
     
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  3. Famil Man

    Famil Man Member

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    Bought a Pajero to keep the wife and kids safe on the roads :D
    7 year loan through dealership approx. ~8% interest.
    I sometimes regret going for such an expensive car and large loan.
     
  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Umm... yeah... that interest rate is not good...

    I've never had a car loan.... cars have always been bought with cash... if I ever did finance a car it would be at 0%... then again, if I was to buy then I would buy a 3 year old car, as they rapidly depreciate and a 3 year old car really is as good as a new car... usually same model too...

    My suggestion?... don't do that again.
     
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  5. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    For some, a car is just a nothing piece of machinery, for some its a safety requirement for their family, for others its a passion and interest. Telling someone not to get a car loan is fine if you can afford to buy a car for cash.. many cant so its always going to be part of their financial equation.

    Moving on... @Famil Man income looks good, though with a decent income and a low mortgage you should service for a loan well. I would look for properties you can buy, add value to then draw equity out of to fund the next property deposit.
     
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  6. Famil Man

    Famil Man Member

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    Thanks, that was always the plan with buying my current place, mostly cosmetic reno, kitchen/bathroom tidy up.
    But the twins were a lot more work than the first boy so we have not made a whole lot of progress in the last 2 years.

    So if we do not have much/any equity in our PPOR, then only option is cash deposit for Investment property?
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    How recent is the val ?

    Ta

    Rolf
     
  8. Famil Man

    Famil Man Member

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    less than 24 hours :D
    Pretty accurate in my view, with our place fixed up i think $300k is achievable, the area is what sold it for me.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    No.

    Another option would be to pay down the PPOR loan and reborrow the money for the deposit. This way the interest will be deductible - also known as 'debt recycling'
     
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  10. Famil Man

    Famil Man Member

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    Ok thanks. I would like to visit a local broker, but i'm hesitent due to not getting very good advice from a broker prior to purchasing my current house.
    I want to read up so i have some sort idea what i need before blindly following another broker.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Read my tax tips on structuring loans Terry's Tax Tips
     
  12. Mick Butterfield

    Mick Butterfield Well-Known Member

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    Hi there,

    There are lots of great brokers on here (I use one myself) that you can work with all over Australia. It is vitally important to have a broker who is investment minded (providing you want to invest) as it can get a little complicated for the lay person.

    Cheers,
    Mick
     
  13. Famil Man

    Famil Man Member

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    so how do you find/choose an online broker from the forum?
    I've looked for a 'broker list' and the likes but came up with nothing.
     
  14. Nemo30

    Nemo30 Well-Known Member

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    A few have replied to you in this thread. Rolf Latham and Terry W are both brokers.

    Personally I've used Corey Batt and Jamie Moore from the forum and they are both fantastic.

    Others that come to mind.. Kinnon Bell, Jess Peletier..
     
  15. tobe

    tobe Well-Known Member

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    There's a service providers list as one of the forum topics. That has brokers accountants etc listed there.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Or just read the posts brokers make and see whose style you like.
     
  17. robboat

    robboat Well-Known Member

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    My 2c....
    On face value it seems your assets equal your liabilities so your current income is fine to service the debt.
    As others have said your debt is all "bad debt" on the car & PPOR as it is not tax deductible against your income.
    Options:
    - Can you refinance the PPOR at a lower rate.....reduce your repayment to allow more for investment? Quick but may not be good...
    - Can you rent out the PPOR and rent in a cheaper area of Rocky without too much heartache...? This is a good option as the interest is then deductible but could be hard for the family.....
    - Paying off as much of the PPOR and then borrow line of credit for investment property........better option.
    - Get more income to service debt......buy/sell Ebay, make things, wife able to work from home, work more yourself?.....Not easy.
    - Trade out of the expensive car loan...you can put it on the LOC later.....?

    No easy or obvious solutions.....I can feel your pain brother - I have 3 kids too!
    Luckily our two girls are older and able to look after themselves and wife & I both had IP,s before we got married.

    FWIW - I am taking a punt on a cheap place in Maryborough Qld. - real paint and profit place but well located & large land.
    Easy rent with Centrepay tenants.
    Returning 8% gross now and can increase to 10% with some renovation work.

    Good luck.
     
  18. Famil Man

    Famil Man Member

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    Thanks for the replies.
    I think the only above option that would work for us would be to keep paying down the mortgage and trying to increase the value.

    I dont think i could rent someone else house, my 3 boys are rough on the harware and will probably only get worse. The bond would basically be a donation upon startup.

    I will have a think, and get onto one of these ^^^ brokers in the meantime.

    I forgot to mention, im currently only 25 so still have plenty of time to get it right (slow starter compared to some)
     
  19. Nemo30

    Nemo30 Well-Known Member

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    Its not a race. Do what you feel comfortable with. At 25 you are doing well to have a house, a great income and a family.

    Having a family at a young age can be hard, however you'll be in a great position at age 40.

    Things really do get easier over time. You'll probably eventually have double incomes, house values may rise, kids get older and cost less.

    Personally, Id save as much as you can, put it in an offset account and spend the next 6 months reading everything you can. You've got plenty of time.
     
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  20. Marg4000

    Marg4000 Well-Known Member

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    At 25 you are doing well. Just keep on what you are doing, pay down the loan and add value where you can.
    Marg