Hi, We have just finished reading “0 to 130 properties in 3.5 years”. Thankyou Steve! It was very informative and inspirational. However, we would like some opinions on where we should start. We own our property, outright. It is 50acres and has some sheds and a two bedroom house. We are considering building a bigger house (kit home) on the property, as we have “outgrown” the “cottage” and it will also add value to the property. What do you suggest? We figure that our options would be *SELL NOW, as it is, buy a cheaper property to live in and invest the rest into rental or WRAP properties, *Borrow on the equity we already have to invest in rental and/or WRAP properties, as well as for a kit home – which raises another question of Do we invest in the kit home first (to add valuation and free up the “cottage” so we can rent it out, or do we invest in rental or WRAP property first, to “start earning money from day 1”.
We would REALLY appreciate any advice that ANYONE may have.
Thankyou!
David and Lesleigh
Hi David,
Congratulations on wanting to create your own destiny – the challenge is for you to move from the ‘wanting’ to the ‘doing’ phase of your journey.
Asking questions is a good step and I would also recommend you do some additional reading to develop a more ’rounded’ picture of property investment as there are other ways to invest that may also prove to be as beneficial to you in the short and long term.
Wraps and other less ‘standard’ forms of investing do take additional learning to get your head around all of the requirements. As such it may be necessary to pursue some other additional avenues for completing your education.
Your next step (along the lines of the questions you have asked) is entirely for you to decide. I would recommend you both sit down separately and write down your short and long goals and then compare what you both want to achieve. If you have different goals then your chances of success are somewhat reduced.
You goals should explore what it is you want from your existing property – given it is 50 acres I am sure there are some ‘lifestyle’ considerations to be had that will really determine what you can/want/need to do. How much have you ‘outgrown’ your existing property? Is there further ‘outgrowth’ to be had? manage in the future? How long before you become ‘too old’ to manage 50 acres? Is this an issue?
If the decision is to remain where you are you will then need to explore how you can make it work for you. A bigger house may be in fact necessary for you to live with a degree of comfort – I subscribe to the theory that while investing and wealth creation is fine – you need to enjoy the day too – no point being the richest ‘scrooge’.
Do some research to determine what effect building a larger house will have on the value of your property. Consult local REA/valuers to get an idea before you committ to anything. Over capitalisation may hold you back for an inordinate amount of time.
Leveraging available equity off your existing property appeals most to me – this way you can (to a certain degree) have your cake and can eat it too. Be aware that most lenders will not lend to 80% of the value of your rural property so the ‘gold mine’ may not be as big as you think.
Hope this helps.
Derek
[email protected]David, 2004 isn’t 2003. Steve put that book out when it was pretty easy to find +CF (positive cash flow) property in big cities. You’ll find it more difficult to get +CF IPs these days.
I would suggest you look into improving the value of what you already have first. You may find council won’t let you put a second dwelling on your 50 acres unless it can be proven that it is to house a worker related to primary production on the property itself.
I’d recommend you sit down and work out what all your options are to improve your property’s value, talk to as many locals as possible who might know more than you, then go to council or a town planner with your ideas, and see what they say.
If you can get that second dwelling rented, that will be probably CF+, as the land content hasn’t cost you anything. With the extra passive income and addedf property value, you’ll have more equity to borrow against.
A lot of seasoned investors are just waiting and seeing with the property market at the moment, so don’t feel like you have to rush out there for fear of missing a great +CF opportunity.
I’ve been following a few bayside suburbs in Brisbane for the last 3 weeks, and one property in Wynnum was listed at $660k 2 weeks ago, and the owners will take $450k this weekend. The market has definitely softened. Another in the same street was listed at $525k, and didn’t get a bid at auction last weekend. The agent begged me to make an offer of $425k yesterday.
Bruce
Mooloolaba, QldHi Derek and Bruce,
Thank you both very much for your advice, it is greatly appreciated! We are happy to see that you have raised many of the questions and issues that we have been asking ourselves – assurance that we are hopefully on the “right track”.
We are both in our 30’s and realize that we have an opportunity that many people our age don’t have and that is that we don’t have a mortgage.Thanks again
David and Lesleigh [
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