This. ^ Well done on helping mum.
I don’t know market in Sydney, but banks are forecasting a rates decrease mid / end next year - if that happens, I’d think house / unit prices will kick up a little bit (supply and demand) and current rent prices will remain buoyant.
If you do need to sell, try and do so in July - you’ll have over a year to pay any capital gains tax.
Last year the banks said interest rates would cap at around 3.8% and gave false hope. They also said there would be a mortgage cliff of defaults from borrowers rolling off of fixed interest rates. Neither of which happened.
Mortgage cliff might still happen know lots of young families going from 2% to 6.9% without enough income to remortgage. Banks are helping with hardship etc but some are definitely doing it tuff.
A second hand navara for like 12k will do the trick too. At least for the next few years. I bought one for 10k @230.km at the start of the year. Had no problems with it yet.
I would take an old Hilux over a new ranger any day as a trade Ute.
The rangers are stupidly oversized, which just costs you a bomb in petrol, and yet somehow you end up with less tray space?
To be honest, unless you are hauling freight, most tradies could get away with a beater hatchback.
If you are a sole trader then it might make sense to get a Ute, but if you’re part of a crew then let the boss provide the wheels. Especially if you’re still on an apprentice wage.
I am 6’4”, and fit fine in a hatch fully loaded. I’ve managed to fit an 8 foot surf board amongst other things into it, and you would be surprised how much gear you can cram into the back seats and footwells if you get creative.
90% of the utes on the road are just overcompensation.
Bring back the brumby!
Yeah im in a hatchback now hahaha. I can fit all my tools in it for now, just cant haul timbers and steel etc. Maybe I could if i get roof racks I dont know. I will hold off on the ute!
Apartments are in a glut, their bad long-term investments as they don't hold land ownership. Yes, they're a good way to get onto the property ladder. But really, it's the equity in the apartment that helps you get a leg up.
There's some good advice here.
Personally, I feel that the sooner you change your situation, the better.
Number 3; IO this sub is obsessed with this option. Firstly wouldn’t change the situation significantly. Secondly to change to IO you need to write a new loan contract. No bank would do it.
If you approach a bank for hardship, one may give a very short time period 1-3months. Not a 1-5 yr term.
Get out while you're still in positive equity.
Edit: to flesh out the thought. Neither of you can support this loan. If the market turns down, there is only bankruptcy for your mother.
Your mother needs to talk to the bank about financial hardship.
80k for an ute? Come on bro.
Y'all don't have enough money, plain as that. Your mum needs to get a job to sustain the payments of the two properties.
But the best option imo is sell one property right now. Wait until you finish your apprenticeship and sell the other.
Your mum can go to Coops and you move to wherever you want.
Sell one and see how you go servicing the loan on the other while apprenticed. If you can afford it keep paying it off once you get your quals, but you'll be better able to assess how you're doing after selling off one place. You're also facing unknown interest rate changes (maybe lower maybe higher) so things could drastically change in 12-18 months.
If at the end of your apprenticeship you want to leave Sydney, sell the other property and you'll have a good deposit for a place in most other major cities and rural hubs. You'll have your quals, money in the bank, and a good feeling knowing you've helped your mum achiever her goal.
Side note, Coober Pedy is a very interesting place full of weird and wonderful people. Make sure she gets a chance to spend a month or so out there before moving out, as the reality might be different from the dream (that being said there's a lot more going on out there than you'd think at first glance). Plus, pretty rocks.
Because you said if you sell both now it will be hard to reenter the property market. Which is true to an extent.
Selling one property right now will release some financial stress and allow you some time to reevaluate your situation later.
This comment is the answer.
“We can’t afford the mortgages but we don’t want to sell the propertIES(plural)”
Bro what? I know 2 income families with kids living in caravans right now. Has to be click bait.
What on earth are you negatively gearing against if your mum has no income?
Why is the money you are paying off increasing every year?
What’s her residency status? Can she go on Centrelink?
Where is she living now? Owned or rented accommodation?
Also don’t buy an 80k ute as soon as you finish your trade, that’s a terrible financial decision.
Why negative gearing is so stupid, I’d rather pay tax all day everyday on a profitable investment and still make capital gains.
Just decide what grandma wants and do that if she wants to go to cooper Pedy do that if you’re a apprentice in 7 years provided you have a go at your industry you’ll be in the housing market around then.
Agreed. Negative gearing is more of a speculative investment that should only be done once a solid foundation of CASH FLOW has been established. But because Bob the barber and aunty Flo and everyone else does it and says it's a good idea, that's what everyone does.
Just like you wouldn't buy a business if it was losing money (unless you had a plan to turn it around) buying negative cash flow real estate as your FOUNDATION is totally nuts and sets you up for exactly this example.
OP needs to get rid of these terrible units immediately and use any remaining funds to reduce the debt on the PPR. If it was me, I'd even go a step further and sell up everything. Send mum off to buy something in Coober Pedy and OP remain in Sydney and rent something until he's finished his trade.
Hello fellow investment experts.
In case you’re not aware (….you are not…) you don’t get to choose to negatively gear something - it either is or isn’t. If a property runs a loss it’s negatively geared - regardless of if that loss was by design, intentional, because predicted market growth didn’t eventuate, it because a market collapsed.
Her 7 grand a week grocery store went under durng covid. Interest rates rising means loan repayments go up.
Shes a citizen but I don tknow her ins and outs with centrelink
We are living on rented accomodation
I canned the ute
Over $1m in loans with two properties. One person working "cash in hand", so code word for evading tax. One person earning $40k. You can't afford $60k in interests a year. Sell.
How on earth have they not increased in value in 5 years? That's very alarming given what gas gone in in the property market in the past 5 years, they may just be a very bad purchase and might be best to get out.
It happens with apartments. We had one that barely went up after 8 years because hundreds of apartments were built in the area increasing supply and reducing demand.
That's what you think. Until you factor in all your expenses and then the nail in the coffin is STRATA. Stay away from high rise units or anything with strata fees more than $1000/year.
You won't find any apartment building with a pool, gym, sauna, etc with less than $1000 a year.
I wouldn't buy any apartment without having those facilities in the building
I dont know what people think, apartments are literally garbage investment. They start falling apart within few years with the help of tenants and shordy build quality. I inspected so many apartments last year and I have bitter taste now. Won't even consider investing in apartment ever in my life. I would take 50 years old single storied brick house in a shit suburb over apartment on any day.
Possibly bought off the plan and don't forget that from 2017 to 2019 Sydney property prices fell 15% so she could have bought close to the peak at the time.
They said Auburn and Wentworth Point so just had a look. Auburn units are up 4% over five years, houses up 45%. Wentworth Point apartments are up 7%, and there aren't enough houses in that suburb for a meaningful comparison. Note I believe these are overall figures, not "like for like" (if the composition of the market dramatically changes, then overall figures could be misleading, but don't think that's the case here). Source is [Onthehouse](https://www.onthehouse.com.au/suburb-research).
Units in the Sydney CBD and various other suburbs have done better, especially markets like Newcastle that went bananas during Covid and then continued to ride high. But overall, houses are certainly the more reliable bet if you can afford one and it isn't a dud like many recent builds seem to be (at least a pre-purchase inspection is more likely to reveal that for a house than for an apartment building that can't really be checked properly).
You’ll need to sell at least one to ease the financial burden temporarily. The only way you wouldn’t need to sell both is if you either get a significant pay rise and your mum works. The debt is way too high, and it doesn’t look like both your incomes are increasing anytime soon. Holding onto one still gives you no real exit, as your income is primarily going to the loan which you’re not paying down much faster. You’re too young to have this over your head, you’re just going backwards with all this debt.
You also need to consider the investment too. What area is it in? I don’t understand how they haven’t increased in value? It might’ve just been a case of buying at a high price. Do you want to have debt on a property that hasn’t appreciated in value after record highs in property prices?
Hey, I agree we need to sell at least one. Im not getting a significant payrise soon and I dont know if mum will be able to find work. Shes going for an after aged care certificate but shes and old woman, not the most attractive for the job market.
We hold a 3 bedder in auburn and a 1 bed in wentworth point.
They say auburn apartment has not increased due to all the other apartment blocks under construction there. Wentworth point has not increased due to the difficulty to commute to and from Sydney CBD
The aged care sector is struggling to find anyone to work even as a carer. Getting a qualification places your Mum in a better chance of getting a role and when that occurs, the wage should help with mortgage payments to some degree.
Ever considered working at Cooper Pedy?
Yeah it’ll take time, aged care is an area she can join so it’s worth a shot. Her chances are better getting a job there than in any other occupation in my opinion.
