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  • Advice from the wise

    I am looking at a career change. Maybe. My super is currently worth approx 80k which will be paid out if I leave my current job. The super is only earning 3% at the moment so not really going anywhere. However, the amount my employer is contributing is nothing to sneeze at..

    We (partner and I ) have just purchased our second house, this will be our PPOR and the old house will be rented out...We have been advised to sell the rental to a LAQC as the originaly purpose of the mortage was for a PPOR therefore preventing us from claiming tax on the interest of the mortgage.

    We both have VERY secure jobs right now with income to be reasonably proud of for a young couple, but I am looking at maybe something new which will give me access to the super and hopefully more job satisfaction and better pay.

    Both properties are 100% financed and the old place is no longer worth what we paid for it due to the market drop. Selling now is not an option.
    It will be rented at $300pw but the mortgage is 260k. I will be painting inside and out at the end of the year and adding an outdoor living area (concrete pad) to hopefully gain extra rent.


    1. If I leave and get the pay out, what is the best way to make that money work for us?

    2. Should I stay and continue paying into the super with my employer contributing the current large amount that it is and just grit my teth for a couple more years?


    As we are new to the property scene our knowledge is very limited. Any advice would be much appreciated.

  • #2
    Originally posted by manwithav8 View Post
    We both have VERY secure jobs right now with income to be reasonably proud of for a young couple, but I am looking at maybe something new which will give me access to the super and hopefully more job satisfaction and better pay.

    Both properties are 100% financed and the old place is no longer worth what we paid for it due to the market drop. Selling now is not an option.
    It will be rented at $300pw but the mortgage is 260k. I will be painting inside and out at the end of the year and adding an outdoor living area (concrete pad) to hopefully gain extra rent.

    2. Should I stay and continue paying into the super with my employer contributing the current large amount that it is and just grit my teth for a couple more years?
    I strongly suggest you get yourself sorted so that you can survive on the males income. Sooner or later (generally speaking) "she's" going to want kids.

    Your super is valuable. Don't think of it as spendable. Forget you have it.
    www.3888444.co.nz
    Facebook Page

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    • #3
      Originally posted by Keys View Post
      I strongly suggest you get yourself sorted so that you can survive on the males income. Sooner or later (generally speaking) "she's" going to want kids.

      Your super is valuable. Don't think of it as spendable. Forget you have it.
      So getting access to it and putting it in our own mortgage isn't a good idea considering it's not doing a hell of alot right now?

      Comment


      • #4
        Hi manwithav8,

        Welcome to PropertyTalk.com

        I too am a man with a v8, who dies a little inside every time the fuel price rises.

        Here are some thoughts I had about your first post.

        Originally posted by manwithav8
        IWe (partner and I ) have just purchased our second house, this will be our PPOR and the old house will be rented out...We have been advised to sell the rental to a LAQC as the originaly purpose of the mortage was for a PPOR therefore preventing us from claiming tax on the interest of the mortgage.
        You have been advised wrongly. You can claim the interest on the mortgage as a deductible cost. Who gave you this advice?

        Both properties are 100% financed and the old place is no longer worth what we paid for it due to the market drop.
        Ouch!

        It will be rented at $300pw but the mortgage is 260k. I will be painting inside and out at the end of the year and adding an outdoor living area (concrete pad) to hopefully gain extra rent.
        Do you have a good feel for the numbers - namely, how much you will need to put in per week in order to make up the rental shortfall?

        Should I stay and continue paying into the super with my employer contributing the current large amount that it is and just grit my teth for a couple more years?
        Sorry, I can't help with that one.

        As we are new to the property scene our knowledge is very limited. Any advice would be much appreciated.
        Stick around, read as much as you can, and ask lots of questions.

        Paul.

        Comment


        • #5
          thanks for the welcome superdad

          My brother inlaw was the advisor. They own several properties but I guess not everyone knows everything aye...

          I now longer have the V8 so fuel prices not killing me anymore. A name always sticks though aye.

          We will have to top up by $140 a week hence needing to gain higher rents from the property. If we were to sell we would be losing out easily by 10k which is not easy to find right now to pay out. We are going to have to tighten the strings a little for a while but won't hurt us too badly.

          I am currently lined up for a deployemt overseas early next year which will maybe see and extra 10k if I stay in my current job.

          Comment


          • #6
            What do you do manwithoutav8?

            And ignore keys - he is a chauvinist. Sure, the little lady's biological clock may be a ticking timebomb, but there is no reason you can't be the primary changer of nappies.

            Paul.

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            • #7
              One thing from me...

              If the old house is not freehold and you plan to have kids later (or already have), then DO NOT transfer it to an LAQC.

