Jump to content

Need point of views..


  • Please log in to reply
13 replies to this topic

#1 8mimi8

Posted 26 November 2012 - 07:35 PM

Hello ladies,
After months of lurking, i am now bracing myself for the first ever post.

I like this forum as the responses mostly are not sugar coated, something that i need at the moment.

Background info
I am recently married, i am 27, my DH is 30. We both work full time and pulling in 145k combined income per annum.  Take home is approx $8.9k p/m. We have no kids but considering TTC in the next 18-24 months.

Our overhead per month is 3.3K , this takes into account the mortgage and everything that is essential including the odd takeaways. I don’t factor in gifts, clothes, booze etc as i don’t view these as overhead/bare necessities item so to speak (IYKWIM).

We live in a tiny 2BR duplex, our minimum pmt is $1200 p/m. Have been overpaying this since we bought in 08 and at the moment, we have 94.5k to go for it to be fully paid off.

My headache is our three investment properties. They are on interest only loan. We have refinanced last month and at present, the loan amount is 657k at 5.81%.

They are all negative geared, after very conservative and thorough calculation; we have a shortfall of $1,750 pm. I know that this will be claimable coming tax time, however the monthly payments (and the associated strata, repairs, insurance, rates, water costs) seem to be attacking me left right and centre..and its killing me softly..( i am the budget person for us, he is more “she’ll be rite” type of guy).

I have been saying/discussing/asking him to consider our option in selling the most non performing unit thus, reducing our loan to 436k, but he doesn’t think that way.  His reasons were – market is not good, and we should be in this for the long haul, look at the big picture, never sell assets..you name it. But in my defence, we can then allocate the money to pay down our mortgage, i think that itself is an investment to our future. I know that from the outset, it looks like we do have a good buffer but i constantly feel like it is only going to take us one major thing like job loss to tip us over the edge..
My main worry is..what happen when we go down to one income (only plan to do this 2 years max), i don’t foresee his income to rise exponentially in the next 2-3 years. And we cannot just up the rent to decrease the shortfall.., we can but not by much.

And eventually i want to upgrade to a 3 bdr house, nothing fancy as we can always do it up slowly. But 3 bdr in my area is starting at 380k and i already feel like we are mortgaged to the hilt.

He is being reasonable with this, and its not just a flat out no that i'm hearing,he is willing to consider all options however i know that if we do sell, he will not be happy abt it.

I need your point of views, am i being too risk averse and not seeing the big picture? I guess i just don’t want our budget to be so tight when we go down to one income for something that may or may not generate profit in the future.

Thanking you guys in advance for reading. English is not my 1st language so apologise for any weird phrases/grammars etc
-Mimi-


#2 olikat03

Posted 26 November 2012 - 09:12 PM

I agree with what you have said. We are going through a similar thing.

We have our house and three other investment properties. We had an issue with one property and it has slowly been sinking us. I am a bit like you and want to sell and put the money back into one of the mortgages. Dh was against it but now is seeing the benefits of doing so.

I want to get rid of two of the properties and rent one out (we were going to sell it when we moved out of it and back into the house we are in now but the return on rent will be really good so we have decided to keep it for two years rent it and reassess.

I feel like we are playing catchup all the time and I just keep thinking if we don't sell something we are just going to keep going the same way we have been.

I guess i will be watching what replies you get to see what others suggest.

#3 Lees75

Posted 27 November 2012 - 07:23 AM

QUOTE (FluffyOscar @ 26/11/2012, 09:49 PM) <{POST_SNAPBACK}>
Meh, sell an IP. It's not worth the stress. A 3-br house at $360k is cheap as chips, you can pick one up later. I take it you don't live in a capital city in Australia?