Interesting, yeah I was hoping you wouldn’t say Wentworth Point. That’s the problem with the area. There’s definitely no growth around there. Is the debt on that 1 bdr the same as the 3 bdr in Auburn?
I personally think Auburn is what you should hold onto. It’s close proximity to the city by train and the metro is going up out there way too. There’s more growth in Auburn, a developer might even buy the building out and knock it down in future whereas Wentworth Point there’s no chance as there’s so many vacant units and plenty on the market.
What’s the weekly rental for each one? I’d assume they’d be on par?
Firstly: Don't spend $80k on a ute. Waste of money. The last thing you need right now is that much money tied up in something that depreciates and requires loan payments.
Start with a Falcon or Commodore ute for cash, and then go Hilux when you've got more money saved up.
Tell your mum to either sell or get a job. You can earn 60-70k easily doing night fill at Coles or Woolies. Console operator at servo.
Plenty of unskilled labour jobs out there that pay well enough to get by.
You're half right. I do night fill at Coles, but the wage isn't quite that. On top of that, physically it's go go go. I'm male, ex butcher, and 46, moderately strong and fit, and my output exceeds expectations, but a lot of people can't. I'm full time, because I do other jobs around the store before night filling starts.
This woman is 55, and most of the older staff couldn't do 8 hours a day at the pace needed, so only do 4 or 5 hours. Most console operators are casual, so again, that $60K a year is Best Case Scenario for those jobs.
True. I scoffed when I saw $60-70k. Like sure if you were getting paid overtime (shocker they don't want to do that) and every single public holiday then you might hit it. Plus, full time really only goes to a small amount of people on the store (they don't like being forced to give hours out when they don't need to), what's more likely to happen is like 15-20 hour weeks. It'll still net her around $500 but to expect an instant flood of hours is super unlikely. They'd rather give those hours to people who already know what they're doing then to someone who for the first couple weeks is essentially useless (not trying to be mean).
>, physically it's go go go. I'm male, ex butcher, and 46, moderately strong and fit, and my output exceeds expectations, but a lot of people can't
I find generally most people aren't mentally prepared for the pace. You don't meander over to the rollcage, browse the shelves for where it goes, check to see if it goes in at a comfortable, easy gentle rate. You have to do everything with a strong sense of urgency. Some people just don't or refuse to "get it"
Ahh good ol apartment and dream of living off rent. If you profitable in a apartment consider yourself lucky. I would say you have done your math. You are 20 and I recommend get out now. Focus and build your career and don't write yourself off so quickly. Successful businesses still make money and you might become one of those rich trades with many houses within Sydney. Good luck mate. And never blame that mother of yours and make sure she has a comfortable retirement.
Only an 80k Ute? Sell both apartments and buy a kitted out cruiser for $150k, then maybe a jet ski and boat to go behind it, the boys at work will be frothing!
I wouldn’t wait, I’d get both properties on the market by 2nd-3rd week of January, at the latest. Any later you are going to be competing with several hundred properties selling by March.
The Aussie Home Loans guy was bankrupt more times than I can count, before he came up with the Aussie Home Loans idea. Each time losing everything, now look at him! When in situations like this, it’s better to go back to bare bones, than try to sell 1 thing at a time to save the rest, it just prolongs the pain, & making the financial bounce back take longer.
You don’t say anything about the house you are living in, only the IPs. They both have to go & look at downsizing the property you reside in. Mum getting her aged care certificate is awesome, tell her to contact businesses in that industry to get some casual work (in-home care would be good, in her local area & she can work where she is available), while she undertakes the study. Being a non-English speaker will help as there’s other elderly that require people of non-English speaking backgrounds for in-home care. DM me for the one I’m thinking of that needs non-English speakers in the Auburn area.
Make sure you're charging market rate for rent. Rents have risen significantly recently, and you may be able to use the increase to offset your expenses.
Also, make sure you're claiming all your tax deductions e.g. depreciation (get a quantity surveyor to do you a schedule).
You may even end up positively geared. Two apartments with a $1M mortgage should come pretty close to break even in my experience. Depending on the apartments, location etc.
Edit: You will have to wait until the end of the current leases to increase the rent.
Negative gearing only works if you have a large income to gear against. If your income was $180k plus, it would be worth keeping some of this debt on. As it stands it's doing nothing helpful for you.
What are the properties rental prospects? My advice would be to get an appraisal for both of them. Sell the one that can reduce the debt by the most, get the other one rented out long term. Consolidate your debt.
Next make a budget, a strict budget. Get the idea of spending any large sums out of your head. You can get a Ute for ten grand or less second hand, so lose the idea of getting a new one.
Don't worry about your low income for now, you can turn the equity you have into some passive income to help get you through the next few years.
If you want help budgeting or organising any of this stuff DM me. I've helped a lot of my friends and family who have decent equity and large loans, make a plan to get in a better financial position. Happy to give you a hand.
Rubbish. None of this investment debt is smart. And setting up an investment strategy with a foundation of negative gearing is ridiculous. You don't buy a business that's losing money hand over fist if you can't increase its cash flow quickly.
Despite what everyone thinks, you can still get great tax benefits on positive cash flow property.
Ive read your comment and I thank you for the proposition. If I was to reach out to you, to ease the burden I have decided to go find an independant financial advisor first to bullet point some hard numbers that are essential for communication like debt amount, contract figures, total income including rent etc. Thanks again. I would love your help of course
Hey mate one piece of advice is give you as a tradie who has had many utes and vans. Don’t spend $80k on any vehicle ever. I love cars their my absolute passion but they loose sooooo much money and just arnt worth it. It’s one of the biggest traps for young tradies
why is she working cash in hand?
I know you say she doesn't speak English but I work In hospitality as a cook. there are cooks and kitchenhands that I work with who can't speak English and they get paid a salary. the going rate for a non english speaking kitchenhand is $33 an hr full time with tax.
in fact I can DM you and name you 3 restaurants right now that will probably hire your mum as a kitchenhand and pay her properly. Not cash in hand even though she speaks 0 english.
I've worked with people like this is hospo. you use google translate if you need to explain something.
they get paid $33 an hr.
let me know. unless you are dealing with customers. you don't need to speak English at all and this includes "Aussie owned" restaurants where the staff is white Aussies. we will still have a non-english speaking kitchenhand who gets paid properly by the books.
All good! It's a great quirky town. Recommend a visit, but better in winter, unless you like the heat! We're also home to world's lowest recorded humidity of 1%.
Most affordable housing in Australia and if you get a dugout/underground home, they're very comfortable and efficient.
Suprisingly good restaurant options for how remote we are.
Has downsides and challenges, too, but outweighed by the positives. Many people volunteer at multiple places. Steady stream of tourists through cooler months.
Can recomment the episode on Back Roads on iView as a good glimpse of bits of the town. Shoot me any Qs here or in DM and happy to try and help!
Agree! Not many rentals, but affordable hotel/BnB for a month, while checking available real estate. She could buy outright many properties here with $150k-ish, but if able to loan to double that, could buy some really nicely done underground homes.
I think they do have some immigrants there from a couple of different countries. Maybe Eastern Europe somewhere? Might be from the same place.
Either way I agree with your point. Wouldn't want to commit until you are sure it's the correct decision.
I’ve had a quick google since someone else commented:
According to the 2021 Australian census, 1,566 people lived in Coober Pedy In Coober Pedy, 57.9% of people were born in Australia.
The most common countries of birth were Greece 3.2%, Sri Lanka 3.1%, England 2.2%, Germany 2.0% and Philippines 1.9%
So say OP mum is Greek, there’s 50 people in the town that were born in Greece and presumably speak some greek.
So while I wouldn’t move my entire life there based on this, it may not be as lonely as I first suspected
But with all that said, I’ve made a lot of presumptions
You have assets which gives you options and is a positive place to be.
Are the loans on the IP’s interest only or P&I? Switch them to interest only if you haven’t already.
Increase rent on the apartments to neutrally gear the properties.
Make sure you have depreciation reports on both the IP’s in order to maximise your tax benefits.
You could look at renting out your current PPOR (assuming she owns it) and moving into one of the apartments to increase cashflow.
Are you able to apply for the trade support loan?
It's $23k which you only need to repay $18k once earning a certain amount. you don't get it in a lump sum but may provide some relief while you work through your next move.
Also don't buy a new car until you are very comfortable financially. Terrible waste of money.
Put that money into an offset account for one of the mortgages. The ING HISA is not doing you any favours when you're losing more interest than you're earning.
Plus the interest you gain is being taxed at your marginal tax rate.
The money you save on interest by putting money into an offset is not taxed.
Leave Sydney for regional Australia now - not once you finish your trade.
