Mega Thread The Questions Thread - Part II

[Billy ray]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

 

[74561347]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

i took advantage of the six year rule yesterday morning when i found a chip underneath my refrigerator

 

[The Dice Man]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

We rent our house out for 3 weeks in August, that pays for 45% of the mortgage for the year. Last year we stayed in a couple of AirBnbs in Spain which wasnt really easy with how hot it was and a 6 month old and a dog. This year we're looking at Italy. We get 5k a week in summer. If we were really motivated we could do the same for the Film Festival and a couple of other week long conferences throughout the year and cover our mortgage completely, but it is a bit of a pain to pack away all personal items for such a short time.

For you and your location, you would have to accept a downgrade to make it profitable I imagine. For us we just spend a few weeks in Italy or Spain or Portugal where everything is much cheaper than here.

 

[Billy ray]

We rent our house out for 3 weeks in August, that pays for 45% of the mortgage for the year. Last year we stayed in a couple of AirBnbs in Spain which wasnt really easy with how hot it was and a 6 month old and a dog. This year we're looking at Italy. We get 5k a week in summer. If we were really motivated we could do the same for the Film Festival and a couple of other week long conferences throughout the year and cover our mortgage completely, but it is a bit of a pain to pack away all personal items for such a short time.

For you and your location, you would have to accept a downgrade to make it profitable I imagine. For us we just spend a few weeks in Italy or Spain or Portugal where everything is much cheaper than here.

Must be nice

Im not really looking to make a profit (or loss). Doing some preliminary figures it would almost certainly be positively geared however - but thats fine. So long as the new place delivers the lifestyle desired and i dont lose any cashflow

 

[Teagueeee15]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

Rentvesting is the term for what you are doing and it is a common strategy.

If you can’t decide whether to do it or not, just google the term and weigh up all the pros and cons of it. There is plenty of material on it.

 

[Gralin]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

Renting sucks.
You could find yourself moving every year

 

[Billy ray]

Renting sucks.
You could find yourself moving every year

I’d be happy to sign a two year lease to prevent it from being an annual possibility.

 

[Gralin]

I’d be happy to sign a two year lease to prevent it from being an annual possibility.

Good luck with that, hard to get longer term leases

 

[Billy ray]

Good luck with that, hard to get longer term leases

True though in the price range i am looking i know of a few people who have recently signed either 18 months or two years.
And i as a landlord would be looking for something similar for my would be tenants

 

[The Dice Man]

Must be nice

I got to get me one of these.

 

[Billy ray]

View attachment 1711523

I got to get me one of these.

And also a lost touch with the common man tshirt

 

[Perth gal]

I’ve thought about this before and may have mentioned it on a thread at some stage, but I’m contemplating renting out my home and then using the rent I receive to pay rent to live elsewhere.
So pretty much money in = money out.
Has anyone done this before?
It would just be for 5-6 years to take advantage of the 6 year rule.

Why not just rent a room?

 

[Caesar]

Must be nice

Im not really looking to make a profit (or loss). Doing some preliminary figures it would almost certainly be positively geared however - but thats fine. So long as the new place delivers the lifestyle desired and i dont lose any cashflow

what is the goal exactly

rentvesting usually only makes sense for people who are forced to live in a property market that they’re completely priced out of. It is a last chance saloon to build equity.

That is in large part because the tax rules make it stupidly expensive. Compared to living in the place you are spending a ton of money on extra costs (agents, landlord insurance, moving, vacancy costs, etc.) but while everything you earn on the investment side is assessable, nothing you pay on the renting side is deductible. To make the cash flows even out, you have pay for the difference with downgrades to your lifestyle - less desirable place, uncertainty of renting, landlord headaches, etc.

It’s a lot of trouble and inconvenience for the privilege of (mostly) putting more money into the pocket of the tax man and a couple of real estate agents.

you really need to have a compelling reason to do it

if you just want to make a few extra bucks, there are easier ways

 

[peternorth]

if you just want to make a few extra bucks, there are easier ways

Only fans ?

 

[Billy ray]

what is the goal exactly

rentvesting usually only makes sense for people who are forced to live in a property market that they’re completely priced out of. It is a last chance saloon to build equity.

That is in large part because the tax rules make it stupidly expensive. Compared to living in the place you are spending a ton of money on extra costs (agents, landlord insurance, moving, vacancy costs, etc.) but while everything you earn on the investment side is assessable, nothing you pay on the renting side is deductible. To make the cash flows even out, you have pay for the difference with downgrades to your lifestyle - less desirable place, uncertainty of renting, landlord headaches, etc.

It’s a lot of trouble and inconvenience for the privilege of (mostly) putting more money into the pocket of the tax man and a couple of real estate agents.

you really need to have a compelling reason to do it

if you just want to make a few extra bucks, there are easier ways

I guess goal is to live in a more convenient place. And so long money in (to me as rent) covers money out (I pay as rent) its break even in that someone pays off my home and i pay off their home. I get some non cash tax benefits from building allowance and whatnot.

