Hi All, I've been lurking for a couple of weeks absorbing the wealth of knowledge across this forum, so thought I'd better introduce myself. I'm a single parent to an incredible little person, and am hoping to use my PPOR and a bit of hardwork to build a financially better future for us. I am currently in the midst of planning to build a granny flat on my property, to generate some positive cash flow plus I really don't want to keep mowing 780sqm any more. I am using some equity in my property and also a recent small inheritance to build. I am hoping it is the right move for us as I am in an area of fairly high rental demand and I'm a stones throw from the shopping centre, public transport etc. GF will be 2 bedroom, be privately fenced off from main house, have its own entrance and parking. Rental return should be $350/wk and I plan on keeping the property for the long term. Thank you for sharing your knowledge and I look forward to getting to know you in this virtual world a little better.
Welcome @Liela71. Good luck with the Granny Flat if that's the path you go down. I am guessing you have enough PPOR equity to fund the entire build? I chuckled when you mentioned it would save mowing some of the lawn What would be the next move after that?
Welcome and well done on taking responsibility for your future. Always great to hear about someone taking action
Thanks for the warm welcome. My lawn mower and I definitely have a love hate relationship, but seriously between full time work, full time parent, chief cook, cleaner and bottle washer just needing to downsize and hopefully think a little wisely. I have just enough equity to avoid LMI, to spend 120k on a GF and also pay out my car. My plan is hopefully in the next 12 months to rent out the house and GF, which will have me significantly positive geared, so planning on then buying another local property that may need a little facelift to become my PPOR. Just need to read through the posts on tax etc to make sure I make the most of any deductions and find a good accountant.
If you're going to rent out both the granny and the main residence in the future, I'd recommend using LMI for the granny and saving your cash for your new PPOR. That way you can write off the LMI over 5 years, and have a smaller non-deductible debt on your future PPOR. Also, if you hope to reno your new PPOR you'll need cash for that so best to use as much debt as possible for the granny. You can put the cash in an offset account until you're ready to buy your new house so the additional cost will have minimal impact on repayments.
Awesome thank you @Jess I was looking at waiting until the GF was built as I'm hoping that this will create additional value with the view that I would then remortgage it up to its eye balls to put the equity against my PPOR. I am concerned about serviceability issues given we are just a single income family. But was advised based on potential value I should be able to reborrow $500k - $600k. I would be selling the PPOR once it's finished and buying another. If the advice is to do otherwise I'm more than happy to challenge my MB as I am no expert in these matters, and do rely upon the knowledge of others.
You can't do that unfortunately - if you do, the new lending won't be deductible. Your MB isn't thinking about the tax implications - they probably aren't aware of them. It's also much more difficult to get cash out over 80% since APRA made it's changes, so I would use as much debt as possible first. That said, if you're not going to keep the granny and house it changes things. But have you had your MB run servicing on a new PPOR with rental income from the granny and main residence? It may be possible to hold?
Definitely spend some time mapping our your options before making any big calls. As @Jess points out, there's a bit to consider. Something I'd look at might also be if you have the borrowing capacity to use the $120k to get into $700k of investment properties e.g. 2 x $350k. You can find stuff returning 6.5-7% in that price point.
Exciting day as I Got my approval today, property valuation came in $20k more than I expected. Am going to borrow up to 85% as beyond that they won't approve due to income. No LMI because of some 'special' promo at the moment. So will stash the extra for the next project. Pretty set in my head to build a GF at the moment, as I want to reduce what I need to maintain myself and generate some income.
http://www.realestate.com.au/sold/p...?activeSort=solddate&includeSurrounding=false I'm pretty confident about Warwick Farm. Old 2 beddas are getting close to the 400K mark and there's only a handful for sale.
