My Dilemma

Hi All,
long time lurker, first time poster. I wanted to get your views on my current situation..
I, 31y/o married and living with mum and dad in a fairly large 2 story home, my wife and i have our own qaurters upstairs. (we share the kitchen/laundry) life is pretty comfortable.

I earn approx 160k p/a in a 9-5 corporate role.

I have recently finished development of a duplex in western sydney with a total loan amount of 900k I rented both units last week for 700/p/w for each (total 1400p/w for both)

I own another property in western sydney with a loan amount of 590k (bought for 740k) recently finalised CDC for another duplex + studios on each. cost to build this would be ~650-700k which I would look at commencing in April 2017.. forecasted rent return on these would be roughly 800p/w CDC approval is valid for 5 years.

We recently had some very good news of a baby on the way which is due in April 2017 (

THE DILEMMA:

1- My strategy was to develop both properties and rent all units with them being positively geared and then save up for a deposit on a PPOR.
The sooner i develop the sooner i can focus on a PPOR saving strategy. (most of the cash will be tied up servicing the loans whilst building (approx 5k p/m)
So by developing i will take me longer to save up for a PPOR and the way house prices are, its looking like a 2.2m PPOR purchase..

2- The other option is to sit on the second property, which services it self ($200 p/m negative geared) and re evaluate in future (within 5 years) and start saving for PPOR now.

I just dont want to be stuck at home for too long with a growing family.. :S It could take another 3-4 years to save 20%..

Thoughts? sorry about the whinge.

Joe

 

Have you considered what is termed rentvesting where you continue to invest and rent where you want to live. This will have a much less impact on serviceability as rent is taken at actual payments in banks servicing calcs and a 1 mill PPOR loan will crush it and could stop you in your tracks!

Rentvesting: The new great Australian dream?.

 

Yeh i have but that rental money would undo the savings i realise by staying at home. would also crush me during construction, i would have to pay rent plus service the 1.2m loan during the build.. ?

 

Also, there's no need to save 20% for your home - it's great if you can, but there are lenders who will help with just a 5% deposit if need be. You'll pay enormous LMI but if it gets you in a home it may be worth it.

 

Couldn't you just move into one of your rented properties when the lease ends? That way, you have your own place without the massive liability of not only another mortgage but one for a $2 million house? I'd be very wary of spending that on one property with a growing family. Just my 2 cents but I'm far from an investment guru myself

 

Yes this would have been the best option..but...Its not somewhere we want to live for the foreseeable future.. I agree on the 2m house, its a nightmare thinking about it. but its the area we dream of living in..

 

Consider bringing forward the construction of the new site so that it will basically be complete by the time bub arrives. That way you will have an additional $800/wk each while the +1 is on maternity leave and you can still factor in any income from the +1 until she goes on maternity leave.

As @Colin Rice notes you will take a servicability hammering when you buy a ppor. (@Jess Peletier - Who wants to live out where?)

 

So let me get this straight?

You're 31, married, kid on the way, earn $160k per annum, own about $2mil of develop ready property - and you still live at home?

Time to get of mum's tit first of all, close the last chapter of the spiderman comics and time to start living on you're own 2 feet. You sure have some weird nightmares when you're still the latch key kid.

pinkboy

 

I don't understand how paying a 2 million mortgage would be more affordable than renting in the same area? It would probably be half the cost (of P&I repayments) too

 

I don't understand why you are worrying about saving for a deposit, looks like you would have enough equity to in your existing IPs to fund the deposit, just make sure the equity drawn down from the IPs is a separate sub-loan.

 

Get some help via an investor savvy broker with what I call "future planning" where you can project various scenarios and see where you land and plan accordingly and hope the policies and bank calculators dont change in the meantime

 

Congrats on the bub news! And you have live in baby-sitters!!! Brilliant!
Sorry what's the problem??

 

Finish the Devo stat ,
then
keep living with yr excellent family(such kindness is rare )
and when its time to live where you want
-check on renting cost as would usually be alot less than buying the property,
Keep saving for deposit on yr dream home and buy later

 

Why on earth are you still dependent on your parents with assets like that? Unless of course you are paying them full market rent as well as half of all household food expenses and bills.

Sorry to sound harsh, but you are not 15.

Far too many of our retired friends are having their retirement funds and plans sabotaged by adult children who find it "easier" to still live at home and let their parents pay the bills while they live high and "invest".

At 31 it is high time you and your wife stood on your own feet and became independent.
Marg

 

In some culture, especially in Asia, adult children living with parents is the norm, and it is expected that they take care of the parents when the parents become old, as oppose to send the parents to homes.

 

good advice here, thank you Colin.

 

Thank you - I guess (as per some comments here) I do want to move out and get my own place. FYI to the rest. I am not mooching from the folks, I pay most bills and we help earn our keep..

 

If i was to tell my folk im moving they would be devo.. thats the honest truth. Yes I do help with most bills and upkeep of the house.

 

I reckon its a good thing that you have parents like this. I have clients in a similar situation who are investing in property and building a decent business whilst staying at there parents property in their own quarters. The parents dont want them to leave either and I have said that if your parents want to support you then good on them and good for you, just dont become expectant or dependent on it.

 

We dont know his relationship with his family.Remeber all families are different .
He may be the most generous son you would ever meet? I know in my family we live to serve one another and that includes housing and everything in life .As much as we can help each other we do. I am sure when gforced's parents need help later he will be the first to do the same for them too !