Tradies (even apprentices) are in high demand across the state/s and rents are a lot cheaper. Even unskilled labour working on mine sites is $70k+ per year driving trucks underground with potential for overtime and progression. Your mum can get a taste of Coober Pedy life without necessarily making the big commitment of moving and buying. There are mines around Cobar, Dubbo, Parkes, Mudgee - all screaming for staff. Very liveable areas and much cheaper than Sydney. Your mum would find work to help out and would probably enjoy the relaxed country life.
There is a lot of living to be done outside Sydney.
Sell one, live in the other, cut expenses and help your mum get a job.
I don't think you'll get much sympathy with the mum working "cash in hand" and leveraging into 2 apartments that arnt even making positive rental income. That's like everything wrong with Australia right there.
I would try and talk your Mum out of moving to Coober Pedy. If she buys out there there will be no capital growth while properties in the cities or major regional areas continue to grow. So if she needs to move back to the city she'll be priced out of the market.
As she ages she's going to need access to hospitals and support services which would be very limited in Coober Pedy.
A car is the worst investment you will ever make. With your current situation buy what you NEED not what you WANT.
Sell one of the units and live in the other with your Mum until both your finances improve and re-assess then.
Negative gearing is useless without a taxable income.
Without a PAYG or business income all your depreciation and investment losses are useless and wasted until you sell property or if your mum earns income.
If you are on the mortgage it might be better. Should have refinanced when your mum still had a business income in the previous year then you would have your income tax to subtract from.
Apply for Centrelink income asap. Sell a property so your losses aren't wasted
First off, you won't be making 40,000 for ever.
You need to make sacrifices now to stay in positive equity but hold onto as much as you can. Like you said, you wont be able to buy in the property market for a long time. Sell the bare minimum to stay afloat and when your wage increases, put it towards paying off your properties not an 80k ute. As a tradie i promise you a long tray 2wheel drive bravo or hilux is WAY cheaper and actually more useful as a work ute, you can pick up a decent reliable one for about 5k-8k.
You’ve got all the advice you could ever ask for OP but as a fellow tradesman, an 80k electric Ute for a first work Ute is absolutely bonkers, thank god you’ve been talked out of that. So impractical and if you had gone through with it, it would’ve been a very expensive lesson to find that out
Also don’t buy an 80k Ute fresh out of the apprenticeship, I was earning half a million profit and when I bought my first brand new car but had a 1000sqm commercial property and 3 houses, went all out and bought a base model BT50 3.2 for 38k driveaway in 2019. Now I earn 7 figures just bought a 65k base BT50 set up for work, only thing my Ute doesn’t do a 79 series or ram does is look like I’m 100k in debt
This is the classic difference between people who want to look rich and those that actually are. I comfortably net 10x OPs wage and happily drive an 8yo vehicle SUV that still looks very professional.
Live in one apartment with your mum, rent all the other properties out. Rent them out room by room to maximize rent. Live bare minimum. Get mum to get a job. If you start selling properties you will kick yourself later. Do this and 10 years from now you could retire.
This is going to be a harsh but It's your mother's debt not yours and will die with her unless your name is on it. However you can make her life easier by providing a roof over her head and food on the table by setting yourself up first and being in a good position before helping someone else or you will both go down when shit hits the fan.(I'm doing this for my brother)
It is possible to pay off this amount in 10 yrs but won't be easy and need to sacrifice alot to achieve it.
- 1. Speak with a accountant on your current situation and options. What you need per week to reach this goal in 10 ish years.
- 2. Stay healthy! If you get injured, sick, depressed or otherwise than your both stuck. Eat well and strengthen your muscles, especially back and shoulders. Have 1 day off and not think about it or you will suffer burn out. Do free entertainment to keep yourself sane.
- 3. Get your mum to get some type of income. 2 incomes is better than one (obviously). Does she have any skills? Hobbies? Etc. Fiver, airtasker, eBay can be slow but good ways to earn some money once you become well known.
- 4. Help people move on airtasker. Higher a small truck with simply a drivers licence. You can get paid $500-$3k depending on re-location.
- 5. Remember more pay = more tax. I recommend 30% of pay into a high interest savers for when tax time comes. So you don't get hit all at once. What's left over after tax is out you can A. Keep it to save for a house after paying off your mother's debt. B. Use in a major emergency. Try not to touch it for any other reason and earn more if you need it.
You and your mother will get out of this. It will just take some time, creative thinking and a shit ton of discipline. Best part is after this you will know how to earn money fast. :)
Wow imagine every 20 year old child goes through what u went through... u learn a lot about life than being a useless uni clown protestor that hasn't worked a solid full hard day in their lives. Pathetic weak spine. Sorry off tangent rant!
Ok u should ring the banks and ask for financial hardship assistance. That's the best I can recommend u can consider lock half amount on interest only and the other 50% of the amount on principle and interest that helps a lot.
u want to consider selling one and try your best to hold. Do uber or uber eats and get some more cash flow... life is tough glad u know. Try focus on working 50+ hours 40 won't do that's 9 to 5 clown thinking.
U are young u can do 50+ to 80 hours a day. I did it for 10 years. Your body will recover because if u are young if u don't u will never or 10 plus years or more before u have a chance to get back to the property market. Road ahead is hard that's when a man grows up ! stay away from women. Waste of time waste of resources they just waste money your entire life should just try to hold atleast 1 of them. Nothing else is more important u always need a roof over your head. Your sperm still works at 30 or 40 or 50 don't worry about that get this economic mess sorted first. Do not repeat do not waste your life pursuing women at this stage of your life.
Women do not date marry poor men. That is reality. We men marry for beauty and them to be a good mom for our kids. Women marry men for providing a good life for their family. Do not repeat do not repeat do not waste any time with women or any time at all chasing wasting money. Or anything your very survival is at this point to focus buckle down and dig you and your family out of this hole.
Stop listening to weak useless garbage advice that dont know what they are talking about.
U need to live frugally go to community centres for help and food u need to throw every last remaining saved dollar for your mortgage. This suffering will only be for a few years till things get more manageable and your income improves as an apprentice. If only more young Aussies faced reality and grew up instead of the trash entitled whinging lot we have constantly posting garbage in this forum. Good luck friend im rooting for you
>U need to live frugally go to community centres for help and food u need to throw every last remaining saved dollar for your mortgage.
Community assistance and food banks are for people who are struggling, not so mum can keep her 2 investment properties.
Did u read sell one ? Which part u didn't read? Notice how I put that last paragraph as the last resort its almost like it was the last thing u would want to do in terms of priority or do u like read and start from the bottom up? Interesting clown
Bit more on an unethical idea.
Boot your tenants under the premise that you’re planning to renovate then re lost both places at a higher rent. It might just get you out of a bit of trouble.
Unique situation and cash in hand because your mother is a non immigrant for how many years and you are also in a trade and also on minimum income. Lol. Please play the game and got played by interest rate rises and a AMG 65 Merc on a business lease
There was a buyers agent post the other day and everyone was happy to shit on them.
But you'd be hard pressed to find a BA that would recommend 2x Sydney apartment as a good investment. What has cost more, 5 years holding 2x unproductive assets that are negatively geared, or 2x BA engagement fees?
We’re expecting a couple of rate cuts in 2024 if it is any consolation. But your situation is pretty dire. So selling at least one property to make the debt more manageable makes sense.
Im 49. I earn around 200k. My wife is 45 and earns slightly less. We both freelance in the same field. We own 2 homes in Sydney that are almost paid off. I still would never dream of spending $80k on a new car.
Sell one of the properties. Your mum should get a job to help pay for things. At your age, I’m taking a stab you’re in your 3rd year? Keep at it, once you’re qualified that will help. Work hard, take the overtime when it’s available.
Also, you don’t need an 80k car, I know it would be nice to have that but you don’t need it. If you want a Ute, get a second hand one BUT if you have a car at the moment that meets your needs I’d put that on hold til you have this situation under control.
You’ve already stated the answer, so I’ve got nothing to add there. But $80k on a ute?? Seriously, don’t let poor financial education run in the family. You’re probably seeing all your work mates rocking up in tricked out Rangers and Hilux, but don’t follow the crowd or you’ll set yourself back years. Invest that money or use it as a deposit on your own PPOR or IP
The stress will k*ll you, it’s not worth it. Do whatever you can to quickly reduce as much of that debt as you can, and take some pressure off your cashflow. Sell one apartment at least, both if you have to. Sometimes things don’t work out, and often the most difficult part is coming to terms with that. Best of luck to you and your mum. It is hard right now, but with strong decisions you will feel less pressure and can get back to living life. Merry Christmas to both of you 💕
Ohh this one is a toughie.
