Hi all I am Andrew, a 33yo from Hobart Tassie. For work I am a tradie and my wife is working in the aquaculture industry. Currently we have a ppor and an investment unit. Ppor: sandy bay house which we did huge renovations on. Mortgaged at 500k on p+I at 3.2% Value $1.4m appraisal Rental $1200p/w appraisal Short let best price achieved is $725 a night (currently doing this) Investment: sandy bay unit (1 of 3 in block) Value $450k Mortgaged at 450k on p+I at 3.1% Rented for $470 p/w We have about $600k left before our serviceability is toast. What would you do next? Cheers and enjoying my time reading through the forum.
Hi and welcome to the forums! The first thing I would do is restructure your loans - they look like they're cross secured and it's a common mistake people make when dealing with a bank directly... or with a broker who used to work at the bank. Get your borrowing capacity assessed at the same time and plan with your broker to get the best bang for buck from the borrowing available to you. The second thing I'd do is great really clear on what you're hoping to achieve. Without an end goal, you're likely to buy properties that are not going to get you where you need to go. From there, creating a strategy based on your borrowing capacity and time line will set you in the right direction.
How did you get a 100% loan for the unit, did you use some equity from your PPOR for the deposit, is this deposit from a split loan account? Do you have any offset accounts, or money in redraw?
I have a tradie friend who has sold his business and now works on increasing his yield on his commercial properties net yield he is looking over 21% (as he has the time and abilities to building and renovations) Other friends running room by room leasing getting 15% plus net (as he has time on his hands) Then there are people who have neither the skill or the time to work on properties (but have the equity) ... they settlement for Properties with net yields of about 6.4% There are many roads to get to magic kingdom of self financial sufficiency. You have many choices !
Sorry I was interested in seeing what other investors would do If they were in my situation. We are crashing at a family shack currently
Do you know about the tax side - 6 year rule - using 6 year rule on airbnb type arrangements - distinction between capital and revenue I would read up about these. Consider whether you could use the 6 year rule to your advantage. Use your skills to produce capital gains could be good - trying to avoid being taxed on revenue account. Could you buy and build? Once you hit serviceability could you keep building and selling or reno and sell - and be taxed. Aim to structure your loans so you have a large sum of loan to play with without mortgaging the new property. you could build sell and repeat without needing to get new loans all the time. Combine this with debt recycling and your serviceability will improve to get another buy and hold property.
