I have been checking out properties for a few years, and finally feel ready to buy something. I don't earn a lot of money but am a good saver.
I bought my first property years ago. Worked hard to pay the mortgage down and finally paid it off a few years ago while living/ working OS. I also bought another property (where a member of my family lived so not IP) and paid that off.
My goal was to be debt free… and now I realise I should have gotten advice before paying things off because now I am paying tax on the rent on the cash flow while still working OS and continuing to save hard. (no negative gearing benefits). I didn't understand the idea of good debt and bad debt. I have found a reluctance to receive advice from Australian based financial advisors while I am OS, but I have read heaps of proeprty books and tried to get my head around different investment strategies. I would love to get to an investment seminar but thats not an option, so by posting this, hopefuly I'll receive some responses that will give me some new ideas and enable to be clarify my goals.
I am now planning to buy another property in the next few months. I understand that some people feel now is not a good time to buy but I feel in my situation it would be beneficial to have some ‘good debt”.
Here are 2 options I have been thinking about and would appreciate any ideas or suggestions:
1. Buy another IP for around $450,000. Keep my savings in an offset account, then perhaps buy another IP in a year or so. I think this could be a way to build up my property portfolio steadily and without too much stress. Also balance the risk of buying a property when prices could fall by not stretching myself financially. (being my 3rd I P I would expect this to be a cash flow postive situation).
2. Add my cash savings to the biggest loan I can get and buy the most expensive property I can. While I am still living OS, rent it out and make extra payments into an offset account to build up an "emergency fund" with the longterm goal of perhaps living in this property when I return to Australia.
I hope I have explained this clearly, and thank you for any ideas about my situation.
Hi, well done. Exactly how it's done and you can look for the best property you can get for the amount that you've allocated. Have you considered that you can also leverage off your properties to buy shares? You get the same -ve gearing advantages and have potential to get a lot of capital gain.
Please understand that I'm not giving advice. You have to do your own calculations which you obviously have been doing.
Good luck,
KY
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