Or she lives in Adelaide original.gif

#4 Guest_Dinah_Harris_*

Posted 27 November 2012 - 07:42 AM

It seems to be fairly cut and dried to me.
If you have a shortfall of $1,750 per month you need to:

* Get a promotion so that you earn $1,750 per month extra
* Raise the rent of the properties to cover an extra $1,750
* Reduce expenses of the properties by $1,750 per month
* Re-negotiate the loans so that the payments are reduced by $1,750 (given they are interest-only, this is extremely unlikely)

If the above options are not workable, then the solution is rather obvious - sell one of the properties.  You are right in that you are right on the edge, and it would only take one catastrophe to push you over, like an illness or job loss.   Not having some breathing room in your financial planning is absolutely crazy.
How long do you think you can sustain going backwards at a rate of $1,750 per month for?  I would say, be proactive, get rid of one of the properties yourself before the bank does it for you.

#5 Moo point

Posted 27 November 2012 - 07:42 AM

If you're planning on dropping to one income for a couple of years once you have a baby, start trying to live on one income now. Although DH and I don't have any IPs or even a mortgage, we started living on one income only and saved the rest for a year before we started TTC.

You don't want to be shocked at what compromises you will have to make once you have a baby. Not to mention you may need funds for IVF (worst case - we did, out of pocket more than $10k before having DS), or job loss as you mentioned, or medical costs, or you may even decide that you don't want to go back to work full time or that both of you want to work part time.

I have no advice re: the market, but if you will still have 2 IPs and will be more financially buffered then I would sell the other IP.

#6 SeaPrincess

Posted 27 November 2012 - 11:51 AM

QUOTE (8mimi8 @ 26/11/2012, 05:35 PM) <{POST_SNAPBACK}>
i am the budget person for us, he is more “she’ll be rite” type of guy).

This is us exactly. Whenever I want to make major changes to our budget I have to make a detailed list of our expenses - mortgage, insurances, power, water, gas, rates, car rego, phone/s, internet...... the works. He is always surprised at what our fixed outgoings are, but will then work with me to find the best solution.  Before we had our first baby, I did this and then we looked at how it compared with his salary at the time. Perhaps that might help?

Good luck.
R



#7 Mpjp is feral

Posted 27 November 2012 - 03:11 PM

We have done a PAYG variation  which allows us to reduce our tax rate on a monthly basis (by the negatively geared amount) rather wait until the end of the year to get those losses back.  So this means we get a greater cash amount each pay that we are then able to apply back into the investment.

http://www.ato.gov.au/individuals/content....nt/00188348.htm

I've probably explained this badly - but our accountant set it up for us. Its made things MUCH easier - but the downside is that you dont get that enforced savings/ nice tax return.



#8 secret~sammy

Posted 27 November 2012 - 04:05 PM

If you’re having rational discussions about money you’ve got half the battle won OP, so many, many couples don’t.

Looking past the sell/don’t sell now discussion could you do the numbers on some what-if scenarios to discuss with DH, with and without the IP you want to sell:

  • How long could you keep paying the bills out of savings if one of you lost your job tomorrow?
  • How long could you keep paying the bills out of savings if you lost a tenant tomorrow?
  • What will your situation look like in 18m + 9m?

Maybe one of you will change your mind after looking at these numbers.

The other thing would be crunching numbers and discussing ‘triggers’ to selling the IP. Under what circumstances would DH agree to sell the IP:

  • Interest rate changes
  • How long a period of unemployment
  • How big an increase in the property market.


#9 CallMeFeral

Posted 27 November 2012 - 04:23 PM

Great advice above.

OP, only you can judge your risk appetite. DH and I are very risk averse and very under leveraged, and while it certainly saved us a lot of stress during my time off work and when he lost his job, it's probably also meant we are less far along financially than we otherwise would be. Whether that balances against the reduced stress levels... hard to judge. Probably does in our case as any more stress and we'd be divorced Tounge1.gif

I think all you can do is prepare a few scenarios and see what your numbers look like in best/worst case scenarios, including job losses, interest rate rises, etc. In my own (somewhat risk averse) case I'd at least make sure that one salary could cover all living costs plus the IP shortfall PLUS have a 6 month to a year buffer in case of job loss. But that's me!
Only you can decide what you are comfortable with.

#10 Lilymoon

Posted 27 November 2012 - 04:33 PM

I don't think I could cope with 3 investment properties, it would make me quite stressed out. Can you drop down to 2?

