My partner and I you could say have overleaveraged ourselves.
We are 29 and 31 and she is due to give birth in 6 months time and be a stay at home mother.
We have 1.2 million over two rental properties with debts of 820k and rent a third seperate property ourselves. Our rentals combined at 5% interest rates are break even/negative 1-2k per year.
Retrospectively we didn’t really know what we were doing when purchasing these but are wanting to keep hold of them long term through the next decade or so of living on one income, raising children, etc. Once again, not investing on the numbers as logic would say sell and find higher yielding properties. However, with the baby on the way and us settling into a new city in a months time, selling a property and going around open homes in Rotorua say is not high on our priority list.
I feel we have two options when our 4x fixed of give or take 200k each loans come up for renewal periodically over the next 24 months.
A- we continue to pick the best shorter term 1-2 year rates at 5% and hope when they come up again the interest rates haven’t jumped up to 7% or higher.
B- we fix for 4-5 years at 6% and know that the properties will be 8k negative a year but know that an increase to 7% plus interest rates is further in the future and inflation in salary, rental income, etc theoretically would have increased to offset this.
Not an ideal scenario we have set ourselves up in but would love to hear your thoughts.
Our goal by 40 (10 years away) is to purchase our own home over and above these two rentals.
We are 29 and 31 and she is due to give birth in 6 months time and be a stay at home mother.
We have 1.2 million over two rental properties with debts of 820k and rent a third seperate property ourselves. Our rentals combined at 5% interest rates are break even/negative 1-2k per year.
Retrospectively we didn’t really know what we were doing when purchasing these but are wanting to keep hold of them long term through the next decade or so of living on one income, raising children, etc. Once again, not investing on the numbers as logic would say sell and find higher yielding properties. However, with the baby on the way and us settling into a new city in a months time, selling a property and going around open homes in Rotorua say is not high on our priority list.
I feel we have two options when our 4x fixed of give or take 200k each loans come up for renewal periodically over the next 24 months.
A- we continue to pick the best shorter term 1-2 year rates at 5% and hope when they come up again the interest rates haven’t jumped up to 7% or higher.
B- we fix for 4-5 years at 6% and know that the properties will be 8k negative a year but know that an increase to 7% plus interest rates is further in the future and inflation in salary, rental income, etc theoretically would have increased to offset this.
Not an ideal scenario we have set ourselves up in but would love to hear your thoughts.
Our goal by 40 (10 years away) is to purchase our own home over and above these two rentals.
Comment