              WFF does not allow loss from LAQCs to be deducted from your family income for the purpose of calculating your entitlement. However, if the rental is under your own name, all paper loss (including depreciations) can be used to reduce your family income, which could make a BIG difference.

              Comment


              • #8
                haha like the name change..

                I am in the military and the partner, ( to be wife in 3 days ) is a registered nurse.

                Yes her clock is ticking as we speak hence looking at all optioins. The deployment can proved lost income for a period while she is off work. Also looking into something small for her to run from home that will help with income.

                Or I can seek new employment and toss the super into our new mortgage which I beleive is better than not earning bugger all.

                We move into the new house on monday coming, wedding on sat coming so stressful times right now. We have a boarder with us who will rent the old house from us with a couple of work mates. They have all agreed to the rent amount and are happy to pay more once I have painted and given them some outdoor living area.

                I was a builder before joining the force and am currently a qualified Heavy automotive tech. Maintenance on the IP won't be an issue due to my trade back ground.

                Will check in tomorrow for some more reading as the lady with the biological clock says it is my bed time lol.

                Thanks all and I have enjoyed lurking on here for a while now and need some advice of my own.. I appreciate it...

                Comment


                • #9
                  Originally posted by SuperDad View Post
                  Sure, the little lady's biological clock may be a ticking timebomb, but there is no reason you can't be the primary changer of nappies.

                  Paul.
                  Then Paul, they need to learn to survive on Her income. One of them will be leaving the job.

                  Originally posted by manwithv8
                  employer contributing
                  At what rate is the employer subsidy?
                  www.3888444.co.nz
                  Facebook Page

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                  • #10
                    Originally posted by manwithoutav8 View Post
                    haha like the name change..

                    We move into the new house on monday coming, wedding on sat coming so stressful times right now. We have a boarder with us who will rent the old house from us with a couple of work mates. They have all agreed to the rent amount and are happy to pay more once I have painted and given them some outdoor living area.
                    Gazes into crystal ball .... I see trouble and strife

                    Originally posted by manwithoutav8
                    I was a builder before joining the force and am currently a qualified Heavy automotive tech. Maintenance on the IP won't be an issue due to my trade back ground.
                    Originally posted by manwithoutamaintenancecrewedv8
                    I am currently lined up for a deployemt overseas early next year which will maybe see and extra 10k if I stay in my current job.
                    While I'm not adverse to people getting into property investment, I do worry about people who think it's an easy way to make money. Just the nature of your questions alarm me when put together with your post suggesting "work mates" (army for gods sake EVEN) moving in.

                    Today's Thursday, I wish you well and sincerely hope you don't get badly burned.
                    www.3888444.co.nz
                    Facebook Page

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                    • #11
                      Congratulations

                      Welcome to PT

                      Now is probably not a good time to be posting all these questions, when the wedding is only a couple of days away. You'll be distracted & excited and maybe miss a pearl of information.

                      There is a lot of advantages in being military, probably more so than civilian, when you're setting out in having a family. You've got guaranteed medical dental, housing if you apply for it. These things cost in the real world. The support that you will receive if there is serious medical problems within the family, is unbelievable.

                      Yes, you do have to put up with being told where to go (deployments) when (at 24 hours notice) and how (helicopter, hercules or LAV) but these are the choices you decided to live with when you signed up.

                      Think of it this way, you never know what you're doing from one day to the next in the military. Would you be able to say that in civvy street??

                      With regards to renting out your home :
                      We have a boarder with us who will rent the old house from us with a couple of work mates. They have all agreed to the rent amount and are happy to pay more once I have painted and given them some outdoor living area.
                      It matters not if they are your mates or not. GET A TENANCY AGREEMENT. Do an inspection before they take over the property, fill out the tenancy agreement provided by Tenancy services (you can pick one up at Paper Plus or Whitcoulls). Just because they are your mates doesn't make them good tenants. The only bonus of them being military, is if they damage the property and you "go" them for damages, at least you'll know where they work!!

                      IMHO, now is not a good time to be selling property. If you decide to sell the property, don't forget not only is it the loss on sale but lawyers fees, and REA's fees as well. You may loose more than $10K. Would it be worth you while losing that much, or could you continue to subsidise the rental by $140(?)/week.

                      Don't forget as Keys said, you can claim depreciation on your rental PLUS you can get fortnightly refunds from the IRD via a IR23BS (do a search on here). This may help with cashflows.

                      Being in the military, does provide a different set of rules/problems, so if you need any more advise, just PM me.
                      Patience is a virtue.