I have 1 and I find that quite worrying. Having to rent it out, pay insurance, taxes etc.

Without a mortage I think it would not matter but a mortgage is verry stressful.

I would start looking into selling one. I am also not a fan of interest only loans also.

I would keep the 2 with the lowest maintance.

#11 steppy

Posted 27 November 2012 - 04:39 PM

I think your reasoning is sound - if it will put you in a better position and allow you to own the home you live in, while keeping 2 investments, it will give you more security and also more room to move in future.

I can see your partner's point also, but if this is worrying you I think it is better to take a cautious path for a little. You can always buy again in the future when you feel it is more under control.

#12 8mimi8

Posted 27 November 2012 - 05:27 PM

Thanks for the replies so far.

We live in melbourne, 28 km from the cbd. 380k is the absolut bargain that i've been seeing given the state of the market.

to Dinah Harris :
I am due for payrise soon, hopefully 11k but sensing 7k to be the final offer. The expenses are kinda hard to reduce however, we are trying our best now to be on top of all the paperworks, receipts etc.
both of us are like dumb and dumberer when it comes to organising paperworks. i am shamed to admit that we have not lodged our tax return for the last 2 FY ph34r.gif . total slackers...!!!
but we are trying to rectify this, and the goal post is to have this lodged in the next 2 months..maybe this is why i feel poor all the time.

Ange 75 &Schmach:

we are doing the - live on one pay - thing starting january. we will bank my whole pay and live on his, no iffs and butts..i think this is the way to go to show us the actual financial picture.

Meplainjane brain:

thanks for the tip, will talk about this with the accountant soon, however do you know if by doing this we run the risk of not paying enough tax?...to get an unexpected tax bill will be horrid at this point..

secret sammy & Call me al G

totally agree...i will do the multiple scenario thing in detail as we go, in the mean time our position is as follow:
How long could you keep paying the bills out of savings if one of you lost your job tomorrow? assuming both of us lost our job, we could do 18 months.
How long could you keep paying the bills out of savings if you lost a tenant tomorrow? err...maybe 1 yr.
What will your situation look like in 18m + 9m? 18m (hopefully preggo), 9m (got the tax return and at peace with the decision..whatever that be)

it feels good to write things down, help to keep my mind in order

thanks

#13 Mpjp is feral

Posted 27 November 2012 - 08:04 PM

QUOTE (8mimi8 @ 27/11/2012, 06:27 PM) <{POST_SNAPBACK}>
Meplainjane brain:

thanks for the tip, will talk about this with the accountant soon, however do you know if by doing this we run the risk of not paying enough tax?...to get an unexpected tax bill will be horrid at this point..


We manage this by calculating using the maximum rental income possible, and only deducting our interest payments on the property. That way we still can claim all the other expenses on the property, and adjust the income part at the end of the year if for some reason we end up with less income than we expected (bc of vacancy etc). So far its worked for us - we end up with a small refund based on the expenses on the property. I think if you calculate using ALL possible deductions and maximum income then you could face a tax bill if you end up with less income than expected.

#14 au*lit

Posted 27 November 2012 - 09:17 PM

Having multiple negatively geared investment properties is not financially sustainable, unless you have some other investments that are bringing in significant income.

In your situation I would sell at least one IP (possibly two, depending on how they are performing) and put any funds left from the sale(s) into the mortgage of the property you're living in. Continue to pay this off as you are and/or upgrade to a bargain house.

Once you've paid off your own home, use the money you were paying on that mortgage to pay off one of the remaining IPs. Then put the money you were using to pay off your mortgage and rent from the first IP towards the second IP.

You can probably see where this is going, each property gets paid off quicker as there are more funds flowing into it. You can then look at buying more IPs (one at a time) and paying them off increasingly quickly (one at a time). You should eventually get to a point where the rental income is enough for you to live on, and you can retire.

IMO this is sensible property investing.




1 user(s) are reading this topic

0 members, 1 guests, 0 anonymous users

 

Special Ticket Offer, Save $8!