Talking brass tacks.
The place i am looking to rent is 1600 a week. Extras on top of that (utilities, internet, insurance etc) i effectively just move ( i pay them now and will pay them still).
I do need extra landlord insurance. And more than likely an agent to manage my rental which means around 8% of rent goes to that.
So i think i need to earn 1600-1700 on my joint.


My place is great for the childless or those with primary school aged children or those with dual living like having parents live with them but have own separate living space (granny flat essentially).
My place is not convenient for high school and uni/tafe aged folks - which is where i am at for next 5-6 years.
Everywhere is a 35-40min round trip. Lots of driving and taxiing around.

So the benefits to me stack up.
Its not a money making exercise at all. Other ways to make money and if thats the aim, its destined to fail.

 

[Caesar]

Talking brass tacks.
The place i am looking to rent is 1600 a week. Extras on top of that (utilities, internet, insurance etc) i effectively just move ( i pay them now and will pay them still).
I do need extra landlord insurance. And more than likely an agent to manage my rental which means around 8% of rent goes to that.
So i think i need to earn 1600-1700 on my joint.

8% to the agent, but you said you’re positively geared so also add in your tax bracket on the net rent. Then plus your own moving costs, opportunity cost on the initial outlay (bond etc.), and assume a vacancy percentage on your home

The vacancy percentage is a big one. You always have changeover time at the end of the lease, even if you do line up tenants perfectly (which often isn’t possible). My place has averaged about 3-4% vacancy in the last 10 years, and it’s in a pretty good rental market. Doesn’t sound like much but you’re relying on that income to pay your own $1600-a-week rent, it won’t have to sit empty long to leave you in a nasty hole if you haven’t priced up to cover it.

Consider the timings too. You are effectively doubling what’s coming in and going out, which is going to create a lot of fluctuations in cashflow. e.g. just because you’re getting $X in and paying $Y out doesn’t mean X & Y will line up - generally the stuff you’re receiving as a landlord will be well behind the stuff you’re paying as a tenant, so you will need a good cash buffer to avoid getting into strife. Holding that cash on hand also has a cost.

Good luck.

 

[Billy ray]

8% to the agent, but you said you’re positively geared so also add in your tax bracket on the net rent. Then plus your own moving costs, opportunity cost on the initial outlay (bond etc.), and assume a vacancy percentage on your home

The vacancy percentage is a big one. You always have changeover time at the end of the lease, even if you do line up tenants perfectly (which often isn’t possible). My place has averaged about 3-4% vacancy in the last 10 years, and it’s in a pretty good rental market. Doesn’t sound like much but you’re relying on that income to pay your own $1600-a-week rent, it won’t have to sit empty long to leave you in a nasty hole if you haven’t priced up to cover it.

Consider the timings too. You are effectively doubling what’s coming in and going out, which is going to create a lot of fluctuations in cashflow. e.g. just because you’re getting $X in and paying $Y out doesn’t mean X & Y will line up - generally the stuff you’re receiving as a landlord will be well behind the stuff you’re paying as a tenant, so you will need a good cash buffer to avoid getting into strife. Holding that cash on hand also has a cost.

Good luck.

Yeh lots to think about and work out.
Obviously something like 1900 in and 1600 out would be ideal to factor that stuff in.

If kids could drive from 15 would be fine to stay here! Or if decent public transport.
But its more than that. Eg its my family home i designed and built with my now ex wife and my new partner feels odd about being here.
Plus my new partner went through breast cancer treatment while here and was bed bound for months and so a fresh start, in a ‘ neutral ‘ place makes sense.

She totaly understand not selling it. Its an amazing asset and irreplaceable really.
But in saying that, if some rich dudes offered me a wheelbarrow of cash which set a new suburb record, id probably take it!

 

[Chief]

Only fans ?

You've seen that episode of Black Adder?

 

[Engimal v3]

Proposing to my partner in July over a 2 week holiday. Should I do it at the start of the holiday so we can celebrate, the end, or something inbetween?

 

[Chief]

Proposing to my partner in July over a 2 week holiday. Should I do it at the start of the holiday so we can celebrate, the end, or something inbetween?

Will ruin the hols if she says no!

 

[Engimal v3]

Will ruin the hols if she says no!

We're both very much on the same page about our future luckily. She's been sending me pictures of rings she likes leading up to the holiday haha

 

[MrsEddieBetts]

Proposing to my partner in July over a 2 week holiday. Should I do it at the start of the holiday so we can celebrate, the end, or something inbetween?

Where are you going? What sort of proposal do you have planned?

 

[Chief]

I was kidding of course. Get there, settle in for a couple of days, then do the necessary.

 

[Engimal v3]

Where are you going? What sort of proposal do you have planned?

Puglia, Italy. My first time overseas, so I'm very excited from that POV as well lol

I don't have anything extravagant planned, our goal is to have a very chilled out holiday by the Italian seaside.

 

[MrsEddieBetts]

Puglia, Italy. My first time overseas, so I'm very excited from that POV as well lol

I don't have anything extravagant planned, our goal is to have a very chilled out holiday by the Italian seaside.

ohhhhh you could do it literally anywhere at any time and it will be magical
I'd do it a couple of days in so you've gotten over the tireds. but can spend the rest of the trip celebrating (and getting free champagne and desserts)