Hi all
Pretty new to all this so will try lay out our situation and some questions I have around financing rental property and checking if I haven't missed anything.
All mortgages are Principal + Interest. 27 - 30 years for the Rentals, 5 years left on Property 1.
Properties self managed by ourself.
Our strategy is to own newly built properties, with average yield, to hold for the very longterm i.e. 30+ years.
We see it as a way by utilisng a small amount of our income, combined with the majority leveraged from the bank, in 30 years time (retirement) will give us several properties fully paid off generating income. Not chasing the capital gain - as long as it keeps up with inflation we are ok.
Property 1 - Owner Occupied
Mortgage 180k, RV 800k
Property 2 - Rented
Mortgage 660k, RV 690k
$570 per week
Property 3 - Looking to purchase
Mortgage 380k, RV 480k
Rent will be $460
From my calculations:
Property 1 - owner occupied, no tax loss etc etc
Property 2 gives us a slight positive return (2k) after paying the interest and expenses on the property.
But after accounting for the principal repayments we end up topping this mortgage up approx 8k p.a.
Property 3 will be similar to property 2, however just on break even for interest and expenses cover. Top up 6k p.a. of our personal income basically to cover the principal.
Because the rental income on Property 2 & 3 covers the interest portion on these property we cannot claim a loss (actually declare a small profit) nor receive a reduction in our income tax paid.
Am I correct or am I missing something?
Looking forward to your replies.
Pretty new to all this so will try lay out our situation and some questions I have around financing rental property and checking if I haven't missed anything.
All mortgages are Principal + Interest. 27 - 30 years for the Rentals, 5 years left on Property 1.
Properties self managed by ourself.
Our strategy is to own newly built properties, with average yield, to hold for the very longterm i.e. 30+ years.
We see it as a way by utilisng a small amount of our income, combined with the majority leveraged from the bank, in 30 years time (retirement) will give us several properties fully paid off generating income. Not chasing the capital gain - as long as it keeps up with inflation we are ok.
Property 1 - Owner Occupied
Mortgage 180k, RV 800k
Property 2 - Rented
Mortgage 660k, RV 690k
$570 per week
Property 3 - Looking to purchase
Mortgage 380k, RV 480k
Rent will be $460
From my calculations:
Property 1 - owner occupied, no tax loss etc etc
Property 2 gives us a slight positive return (2k) after paying the interest and expenses on the property.
But after accounting for the principal repayments we end up topping this mortgage up approx 8k p.a.
Property 3 will be similar to property 2, however just on break even for interest and expenses cover. Top up 6k p.a. of our personal income basically to cover the principal.
Because the rental income on Property 2 & 3 covers the interest portion on these property we cannot claim a loss (actually declare a small profit) nor receive a reduction in our income tax paid.
Am I correct or am I missing something?
Looking forward to your replies.
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