The Essential Baby & Toddler Show is back this April! Save $8 off the door price for a limited time only!

Why I breastfed my son until he was three

The fact that I not only breastfed my son, but breastfed him for three and a half years, seems pretty incredible in retrospect.

Do babies and young children see ghosts?

Do babies and young children see ghosts? If you’ve pondered the question, you’re not alone.

15 years with Essential Baby: meet Therese

"Life has a funny way of giving you what you need when you need it the most."

Mum causes a stir by taking a stand against leggings

A mum has found herself the subject of debate after claiming tight bottoms cause lustful thoughts in men.

Don't set a parenting goal for 2015 - do this instead

The problem with goal setting as a parent is the measure. How do we really know if we’re succeeding?

5 pregnancy myths that just won't go away

When you're expecting, it often seems like everyone is keen to offer advice about what you should and shouldn't do in the interests of your health and wellbeing.

RPA hospital contacting mums after discovering vaccine storage fault

Sydney's Royal Prince Alfred Hospital (RPA) is trying to contact women who had babies at the facility after discovering a fault in a refrigerator containing vaccines.

'Nutella' not a baby name, French court says

A French court has blocked parents from naming their baby girl after the hazelnut spread Nutella, arguing it would make her the target of mockery.

Why I'm never calling myself 'just a mum' again

I’ve grown three human beings. I feed them, dress them, teach them, care for them and love them 24 hours a day. Yet for eight years, when I meet new people and they’ve asked me what I do, I tell them: “I’m just a mum”.

Rosie Batty named 2015 Australian of the Year

One year ago, Rosie Batty could not have imagined she'd be where she is. Tonight the grieving mum who put domestic violence on the national agenda was named Australian of the Year.

Five reasons to hug more

Hugging – some of us thrive on it, even depend on it – and then there are those who don't care for it really. So, are they missing out?

Help - my three-year-old has started throwing tantrums

My daughter never went through the "terrible twos" but began throwing wild tantrums shortly after her third birthday.

That's commitment

First peek at Sonia Kruger's daughter Maggie

"She smells so good, I could eat her," Kruger tells co-host David Campbell.

Mum assists in own caesarean surgery

A mum who partly delivered her own twins during a caesarean has encouraged other women to take control of their birthing experience.

How to handle common childhood regressions

Regression can be a natural and common part of development prompted by a variety of factors, but that doesn't make it less frustrating.

Disgruntled dad's pram ad goes viral

When buying a second hand pram, there are lots of things to take into consideration. 

Man discovers he's a dad after finding 55-year-old letter

Discovering you are about to father a baby is startling enough - never mind finding out you have a 61-year-old son.

15 thoughts mums have during a tantrum

Ranging from mild to feral and triggered by events both minor and major, tantrums certainly keep life interesting.

Natural pain relief in the early stages of labour

While managing labour pains on your own can be daunting, there are a number of natural pain relief options to help you cope until you are admitted to hospital.

Win an Octonauts prize pack

To celebrate the launch of Octonauts Live! Operation Reef Shield, a spectacular underwater adventure live on stage, we are giving away an amazing Octonauts prize pack to one lucky fan.

Download now: Essential Kids Activity Finder app

Got bored kids? Quickly find the best activities for kids wherever you are in Australia with the Essential Kids app.

 
Advertisement
 
Advertisement
 
 
 

What's hot on EB

Forgotten Baby Syndrome claims the life of toddler

One baby dies every eight days in the back of a car in the US, victims of 'forgotten baby syndrome'.

For a brief time, I was touched by an angel

For a brief time, I was touched by an angel. You stole my heart, and changed me into the women I am today.

Chinese woman gives birth to quintuplets

After six years of trying for a baby, a couple’s dreams have come true many times over after the mum gave birth to quintuplets this week.

Chrissie Swan has reached her "sex quota"

Chrissie Swan says she and her partner have sex once a year due to her fear of falling pregnant.

Stars help save choking babies

It's an important lesson to learn, but one that busy new mums and dads might overlook until it's too late.

