Great board here and what a fantastic way to learn.[
]I really need some advice. There’s so much information out there about what, where and how to buy an IP.
I’m a married professional in Melbourne with a LOC loan, with adequete equity to buy at least one IP now. I have a decent income so I can get max tax benefit.
I’ve attended sessions presented by Destiny (Margaret Lomas), John Hopkins Group and others who talk about buying off the plan or interstate (new or near-new property to get the dep allowances).
Then listen to Wakelin and others about buying established and / or buying something a little tired and renovating it to get a higher rent.
So far my thoughts are:
1. New prop will give good tax break and may be cost neutral or even cash flow pos.So help pay off the home mortgage faster. But risky because there’s so many apartments around even if it’s St.Kilda Rd or Port Melb – where’s the scarcity value with so many apartments? I’m worried about buying interstate b/c have no clue about wher to buy.
2. Established property is less risky but costs more b/c of lack of dep allowances and may need work to bring it up to a good rentable position.I suspect more chance of capital growth.
Interested in your thoughts and particulalry if anyone in my position has found a Professional in Melbourne who can truly help the decision making process and find the right property?
Anyone have any feedback on Destiny, John Hopkins Group or other?
Thanks,
SteveG’day Steve,
It seems to me that you have quite possibly answered your own question in regards to “buying new” or “buying old”……
It all comes down to the amount of risk that you are comfortable with. You have summerized it quite well in your “thoughts” 1 and 2.
Personally, my wife and I have 2 IPs so far (plus our PPOR)as part of our buy and hold strategy, both of which were built before the 1985 tax depreciation cut off point. We live in Melbourne, and both our IPs are in Melbourne too. We slapped on a coat of paint, changed the light switches and door knobs, and raised the rent. Easy.
We have a 2 year old daughter and another baby due next month, so for us for the next few years any way, our risk tollerance is fairly low. Hence our go slow, less risk plan we currently have.
Our plan is to buy another IP next year, quite probably built after 1985 to achive some depreciation benefits as per Margaret Lomas.
What is your risk tollerance ? Could you and your wife sleep at night if you went out tomorrow and bought 198 IPs and had a debt of $28 trillion zillion dollars ?
What are your goals ? From your brief description, your financial status does not appear to be too much worry for you currently, but where do you want to be financially in 5 years, in 10 years, in 20 years, etc ?
My suggestion is if you can answer the 2 questions of your ( and your wifes ) risk tollerance, and your goals, then you will be able to “work backwards” from there, and design an investment strategy accordingly.
Good luck !!
BDM
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