                      Comment


                      • #12
                        Are you in the Army, Airforce or Navy? Unless you are in the SAS the military is quite stable and usually you will get good notice of any deployments overseas unless you are in some form of duty crew I suppose. Also remember if you decide to leave you need a far better paying job as the benefits you receive in the military make your actual income higher than it actually is. As essence pointed out the benefits to a family in the military are very good.
                        I would even consider renting the two properties out and applying for the military housing as this would leave you more income to cover any rent shortfalls until things become better. I know DTLS is very good but I worked out the benefit of renting a married quarter and renting out investment properties far out weighted buying your own home and getting DTLS (although married quarter rents and things may have changed now) especially now while capital growth is low.

                        If you decide to leave make sure the pay far outweighs your military pay and the benefits combined. Also if you leave I would consider using some of your super to pay down your rentals so they are positve cashflow or neutral at the least unless you had a positive cashflow one that could offset it. For your own home you could put the remaining of your super into it and have a revolving credit facility setup so if you needed it you can easily withdraw it but only use it if you really have to. This way it would keep your mortgage payments down.

                        That is my opinion anyway you may have another.
                        Last edited by Tucker; 19-06-2008, 11:04 AM.
                        Nigel Turner

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                        • #13
                          Keys

                          While I am on here for advice and I don't mind the odd joke and banter, I do however dislike your snarky comments that aren't warranted. If yo uhave nothing constructive to say then put a cork in it! I know you have been here alot longer than I, and yo uare obvioulsy more knowledgable than I, I will ask you to use that in a way that helps me rather than pissing me off.

                          While I am deployed we have an excellent support crew in the form of tradesmen to cover all areas. Pays to be in the trade yourself and have family living in the same town wiiling to help out. So your little name suggestion of me not having a maintenancecrew is nothing but crap!

                          My employer is paying in 17.9% to my super which is rather good. Well I beleive it to be anyway. I have superanuated so am entitled to all benefits if I leave.

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                          • #14
                            manwithav8,

                            If you get a moment introduce your self to spaceman, he is a military man deployed over seas at the moment and a property investor.

                            My advice would be to secure your current position, you might have heard there is a slowdown in the property market and I think this one will go against the trend of slumps lasting 18 months or so this will be a trend anomaly, expect nothing out of property for another two to three years.

                            3% might be a small return on your superannuation but the government contribution makes up for that does it not.

                            Depends what you need to grin and bear, if you have had enough of the military life then it might be time for a change, only you and your wife can decide that.

                            Give your self another two to three years, look at reducing your home mortgage if you can two properties, low loan to debt ratio, 100k in super in a couple of years is a very nice position to be in.

                            When the property market makes the turn, then have a rethink of your strategy.

                            All the best…

                            Comment


                            • #15
                              Thanks Tucker

                              Originally posted by Tucker View Post
                              Are you in the Army, Airforce or Navy? Unless you are in the SAS the military is quite stable and usually you will get good notice of any deployments overseas unless you are in some form of duty crew I suppose. Also remember if you decide to leave you need a far better paying job as the benefits you receive in the military make your actual income higher than it actually is. As essence pointed out the benefits to a family in the military are very good.
                              I would even consider renting the two properties out and applying for the military housing as this would leave you more income to cover any rent shortfalls until things become better. I know DTLS is very good but I worked out the benefit of renting a married quarter and renting out investment properties far out weighted buying your own home and getting DTLS (although married quarter rents and things may have changed now) especially now while capital growth is low.

                              If you decide to leave make sure the pay far outweighs your military pay and the benefits combined. Also if you leave I would consider using some of your super to pay down your rentals so they are positve cashflow or neutral at the least unless you had a positive cashflow one that could offset it. For your own home you could put the remaining of your super into it and have a revolving credit facility setup so if you needed it you can easily withdraw it but only use it if you really have to. This way it would keep your mortgage payments down.

                              That is my opinion anyway you may have another.
                              I am in the army. I have worked out what I would need to earn if I were to leave and it is manageable to find that work. I have done over 11 years now and am starting to think something new might be in order.

                              Selling the old house as I have said is not an option as we would end up owing more money. Living out at camp won't happen either as we bought the new house for us, it is something we have been looking into for a long time and finally found what we want. We bought the new house 25K below valuation but we know it is only worth what you pay for it.

                              I was considering if I left putting all the super into our mortgage and refinancoing over the max term again to creat more cash flow which will help top up the IP.

                              I do also like your idea of putting some into the IP to bring it clsoer to a +ve cash flow situation.

                              The other thing is, if I am still around and deploy next year, that is at least another 10k to go somewhere. This I was thinking will be good to hang onto for when we have baby...

                              To put is simply, we need to cover $7800 a year to top up the IP, for the first 12 months we have pretty much got that money in the account already, we will look at having that amount topped up all the time so we are 12 months in advance. This then frees up cash flow through the year so we can pay our mortgage off quicker ..

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