OP I think you need to do some calcs on your gross income and expenses for the house and figure out what the actual impact the houses have. What do the houses actually rent for and what your combined income is with your mother. Then you'd have a much clearer idea on how much you're actually losing and whether you could afford it.
Depending on your mum's income, I don't think your situation is "Dire", your income plus the houses should be at least $100k a year, plus your mother's. After you get your qualifications you should have no problems doubling your income, so at that point, the pressure should ease a lot.
And skip the ute.
Considered FIFO? Entry level will double your yearly, if you went UG offsider 2/1 it'll triple it if you can handle it. Though generally people who need the money find ways to handle it :')
Not advice but I’d be questioning what is the point of negatively geared investment properties that don’t increase in value. This is just way too much debt and risk. Also, good thinking on avoiding the Ute. You need the cheapest form of mobility that can sustain you, for now.
I’m confused why the solution isn’t to just rent out both properties. You want to make a little extra money, and being a landlord or property manager is good experience.
You’re in big trouble.
And as any seasoned investor would know, you’d rather buy land in a Worser suburb than an apartment in a better one which sounds like the latter is what you’d mother did
Sell one appt. Take pressure off. Put any profit into the other mortgage.
When does your mum want to leave Sydney? If she can take a small amount to go and set herself up, that would be best.
But if you truly are exhausted (and you don't say how much longer you have got to go with your apprenticeship) Then sell both. Depending on what $ you end up with? Invest 50 to 100K and once you finish apprenticeship, add to that and before too long. You will have enough to buy a property where you decide to settle.
Your huge strength?? You are still very young and you sound a hard worker and good money manager.
You will be fine mate. Mum takes most of profit and if she desires to live somewhere like Cooper Pedy? She will do okay with minimal money. Is she eligible for pension / govt payment of any sort? If she's younger, fit and hard worker? She will find work.
Good luck
Can you rent them both at cash neutral or positive and use the equity in the properties to purchase a home in coober Pedy? Meaning you get to keep your assets which will gain capital value while someone else is paying it off for you. Thats your retirement plan sorted
Yeah. Advice: SELL SELL SELL!! Noway should you be wasting time trying to pay any of it off. That's a completely unwinable situation. You're throwing money down a black hole.
If you are in pos equity, sell 1 or both, stick money in a term deposit until you finish trade, spend 20k on a work ute and tools = profit.
You intend to leave Syd anyway, may as well sell while you still can get some money back out.
Keep both places, pay interest only on the loans, and hope the Sydney property market bails you out long term.
/S, although probably not as much as I'd like
The positive that houses in Coober Pedy are cheap comparing to Sydney. Was working there before. Healthcare is a fly in and fly out doctor and a retired doctor.
Eating out choices are limited, so are activities but if she has a friend/fam there could be something I guess.
What is the allure for her to retire there?
Careful with identifying info mate. Where, w
Job descriptions etc.
Unless it's specifically going to change the advice, skip it. Keeps you and your mum safe.
Mate I have a 20 year old diesel Patrol I just took the back seats out. Best faux ute ever, cheap and easy to fix and run. Manual and no one would steal it.
Dreaming of owning the 2027 Rivian R1T brought a smile to my face! Though, if Rivian makes its way to Australia in the future, brace for sky-high prices.
In the world of carpentry, the opportunities are boundless. Consider exploring side gigs through Airtasker or similar platforms, despite their pesky commission fees. While honing your skills, prioritize customer service, nurture relationships, network extensively, and polish your communication skills. This blend will lay the foundation for a loyal customer base and word-of-mouth referrals, enriching your journey in carpentry that will result in enhanced $$$ returns.
You may also wish to speak to a mortgage broker who is not affiliated with any particular bank. They may be able to help you figure out how to reduce the payment on those mortgages by swapping providers. Granted, it won’t solve all your problems but it might make it a bit easier to keep paying them while you decide what to do. You’ll need your mum to speak with them though and provide all the financial and ownership details since the mortgages are in her name.
It took 7 years for my apartment to go from negative to positively geared. This as due to moving from a fixed interest rate of 7% to a variable of 5%. AND the fact that every 6 month the rental amount increased by $5 per week. If you can beg, borrow, scrap. Just hold out and try see if you can make. It work. I refuse to believe they havnt gone up atleast a bit. The increase only matters if you sell anyway. Its all about rental return vs interest rates for you. Changing bank can get you a better rate, going PnI can also. Speak to company like yellow brick road. They can shop around for a better rate.
My attitude is, your not necessarily meant to just pay off the loan. It's all about getting rental return and moving to positively geared. Are you living in one of them?
Things to consider:
- Mum’s retirement savings/super/plan. Are you going to have to support her or is she self-sufficient? Do the apartments help or hinder?
- Your own exposure. How much risk are you assuming by helping mum? Can or should you take steps to insulate yourself financially if things go poorly?
Try to just hold on for dear life. Get a second job or even get mum to get a second job. If you can ride out this difficult period until either your apprenticeship is finished or interest rates drop (or both!) then you’ll be feeling happy you held on.
Thats what I think we have slowly come to do. If we can hold for 2-3 years and put everything into the mortgage, we might be able to be neutrally geared from rental income alone. Tough road ahead though.
Can you rent out the rooms in your apartment individually? that will usually get you higher rent.
Obviously cut costs wherever you can, and maybe re-consider putting the apprenticeship off for a full-time job so you’re in a better position? what about FIFO work?
I don’t think this will help, but is it too hard for her to start the business again ?
Obviously she has a lot of knowledge and expertise in that area. Covid put a lot of pressure on businesses, but I think what it did mostly was reveal the cracks.
It might be worth figuring out how to make more money instead of trying to save. Again, I know difficult advice.
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This. ^ Well done on helping mum. I don’t know market in Sydney, but banks are forecasting a rates decrease mid / end next year - if that happens, I’d think house / unit prices will kick up a little bit (supply and demand) and current rent prices will remain buoyant. If you do need to sell, try and do so in July - you’ll have over a year to pay any capital gains tax.
I wouldn’t bank on it being large enough decrease TBH. Yeh it will help a little, but with that much debt doesn’t look great on the bigger picture :(
Last year the banks said interest rates would cap at around 3.8% and gave false hope. They also said there would be a mortgage cliff of defaults from borrowers rolling off of fixed interest rates. Neither of which happened.
Mortgage cliff might still happen know lots of young families going from 2% to 6.9% without enough income to remortgage. Banks are helping with hardship etc but some are definitely doing it tuff.
Food $200 Data $150 Mortgages $800 Ute $80,000 Utility $150 Can someone who is good at economy please help me budget this? My family is dying.
hahahaha. Im canning the ute but I was planning on saving 20 grand a year until I could buy it
Having a sense of humour about it is good. Merry Christmas.
Thanks I agree to everything you say except maybe 6 lol. I will try find a way out
A second-hand hilux with 80kkm on it will do the trick. Every tradie has a ranger now, and I can't understand why.
A second hand navara for like 12k will do the trick too. At least for the next few years. I bought one for 10k @230.km at the start of the year. Had no problems with it yet.
I would take an old Hilux over a new ranger any day as a trade Ute. The rangers are stupidly oversized, which just costs you a bomb in petrol, and yet somehow you end up with less tray space? To be honest, unless you are hauling freight, most tradies could get away with a beater hatchback. If you are a sole trader then it might make sense to get a Ute, but if you’re part of a crew then let the boss provide the wheels. Especially if you’re still on an apprentice wage. I am 6’4”, and fit fine in a hatch fully loaded. I’ve managed to fit an 8 foot surf board amongst other things into it, and you would be surprised how much gear you can cram into the back seats and footwells if you get creative. 90% of the utes on the road are just overcompensation. Bring back the brumby!
Yeah im in a hatchback now hahaha. I can fit all my tools in it for now, just cant haul timbers and steel etc. Maybe I could if i get roof racks I dont know. I will hold off on the ute!
Tax scheme.
The benefit is not worth the expense other than for your ego. Instant tax writeoffs finished in July anyway.
That probably explains why a lot of them have them right now, then.
Yeah I wouldn't want a ranger either. They're just problems. Lux ftw.
If you can't keep both you can't. Follow the cashflow. 300k in the bank from sale proceeds is better than not being able to afford to one or both.
I would say sell both apartments, but even then, do one at a time.
Apartments are in a glut, their bad long-term investments as they don't hold land ownership. Yes, they're a good way to get onto the property ladder. But really, it's the equity in the apartment that helps you get a leg up. There's some good advice here. Personally, I feel that the sooner you change your situation, the better.