New Girl star Zooey Deschanel pregnant

Actress Zooey Deschanel is expecting her first child with her producer boyfriend Jacob Pechenik.

16 times 'dad reflexes' saved the day

Of course, in some cases they may be the ones who actually got their child into a precarious position in the first place, but we'll ignore that for now.

Couple's 'non-traditional' pregnancy announcement goes viral

Knowing you are not the father of your pregnant wife's baby would usually indicate a rocky relationship ahead for traditional parents.

The trials and tribulations of identical triplet newborns

Pip Donnelly is still playing spot the difference with her newborn identical triplets, Isabelle, Georgina and Frankie.

Win an Octonauts prize pack

To celebrate the launch of Octonauts Live! Operation Reef Shield, a spectacular underwater adventure live on stage, we are giving away an amazing Octonauts prize pack to one lucky fan.

Earthquake baby thriving five years on

Jenny Alexis is lucky to be alive after spending four days buried in the rubble of the 2010 Haitian earthquake, but now she's a thriving five year old.

Please don't say I'm lucky because I was adopted

On the one hand I was having a regular life with friends and sports and sleepovers and school. But I was also always wondering: Did my mother love me? What was wrong with me?

An open letter to non-parents who offer advice on child-rearing

Kitty, when you’re the parent of my child you’re welcome to wade in with an opinion – but until then, I’d prefer you to have a supportive ear and a glass of wine ready.

Couple arrested over baby gun video

A US couple faces charges after investigators say they found mobile phone videos showing the woman's 12-month-old daughter putting a handgun in her mouth.

NSW Health dumps 10-year limit on frozen embryos

A 10-year time limit on storing frozen embryos that were created with donor sperm has been dropped by the NSW government.

How my happy-go-lucky husband became a monster

Sharan Nicholson-Rogers watched her husband change from a happy-go-lucky police officer into an unpredictable man prone to violent and emotional outbursts.

Dads-to-be experience hormonal changes, too

Dads-to-be experience hormonal changes in line with their pregnant partners, a new study shows.

'They were just doing their job': mum of toddler killed in police chase gone wrong

"They were just doing their job. I feel so sorry for them. It is all just too sad."

Miscarriages to be formally recognised by NSW government

Women who miscarry will be able to obtain an optional "recognition of loss" certificate as a formal recognition of their often heartbreaking loss.

Cafe cubby house 'too noisy' for neighbours

Teenage parties, domestic disputes, or raucous late night pubs are the things that usually come to mind when you think neighbourhood noise complaints.

Dad films baby playing with snake

Most parents would not consider a snake an appropriate playmate for their baby, but a US dad who filmed his daughter playing with a python has defended himself against criticism.

Clever breastfeeding products

Check out this range of products designed to help make your breastfeeding journey more enjoyable, manageable and convenient.

 

Back to School Offer

Findababysitter.com.au

We've got you covered for this school year. Use www.findababysitter.com.au to meet local nannies now.

 
Advertisement
 
 
Essential Baby and Essential Kids is the place to find parenting information and parenting support relating to conception, pregnancy, birth, babies, toddlers, kids, maternity, family budgeting, family travel, nutrition and wellbeing, family entertainment, kids entertainment, tips for the family home, child-friendly recipes and parenting. Try our pregnancy due date calculator to determine your due date, or our ovulation calculator to predict ovulation and your fertile period. Our pregnancy week by week guide shows your baby's stages of development. Access our very active mum's discussion groups in the Essential Baby forums or the Essential Kids forums to talk to mums about conception, pregnancy, birth, babies, toddlers, kids and parenting lifestyle. Essential Baby also offers a baby names database of more than 22,000 baby names, popular baby names, boys' names, girls' names and baby names advice in our baby names forum. Essential Kids features a range of free printable worksheets for kids from preschool years through to primary school years. For the latest baby clothes, maternity clothes, maternity accessories, toddler products, kids toys and kids clothing, breastfeeding and other parenting resources, check out Essential Baby and Essential Kids.