Hi,
I would really appreciate the views of mustaschians on my dilemma. Everyone else's situation always seems so clear but when its your own, I find it hard to get perspective.
I work in one part of the country 4 days a week and stay with my folks. The other 3 days per week, I am based with my partner of 6 years at the other end of the country. He cannot move to live with me yet as his child lives with us 50% of the time. He lives in a rural area where salaries are low and jobs in my field are scarce. I am a part owner of a successful business that is fast growing, has received investment and is really starting to scale giving me terrific experience. I love it. In other words, I need to work in one part of the country and he needs to live in another for now.
Expenses[/u]
My current expenses are low as in effect I live in my parents house 4 days a week and my partners house 3 days a week :
'Rent' : total 400 mth
Transport : Work pays my commute so thankfully so I just pay for local public transport to get to work 100 / mth
Food : 250 mth (I'm vegetarian so this could be lowered but I often buy food for the homes I stay in as a gesture)
Entertainment : 200 mth (purely socialising with friends). Its difficult to avoid this one as I don't have a home to entertain in M-T where most of my friends are
Personal : e.g. clothes, toiletries, gifts etc 60 / mth
Mortgage + property related expenses e.g. insurance : 2500 / mth of which my tenants (see below) pay 1700 / mth so I make up the shortfall of 800 / mth
Total monthly expenses = 1810
Liabilities
Car : Zero - I drive an old car that is paid off. We are considering getting rid of it which would save us 700 p.a in tax, ins, etc plus low petrol costs.
Cable : zero - we are on free view only
Phone : zero - work pays for my mobile phone
Liability : mortgage of 460K (total on 3 rental properties). I am on a tracker mortgage which are not given out any more. It tracks the European Central Bank rate plus 0.75% so is at a very low rate of 0.95%.
Total monthly liability : 800 (already included in monthly expenses)
Assets (note major economic crash in Europe has devalued property by one third to one half. Long-term prospects of recovery are slow) :
Rental house 1 - purchased 85K, current value 150K. Monthly rental income 750
Rental house 2 - purchased 145K, no mortgage. Monthly rental income was 550 / mth but I have this house for sale now to reduce my mortgage and as the yield in not great (hence I need to make up the mortgage shortfall (see above) more than usual at the moment. The house is in a beach location so I would expect a sale before Summer. I have to put 50% of any sale proceeds against the mortgage as the separation agreement with my ex-husband requires.
Rental apartment 3 - purchased 375K (yes !), current value 200K (yes !), rental income 1000 / mth
Total assets : 495K value less mortgage 460K = 35K
Salary : 4000 / mth net - of which at least 50% is free to save / invest each month
Savings : 40K cash in bank
Pension : 100K (plus work pay 1K p/m into my pension)
Age : 45
Goals : We plan to move to my area of work fulltime in 5 years so would like a house of our own to live in there. It would also be great if I didn't have to live with my folks 4 days a week for the next 5 years so I could live in it from now and perhaps take in a lodger ? If really necessary, I could stay with my folks who are happy with our arrangement. My rental properties are in different locations so would not be suitable as our future home. A secondary goal would be to achieve financial independence, however I am not counting down the days to retirement as I love what I do for a living.
Question : How can I buy another property as my home without incurring significantly more mortgage and yet maintain some investment vehicle for the future ? I am prepared to sell anything to achieve this, yet would like the security of having even one rental property for the future. My low tracker rate will not last forever and any new mortgages would not quality for it.
I welcome any other observations about my financial situation. Thank-you.