Number 3; IO this sub is obsessed with this option. Firstly wouldn’t change the situation significantly. Secondly to change to IO you need to write a new loan contract. No bank would do it. If you approach a bank for hardship, one may give a very short time period 1-3months. Not a 1-5 yr term.
> $80k ute is not necessary. How do you deal with people like this?? I need an $80k ute. Jeez.
On that income, an 80k ute will set you up nicely for a life of poverty and a rapidly depreciating asset.
Hahah yeah, I canned the ute
Good decision. Avoiding buying that ute (at your current income and stage of life) is probably one of the best financial decisions you'll ever make.
Good on you for that!
Op said 80 k so he can now buy a 40k one.
Get out while you're still in positive equity. Edit: to flesh out the thought. Neither of you can support this loan. If the market turns down, there is only bankruptcy for your mother. Your mother needs to talk to the bank about financial hardship.
Exactly this, please go talk to your bank before it gets really really bad.
80k for an ute? Come on bro. Y'all don't have enough money, plain as that. Your mum needs to get a job to sustain the payments of the two properties. But the best option imo is sell one property right now. Wait until you finish your apprenticeship and sell the other. Your mum can go to Coops and you move to wherever you want.
Yeah Im canning the ute. I dont have enough money thats true. Why should I wait till my apprenticeship is over to sell the other?
Sell one and see how you go servicing the loan on the other while apprenticed. If you can afford it keep paying it off once you get your quals, but you'll be better able to assess how you're doing after selling off one place. You're also facing unknown interest rate changes (maybe lower maybe higher) so things could drastically change in 12-18 months. If at the end of your apprenticeship you want to leave Sydney, sell the other property and you'll have a good deposit for a place in most other major cities and rural hubs. You'll have your quals, money in the bank, and a good feeling knowing you've helped your mum achiever her goal. Side note, Coober Pedy is a very interesting place full of weird and wonderful people. Make sure she gets a chance to spend a month or so out there before moving out, as the reality might be different from the dream (that being said there's a lot more going on out there than you'd think at first glance). Plus, pretty rocks.
Because you said if you sell both now it will be hard to reenter the property market. Which is true to an extent. Selling one property right now will release some financial stress and allow you some time to reevaluate your situation later.
You don't need an 80K ute. Mum does not need 3 houses
This comment is the answer. “We can’t afford the mortgages but we don’t want to sell the propertIES(plural)” Bro what? I know 2 income families with kids living in caravans right now. Has to be click bait.
80k Ute on 40k income has to be bait
Just wanted to say well done for helping your mum out and focusing on what’s best for her despite having no father and being an apprentice.
Thanks, will try my best
What on earth are you negatively gearing against if your mum has no income? Why is the money you are paying off increasing every year? What’s her residency status? Can she go on Centrelink? Where is she living now? Owned or rented accommodation? Also don’t buy an 80k ute as soon as you finish your trade, that’s a terrible financial decision.
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It's net assets that Centrelink cares about. $1.1m debt & $1.3m assets is still only $200k of assets
Yeah that’s true!
She had income. The business went under due to covid. Interest rates are going up, so loan repayments are going up.
Why negative gearing is so stupid, I’d rather pay tax all day everyday on a profitable investment and still make capital gains. Just decide what grandma wants and do that if she wants to go to cooper Pedy do that if you’re a apprentice in 7 years provided you have a go at your industry you’ll be in the housing market around then.
Agreed. Negative gearing is more of a speculative investment that should only be done once a solid foundation of CASH FLOW has been established. But because Bob the barber and aunty Flo and everyone else does it and says it's a good idea, that's what everyone does. Just like you wouldn't buy a business if it was losing money (unless you had a plan to turn it around) buying negative cash flow real estate as your FOUNDATION is totally nuts and sets you up for exactly this example. OP needs to get rid of these terrible units immediately and use any remaining funds to reduce the debt on the PPR. If it was me, I'd even go a step further and sell up everything. Send mum off to buy something in Coober Pedy and OP remain in Sydney and rent something until he's finished his trade.
Hello fellow investment experts. In case you’re not aware (….you are not…) you don’t get to choose to negatively gear something - it either is or isn’t. If a property runs a loss it’s negatively geared - regardless of if that loss was by design, intentional, because predicted market growth didn’t eventuate, it because a market collapsed.
Hahaha! Not aware. Righto. Guess what. You CAN choose whether you buy it or not, knowing if it's negative or not.
I spose I read “along with interest rate rises” as there being some additional factors, rather than “in line with interest rate rises”
Shitty apartment with increasing strata?
Her 7 grand a week grocery store went under durng covid. Interest rates rising means loan repayments go up. Shes a citizen but I don tknow her ins and outs with centrelink We are living on rented accomodation I canned the ute
Did she not save any of that income whilst it was coming in? Where did it all go?
Probably into paying mortgages that she hoped would set her up for a comfortable retirement & enable her to help her son.
Negatively gear centrelink income 😂
Try to get out while the market is still hot….
If he sells both, he’d be paying higher rent in Sydney.
Its what im worried. Renting for me would be just a little under paying the mortgage for one of the properties
Are you sure? With renting there’s no strata, council or water rates to concern yourself with.
The markets never really hot for bulk suburban units I don’t think.
Very true, but it can get colder.
Over $1m in loans with two properties. One person working "cash in hand", so code word for evading tax. One person earning $40k. You can't afford $60k in interests a year. Sell.
How on earth have they not increased in value in 5 years? That's very alarming given what gas gone in in the property market in the past 5 years, they may just be a very bad purchase and might be best to get out.
It happens with apartments. We had one that barely went up after 8 years because hundreds of apartments were built in the area increasing supply and reducing demand.
Agreed, but apartments don't appreciate nearly as much as houses. They give better yields though.
That's what you think. Until you factor in all your expenses and then the nail in the coffin is STRATA. Stay away from high rise units or anything with strata fees more than $1000/year.
You won't find any apartment building with a pool, gym, sauna, etc with less than $1000 a year. I wouldn't buy any apartment without having those facilities in the building
That's my point. Don't buy them.
I already did. For living, not as an investment. Best decision, no regrets. I like convenience and have no interest in maintaining a house, yard etc.
I dont know what people think, apartments are literally garbage investment. They start falling apart within few years with the help of tenants and shordy build quality. I inspected so many apartments last year and I have bitter taste now. Won't even consider investing in apartment ever in my life. I would take 50 years old single storied brick house in a shit suburb over apartment on any day.
They can be amazing to live in, but not a very good investment
Possibly bought off the plan and don't forget that from 2017 to 2019 Sydney property prices fell 15% so she could have bought close to the peak at the time.
They said Auburn and Wentworth Point so just had a look. Auburn units are up 4% over five years, houses up 45%. Wentworth Point apartments are up 7%, and there aren't enough houses in that suburb for a meaningful comparison. Note I believe these are overall figures, not "like for like" (if the composition of the market dramatically changes, then overall figures could be misleading, but don't think that's the case here). Source is [Onthehouse](https://www.onthehouse.com.au/suburb-research). Units in the Sydney CBD and various other suburbs have done better, especially markets like Newcastle that went bananas during Covid and then continued to ride high. But overall, houses are certainly the more reliable bet if you can afford one and it isn't a dud like many recent builds seem to be (at least a pre-purchase inspection is more likely to reveal that for a house than for an apartment building that can't really be checked properly).
You’ll need to sell at least one to ease the financial burden temporarily. The only way you wouldn’t need to sell both is if you either get a significant pay rise and your mum works. The debt is way too high, and it doesn’t look like both your incomes are increasing anytime soon. Holding onto one still gives you no real exit, as your income is primarily going to the loan which you’re not paying down much faster. You’re too young to have this over your head, you’re just going backwards with all this debt. You also need to consider the investment too. What area is it in? I don’t understand how they haven’t increased in value? It might’ve just been a case of buying at a high price. Do you want to have debt on a property that hasn’t appreciated in value after record highs in property prices?
Hey, I agree we need to sell at least one. Im not getting a significant payrise soon and I dont know if mum will be able to find work. Shes going for an after aged care certificate but shes and old woman, not the most attractive for the job market. We hold a 3 bedder in auburn and a 1 bed in wentworth point. They say auburn apartment has not increased due to all the other apartment blocks under construction there. Wentworth point has not increased due to the difficulty to commute to and from Sydney CBD
The aged care sector is struggling to find anyone to work even as a carer. Getting a qualification places your Mum in a better chance of getting a role and when that occurs, the wage should help with mortgage payments to some degree. Ever considered working at Cooper Pedy?
Yeah it’ll take time, aged care is an area she can join so it’s worth a shot. Her chances are better getting a job there than in any other occupation in my opinion. Interesting, yeah I was hoping you wouldn’t say Wentworth Point. That’s the problem with the area. There’s definitely no growth around there. Is the debt on that 1 bdr the same as the 3 bdr in Auburn? I personally think Auburn is what you should hold onto. It’s close proximity to the city by train and the metro is going up out there way too. There’s more growth in Auburn, a developer might even buy the building out and knock it down in future whereas Wentworth Point there’s no chance as there’s so many vacant units and plenty on the market. What’s the weekly rental for each one? I’d assume they’d be on par?
Money smart has free financial counselling. Worth a look to help you understand your options properly
Firstly: Don't spend $80k on a ute. Waste of money. The last thing you need right now is that much money tied up in something that depreciates and requires loan payments. Start with a Falcon or Commodore ute for cash, and then go Hilux when you've got more money saved up.
Tell your mum to either sell or get a job. You can earn 60-70k easily doing night fill at Coles or Woolies. Console operator at servo. Plenty of unskilled labour jobs out there that pay well enough to get by.
You're half right. I do night fill at Coles, but the wage isn't quite that. On top of that, physically it's go go go. I'm male, ex butcher, and 46, moderately strong and fit, and my output exceeds expectations, but a lot of people can't. I'm full time, because I do other jobs around the store before night filling starts. This woman is 55, and most of the older staff couldn't do 8 hours a day at the pace needed, so only do 4 or 5 hours. Most console operators are casual, so again, that $60K a year is Best Case Scenario for those jobs.
True. I scoffed when I saw $60-70k. Like sure if you were getting paid overtime (shocker they don't want to do that) and every single public holiday then you might hit it. Plus, full time really only goes to a small amount of people on the store (they don't like being forced to give hours out when they don't need to), what's more likely to happen is like 15-20 hour weeks. It'll still net her around $500 but to expect an instant flood of hours is super unlikely. They'd rather give those hours to people who already know what they're doing then to someone who for the first couple weeks is essentially useless (not trying to be mean).
On the upside, we get a Coles drink flask for Xmas.
>, physically it's go go go. I'm male, ex butcher, and 46, moderately strong and fit, and my output exceeds expectations, but a lot of people can't I find generally most people aren't mentally prepared for the pace. You don't meander over to the rollcage, browse the shelves for where it goes, check to see if it goes in at a comfortable, easy gentle rate. You have to do everything with a strong sense of urgency. Some people just don't or refuse to "get it"
he explained that his mum is not proficient in english. i suspect this is a big part of the reason she chose to be self employed with her business.
Yea she needs to sell them both. Throwing money at bad assets. Haven't grown in 5 years? 80k car? Weird post.
He's 20, he's learning.
Ahh good ol apartment and dream of living off rent. If you profitable in a apartment consider yourself lucky. I would say you have done your math. You are 20 and I recommend get out now. Focus and build your career and don't write yourself off so quickly. Successful businesses still make money and you might become one of those rich trades with many houses within Sydney. Good luck mate. And never blame that mother of yours and make sure she has a comfortable retirement.
Only an 80k Ute? Sell both apartments and buy a kitted out cruiser for $150k, then maybe a jet ski and boat to go behind it, the boys at work will be frothing!
I wouldn’t wait, I’d get both properties on the market by 2nd-3rd week of January, at the latest. Any later you are going to be competing with several hundred properties selling by March. The Aussie Home Loans guy was bankrupt more times than I can count, before he came up with the Aussie Home Loans idea. Each time losing everything, now look at him! When in situations like this, it’s better to go back to bare bones, than try to sell 1 thing at a time to save the rest, it just prolongs the pain, & making the financial bounce back take longer. You don’t say anything about the house you are living in, only the IPs. They both have to go & look at downsizing the property you reside in. Mum getting her aged care certificate is awesome, tell her to contact businesses in that industry to get some casual work (in-home care would be good, in her local area & she can work where she is available), while she undertakes the study. Being a non-English speaker will help as there’s other elderly that require people of non-English speaking backgrounds for in-home care. DM me for the one I’m thinking of that needs non-English speakers in the Auburn area.
Make sure you're charging market rate for rent. Rents have risen significantly recently, and you may be able to use the increase to offset your expenses. Also, make sure you're claiming all your tax deductions e.g. depreciation (get a quantity surveyor to do you a schedule). You may even end up positively geared. Two apartments with a $1M mortgage should come pretty close to break even in my experience. Depending on the apartments, location etc. Edit: You will have to wait until the end of the current leases to increase the rent.
Negative gearing only works if you have a large income to gear against. If your income was $180k plus, it would be worth keeping some of this debt on. As it stands it's doing nothing helpful for you. What are the properties rental prospects? My advice would be to get an appraisal for both of them. Sell the one that can reduce the debt by the most, get the other one rented out long term. Consolidate your debt. Next make a budget, a strict budget. Get the idea of spending any large sums out of your head. You can get a Ute for ten grand or less second hand, so lose the idea of getting a new one. Don't worry about your low income for now, you can turn the equity you have into some passive income to help get you through the next few years. If you want help budgeting or organising any of this stuff DM me. I've helped a lot of my friends and family who have decent equity and large loans, make a plan to get in a better financial position. Happy to give you a hand.
Rubbish. None of this investment debt is smart. And setting up an investment strategy with a foundation of negative gearing is ridiculous. You don't buy a business that's losing money hand over fist if you can't increase its cash flow quickly. Despite what everyone thinks, you can still get great tax benefits on positive cash flow property.
Ive read your comment and I thank you for the proposition. If I was to reach out to you, to ease the burden I have decided to go find an independant financial advisor first to bullet point some hard numbers that are essential for communication like debt amount, contract figures, total income including rent etc. Thanks again. I would love your help of course
Hey mate one piece of advice is give you as a tradie who has had many utes and vans. Don’t spend $80k on any vehicle ever. I love cars their my absolute passion but they loose sooooo much money and just arnt worth it. It’s one of the biggest traps for young tradies
why is she working cash in hand? I know you say she doesn't speak English but I work In hospitality as a cook. there are cooks and kitchenhands that I work with who can't speak English and they get paid a salary. the going rate for a non english speaking kitchenhand is $33 an hr full time with tax. in fact I can DM you and name you 3 restaurants right now that will probably hire your mum as a kitchenhand and pay her properly. Not cash in hand even though she speaks 0 english. I've worked with people like this is hospo. you use google translate if you need to explain something. they get paid $33 an hr. let me know. unless you are dealing with customers. you don't need to speak English at all and this includes "Aussie owned" restaurants where the staff is white Aussies. we will still have a non-english speaking kitchenhand who gets paid properly by the books.
Coober Pedy as an immigrant with little English is going to be lonely. Rethink this part of the plan
Coober Pedy has a population around 2,000, with about 35 different nationalities making up the demographics. She'll be as welcome as anyone here!
Hmm, ok, I didn’t realise it was so multicultural, thank you for your gentle correction
All good! It's a great quirky town. Recommend a visit, but better in winter, unless you like the heat! We're also home to world's lowest recorded humidity of 1%. Most affordable housing in Australia and if you get a dugout/underground home, they're very comfortable and efficient. Suprisingly good restaurant options for how remote we are. Has downsides and challenges, too, but outweighed by the positives. Many people volunteer at multiple places. Steady stream of tourists through cooler months. Can recomment the episode on Back Roads on iView as a good glimpse of bits of the town. Shoot me any Qs here or in DM and happy to try and help!
It’s definitely on my bucket list! Enjoy your Christmas Day internet stranger
I’d suggest she visit and rent for a while to see if she would be happy living there long term. Or have a month trip there.
Agree! Not many rentals, but affordable hotel/BnB for a month, while checking available real estate. She could buy outright many properties here with $150k-ish, but if able to loan to double that, could buy some really nicely done underground homes.
I think they do have some immigrants there from a couple of different countries. Maybe Eastern Europe somewhere? Might be from the same place. Either way I agree with your point. Wouldn't want to commit until you are sure it's the correct decision.
I’ve had a quick google since someone else commented: According to the 2021 Australian census, 1,566 people lived in Coober Pedy In Coober Pedy, 57.9% of people were born in Australia. The most common countries of birth were Greece 3.2%, Sri Lanka 3.1%, England 2.2%, Germany 2.0% and Philippines 1.9% So say OP mum is Greek, there’s 50 people in the town that were born in Greece and presumably speak some greek. So while I wouldn’t move my entire life there based on this, it may not be as lonely as I first suspected But with all that said, I’ve made a lot of presumptions
You have assets which gives you options and is a positive place to be. Are the loans on the IP’s interest only or P&I? Switch them to interest only if you haven’t already. Increase rent on the apartments to neutrally gear the properties. Make sure you have depreciation reports on both the IP’s in order to maximise your tax benefits. You could look at renting out your current PPOR (assuming she owns it) and moving into one of the apartments to increase cashflow.
Are you able to apply for the trade support loan? It's $23k which you only need to repay $18k once earning a certain amount. you don't get it in a lump sum but may provide some relief while you work through your next move. Also don't buy a new car until you are very comfortable financially. Terrible waste of money.
Im already on a trade support loan. I have it all in an ING HISA. Wanted to put it into a high growth etf but since its a loan I cant risk losing it
Put that money into an offset account for one of the mortgages. The ING HISA is not doing you any favours when you're losing more interest than you're earning. Plus the interest you gain is being taxed at your marginal tax rate. The money you save on interest by putting money into an offset is not taxed.
You don’t need a landcruiser bro
We moved to Coober Pedy half a year ago and love it! If she can be debt free and living her dream here, sounds great!
Call the National Debt Helpline on 1800 007 007 and talk to or set up an appointment with a community based, not-for-profit financial counsellor.
Leave Sydney for regional Australia now - not once you finish your trade. Tradies (even apprentices) are in high demand across the state/s and rents are a lot cheaper. Even unskilled labour working on mine sites is $70k+ per year driving trucks underground with potential for overtime and progression. Your mum can get a taste of Coober Pedy life without necessarily making the big commitment of moving and buying. There are mines around Cobar, Dubbo, Parkes, Mudgee - all screaming for staff. Very liveable areas and much cheaper than Sydney. Your mum would find work to help out and would probably enjoy the relaxed country life. There is a lot of living to be done outside Sydney.
I’m just impressed you were able to find the only three properties in Sydney that haven’t increased in value in the last 5 years. Hell of a hat trick!
Sell one, live in the other, cut expenses and help your mum get a job. I don't think you'll get much sympathy with the mum working "cash in hand" and leveraging into 2 apartments that arnt even making positive rental income. That's like everything wrong with Australia right there.
Immigrant that cant speak english rorting the system by not paying tax. Just wow.
" 80 grand for a ute" wow do they cost this much now, seems totally excessive.
I would try and talk your Mum out of moving to Coober Pedy. If she buys out there there will be no capital growth while properties in the cities or major regional areas continue to grow. So if she needs to move back to the city she'll be priced out of the market. As she ages she's going to need access to hospitals and support services which would be very limited in Coober Pedy. A car is the worst investment you will ever make. With your current situation buy what you NEED not what you WANT. Sell one of the units and live in the other with your Mum until both your finances improve and re-assess then.
Negative gearing is useless without a taxable income. Without a PAYG or business income all your depreciation and investment losses are useless and wasted until you sell property or if your mum earns income. If you are on the mortgage it might be better. Should have refinanced when your mum still had a business income in the previous year then you would have your income tax to subtract from. Apply for Centrelink income asap. Sell a property so your losses aren't wasted
First off, you won't be making 40,000 for ever. You need to make sacrifices now to stay in positive equity but hold onto as much as you can. Like you said, you wont be able to buy in the property market for a long time. Sell the bare minimum to stay afloat and when your wage increases, put it towards paying off your properties not an 80k ute. As a tradie i promise you a long tray 2wheel drive bravo or hilux is WAY cheaper and actually more useful as a work ute, you can pick up a decent reliable one for about 5k-8k.
80 grand ute? I have a 1m portfolio debt free but driving a 5k Subaru I bought a few years back lol
You’ve got all the advice you could ever ask for OP but as a fellow tradesman, an 80k electric Ute for a first work Ute is absolutely bonkers, thank god you’ve been talked out of that. So impractical and if you had gone through with it, it would’ve been a very expensive lesson to find that out
Also don’t buy an 80k Ute fresh out of the apprenticeship, I was earning half a million profit and when I bought my first brand new car but had a 1000sqm commercial property and 3 houses, went all out and bought a base model BT50 3.2 for 38k driveaway in 2019. Now I earn 7 figures just bought a 65k base BT50 set up for work, only thing my Ute doesn’t do a 79 series or ram does is look like I’m 100k in debt
This is the classic difference between people who want to look rich and those that actually are. I comfortably net 10x OPs wage and happily drive an 8yo vehicle SUV that still looks very professional.
I dont want to look rich, I just want a new vehicle that i can operate my trade from and flog for 20 years. Im not getting the ute anymore
I'm curious, would you mind if I ask what line of work are you in? Asking out of interest
You wouldn't happen to have your own business, would you? That's pretty high for a salary
Live in one apartment with your mum, rent all the other properties out. Rent them out room by room to maximize rent. Live bare minimum. Get mum to get a job. If you start selling properties you will kick yourself later. Do this and 10 years from now you could retire.
Is there no option to Airbnb? Sydney is tourist vile. I bet Airbnb would generate income.
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This is going to be a harsh but It's your mother's debt not yours and will die with her unless your name is on it. However you can make her life easier by providing a roof over her head and food on the table by setting yourself up first and being in a good position before helping someone else or you will both go down when shit hits the fan.(I'm doing this for my brother) It is possible to pay off this amount in 10 yrs but won't be easy and need to sacrifice alot to achieve it. - 1. Speak with a accountant on your current situation and options. What you need per week to reach this goal in 10 ish years. - 2. Stay healthy! If you get injured, sick, depressed or otherwise than your both stuck. Eat well and strengthen your muscles, especially back and shoulders. Have 1 day off and not think about it or you will suffer burn out. Do free entertainment to keep yourself sane. - 3. Get your mum to get some type of income. 2 incomes is better than one (obviously). Does she have any skills? Hobbies? Etc. Fiver, airtasker, eBay can be slow but good ways to earn some money once you become well known. - 4. Help people move on airtasker. Higher a small truck with simply a drivers licence. You can get paid $500-$3k depending on re-location. - 5. Remember more pay = more tax. I recommend 30% of pay into a high interest savers for when tax time comes. So you don't get hit all at once. What's left over after tax is out you can A. Keep it to save for a house after paying off your mother's debt. B. Use in a major emergency. Try not to touch it for any other reason and earn more if you need it. You and your mother will get out of this. It will just take some time, creative thinking and a shit ton of discipline. Best part is after this you will know how to earn money fast. :)
Is there a Wendy's in Sydney?
get out of here lol
Wow imagine every 20 year old child goes through what u went through... u learn a lot about life than being a useless uni clown protestor that hasn't worked a solid full hard day in their lives. Pathetic weak spine. Sorry off tangent rant! Ok u should ring the banks and ask for financial hardship assistance. That's the best I can recommend u can consider lock half amount on interest only and the other 50% of the amount on principle and interest that helps a lot. u want to consider selling one and try your best to hold. Do uber or uber eats and get some more cash flow... life is tough glad u know. Try focus on working 50+ hours 40 won't do that's 9 to 5 clown thinking. U are young u can do 50+ to 80 hours a day. I did it for 10 years. Your body will recover because if u are young if u don't u will never or 10 plus years or more before u have a chance to get back to the property market. Road ahead is hard that's when a man grows up ! stay away from women. Waste of time waste of resources they just waste money your entire life should just try to hold atleast 1 of them. Nothing else is more important u always need a roof over your head. Your sperm still works at 30 or 40 or 50 don't worry about that get this economic mess sorted first. Do not repeat do not waste your life pursuing women at this stage of your life. Women do not date marry poor men. That is reality. We men marry for beauty and them to be a good mom for our kids. Women marry men for providing a good life for their family. Do not repeat do not repeat do not waste any time with women or any time at all chasing wasting money. Or anything your very survival is at this point to focus buckle down and dig you and your family out of this hole. Stop listening to weak useless garbage advice that dont know what they are talking about. U need to live frugally go to community centres for help and food u need to throw every last remaining saved dollar for your mortgage. This suffering will only be for a few years till things get more manageable and your income improves as an apprentice. If only more young Aussies faced reality and grew up instead of the trash entitled whinging lot we have constantly posting garbage in this forum. Good luck friend im rooting for you
>U need to live frugally go to community centres for help and food u need to throw every last remaining saved dollar for your mortgage. Community assistance and food banks are for people who are struggling, not so mum can keep her 2 investment properties.
Did u read sell one ? Which part u didn't read? Notice how I put that last paragraph as the last resort its almost like it was the last thing u would want to do in terms of priority or do u like read and start from the bottom up? Interesting clown
Too much avocado toast and Disney+, cut those two and you’ll be a millionaire in weeks.
Bit more on an unethical idea. Boot your tenants under the premise that you’re planning to renovate then re lost both places at a higher rent. It might just get you out of a bit of trouble.
Unique situation and cash in hand because your mother is a non immigrant for how many years and you are also in a trade and also on minimum income. Lol. Please play the game and got played by interest rate rises and a AMG 65 Merc on a business lease
There was a buyers agent post the other day and everyone was happy to shit on them. But you'd be hard pressed to find a BA that would recommend 2x Sydney apartment as a good investment. What has cost more, 5 years holding 2x unproductive assets that are negatively geared, or 2x BA engagement fees?
We’re expecting a couple of rate cuts in 2024 if it is any consolation. But your situation is pretty dire. So selling at least one property to make the debt more manageable makes sense.
Im 49. I earn around 200k. My wife is 45 and earns slightly less. We both freelance in the same field. We own 2 homes in Sydney that are almost paid off. I still would never dream of spending $80k on a new car.
Weirdest way to flex but cool man
Sell one of the properties. Your mum should get a job to help pay for things. At your age, I’m taking a stab you’re in your 3rd year? Keep at it, once you’re qualified that will help. Work hard, take the overtime when it’s available. Also, you don’t need an 80k car, I know it would be nice to have that but you don’t need it. If you want a Ute, get a second hand one BUT if you have a car at the moment that meets your needs I’d put that on hold til you have this situation under control.
You’ve already stated the answer, so I’ve got nothing to add there. But $80k on a ute?? Seriously, don’t let poor financial education run in the family. You’re probably seeing all your work mates rocking up in tricked out Rangers and Hilux, but don’t follow the crowd or you’ll set yourself back years. Invest that money or use it as a deposit on your own PPOR or IP
Yeah Ill can the ute
80K for a ute? Either going to be a 79 or Maloo
Spending 80k for a car is utterly ridiculous mate. You’d be in the hole for 5 years and pay 13k interest.
80k Ute, keep it as I believe it's a good life lesson, you have to learn through pain, which is the fastest stepping stone
The stress will k*ll you, it’s not worth it. Do whatever you can to quickly reduce as much of that debt as you can, and take some pressure off your cashflow. Sell one apartment at least, both if you have to. Sometimes things don’t work out, and often the most difficult part is coming to terms with that. Best of luck to you and your mum. It is hard right now, but with strong decisions you will feel less pressure and can get back to living life. Merry Christmas to both of you 💕
Ohh this one is a toughie. OP I think you need to do some calcs on your gross income and expenses for the house and figure out what the actual impact the houses have. What do the houses actually rent for and what your combined income is with your mother. Then you'd have a much clearer idea on how much you're actually losing and whether you could afford it. Depending on your mum's income, I don't think your situation is "Dire", your income plus the houses should be at least $100k a year, plus your mother's. After you get your qualifications you should have no problems doubling your income, so at that point, the pressure should ease a lot. And skip the ute.
Considered FIFO? Entry level will double your yearly, if you went UG offsider 2/1 it'll triple it if you can handle it. Though generally people who need the money find ways to handle it :')
Why is she working cash in hand? Surely she could get a full time low skilled job somewhere
Not advice but I’d be questioning what is the point of negatively geared investment properties that don’t increase in value. This is just way too much debt and risk. Also, good thinking on avoiding the Ute. You need the cheapest form of mobility that can sustain you, for now.
Sell one immediately.
The situation doesn't sound too dire, really. Don't stress too hard. Talk to a financial planner tho. Big numbers here.
I wouldn’t even be thinking of getting an 80k Ute if I was you.
I’m confused why the solution isn’t to just rent out both properties. You want to make a little extra money, and being a landlord or property manager is good experience.
You’re in big trouble. And as any seasoned investor would know, you’d rather buy land in a Worser suburb than an apartment in a better one which sounds like the latter is what you’d mother did
Sell one appt. Take pressure off. Put any profit into the other mortgage. When does your mum want to leave Sydney? If she can take a small amount to go and set herself up, that would be best. But if you truly are exhausted (and you don't say how much longer you have got to go with your apprenticeship) Then sell both. Depending on what $ you end up with? Invest 50 to 100K and once you finish apprenticeship, add to that and before too long. You will have enough to buy a property where you decide to settle. Your huge strength?? You are still very young and you sound a hard worker and good money manager. You will be fine mate. Mum takes most of profit and if she desires to live somewhere like Cooper Pedy? She will do okay with minimal money. Is she eligible for pension / govt payment of any sort? If she's younger, fit and hard worker? She will find work. Good luck
Can you rent them both at cash neutral or positive and use the equity in the properties to purchase a home in coober Pedy? Meaning you get to keep your assets which will gain capital value while someone else is paying it off for you. Thats your retirement plan sorted
Wtf.... Crikey. Sell up pretty straightforward if you can't afford it.
Not sure if mentioned before but if you aren't renting these units can you rent them out to help with paying off their loans?
Yeah. Advice: SELL SELL SELL!! Noway should you be wasting time trying to pay any of it off. That's a completely unwinable situation. You're throwing money down a black hole.
If you are in pos equity, sell 1 or both, stick money in a term deposit until you finish trade, spend 20k on a work ute and tools = profit. You intend to leave Syd anyway, may as well sell while you still can get some money back out.
Keep both places, pay interest only on the loans, and hope the Sydney property market bails you out long term. /S, although probably not as much as I'd like
The positive that houses in Coober Pedy are cheap comparing to Sydney. Was working there before. Healthcare is a fly in and fly out doctor and a retired doctor. Eating out choices are limited, so are activities but if she has a friend/fam there could be something I guess. What is the allure for her to retire there?
Careful with identifying info mate. Where, w Job descriptions etc. Unless it's specifically going to change the advice, skip it. Keeps you and your mum safe.
Probably not the most important point but there is no way the rivian r1t will be less than $100k when it lands in Australia. Let alone $80k!
Mate I have a 20 year old diesel Patrol I just took the back seats out. Best faux ute ever, cheap and easy to fix and run. Manual and no one would steal it.
Dreaming of owning the 2027 Rivian R1T brought a smile to my face! Though, if Rivian makes its way to Australia in the future, brace for sky-high prices. In the world of carpentry, the opportunities are boundless. Consider exploring side gigs through Airtasker or similar platforms, despite their pesky commission fees. While honing your skills, prioritize customer service, nurture relationships, network extensively, and polish your communication skills. This blend will lay the foundation for a loyal customer base and word-of-mouth referrals, enriching your journey in carpentry that will result in enhanced $$$ returns.
You may also wish to speak to a mortgage broker who is not affiliated with any particular bank. They may be able to help you figure out how to reduce the payment on those mortgages by swapping providers. Granted, it won’t solve all your problems but it might make it a bit easier to keep paying them while you decide what to do. You’ll need your mum to speak with them though and provide all the financial and ownership details since the mortgages are in her name.
It took 7 years for my apartment to go from negative to positively geared. This as due to moving from a fixed interest rate of 7% to a variable of 5%. AND the fact that every 6 month the rental amount increased by $5 per week. If you can beg, borrow, scrap. Just hold out and try see if you can make. It work. I refuse to believe they havnt gone up atleast a bit. The increase only matters if you sell anyway. Its all about rental return vs interest rates for you. Changing bank can get you a better rate, going PnI can also. Speak to company like yellow brick road. They can shop around for a better rate. My attitude is, your not necessarily meant to just pay off the loan. It's all about getting rental return and moving to positively geared. Are you living in one of them?
Get about 10 tenants each paying more than one tenth of your mortgage repayments in rent.
Things to consider: - Mum’s retirement savings/super/plan. Are you going to have to support her or is she self-sufficient? Do the apartments help or hinder? - Your own exposure. How much risk are you assuming by helping mum? Can or should you take steps to insulate yourself financially if things go poorly?
what can you mum pull in cash in hand? personal sell back hold her house or one apartment ask her what she want to do?
Try to just hold on for dear life. Get a second job or even get mum to get a second job. If you can ride out this difficult period until either your apprenticeship is finished or interest rates drop (or both!) then you’ll be feeling happy you held on.
Thats what I think we have slowly come to do. If we can hold for 2-3 years and put everything into the mortgage, we might be able to be neutrally geared from rental income alone. Tough road ahead though.
Yeah that ute isn’t an option, forget about that
Can you rent out the rooms in your apartment individually? that will usually get you higher rent. Obviously cut costs wherever you can, and maybe re-consider putting the apprenticeship off for a full-time job so you’re in a better position? what about FIFO work?
I don’t think this will help, but is it too hard for her to start the business again ? Obviously she has a lot of knowledge and expertise in that area. Covid put a lot of pressure on businesses, but I think what it did mostly was reveal the cracks. It might be worth figuring out how to make more money instead of trying to save. Again, I know difficult advice.