Hi all,
thank God you are here
What would you do if you had about 160K cash and no debts. average income about 80k gross per year with "secure casual work".
I am in Melbourne but open to other states/markets…
What strategy would you undertake?
Thanks in advance…
AndyWhat are you trying to achieve and when do you want to have achieved it. Stuart Wemyss has a new book out The Property Puzzle which sets out and compares different investing strategies. http://www.prosolution.com.au/books/ppuzzle.htm
Well worth having a look at.
Then are you a passive investor or do you want to be hands on
I would be more a passive investor as I am not into renavating plus I do not have time for it.
I would like to achieve a passive income…timeframe 5/8 yearsI would be more a passive investor as I am not into renavating plus I do not have time for it.
I would like to achieve a passive income…timeframe 5/8 years.
Thanks for your help
AndyDo you own a home or are you renting?
I would probably buy a cheapish home (if you haven't got one), and then reborrow the money to invest.
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Buying a cheap home? As in a unit or a house up in the country? What you mean reborrow to invest, you mean buy the house outright and borrow off the equity? By the way I do not own any dwelling…
CheersAre you worried about risk? Why have you just saved 160K and not got it working for you? I'd be buying my own home (unless you live rent free with family or something). I would look for a comfortable cheap home, so not to borrow too much more on my ppor. Then I'd borrow more to buy investments. That's an easy one!
Well I just saved and saved and kept my money in high yielding bank accounts like bankwest, ing, etccc.
In terms of living arrangements I live and share rent with my brother.
You see buying a house or even a unit in Melbourne is not a cheap affair unless you are ready to move to the country and commute for hours every day. We are still looking at an average of 450k per median 3 bdr house within 25-30kms from cbd. And even paying a 20% deposit down still leaves a huge chunk left at least $ 2-2.5k mortgage per month and in the case of my own place I would not get and return on investment (rent money) nor tax benefits at the end of the year…
Thanks for your suggestion…Saving 160k is very impressive! Congratulations!
Personally, if I were you, I would be buying 2 properties in growth areas – I love Frankston
using your savings as deposits but not all of it, just give 10% deposit – and then let the rent pay your mortgages. When the properties go up in value and you have more equity then borrow against and keep buying more properties.Great suggestion thank you Sophie! The only thing is I’m not sure how many properties’ rent could pay the mortgage by itself unless u put say a 50% deposit but in that case probablt all my savings would be gone and just for 1 property although I guess with tax at the end of the year could probably positively geared with some research and luck. I love frankston too I used to live there…
This is true, you may need to contribute toward the mortgage – I would rather do this than have cash flow positive or neutral, but all my eggs in one basket – the capital growth in 2 properties to me is more attractive than 1 property but not having to supplement the mortgage.
Have a look around.. I have just bought a unit – waiting to settle – and rented out I will only have to contribute approx $200 per month. I have put in less than $30k including stamp duty. I expect than another 2 years of growth plus approx $10k in renovations will see this property valued at $260+ not that I will sell
Look forward to hearing what you do!
Oh I realise I put what I expect the property to be worth but not what I paid which doesn’t help! I paid $195k
Now that sounds like a good plan Sophie, you see my plan is to make enough money to go and retire in Asia or central America by age of forty with a passive income of around 2k aud. With high yeld bank deposit this is not possible especially with the fact that any crisis could drop interest rate for investment deposit. I am 33 next month so not much time left… I need to get cracking now given that a real estate cycle is around 7 years…..
Chhers Andreaps
do u know of any group in Melbourne that actually meets up face to face to discuss property matters?Sorry I am not aware of any property groups but I am sure there would be some around, it might be an idea to ask on here
Are you familiar with Margaret Lomas at all? I find her a very inspirational intelligent woman who has built her career around property investment, she runs a company called Destiny Financial and they have offices all over the place specialising in property aquisition and building a property portfolio… I have an appointment to see them coming up.. will be interesting to see what they say.
Yes I’m quite familiar with Lomas I hv her software, read her book and saw her at a seminar, never been to one of her consultants though but I would be xtremely curious on how you went… Although I’m sure that property wise u are much more ahead than me.
Good luckAndy, have you thought about buying a PPOR and having your brother live with you and pay you rent? This way you would be eligible for the First home owners grant which you would not be entitled to if you bought an investment property. And depending on the type of property you bought you could, if you wanted to, rent another room to another tenant and then have them also contribute to your mortgage. if buying in Melbourne you would then be able to redraw on this equity to buy other properties. I have two investment properties and am in the process of settling on another property all of which are in regional areas. The capital gain is not what you will achieve in a major city, however, the fact that they are cashflow positive allows me to purchase more properties.
Sonya
That is a good point to rent it for a modest sum to my brother for cash. Not very happy to share with strangers though. My ultimate goal is to have passive income, any capital gain would be good only for the equity and or paying off other properties faster
With $160k, I would put 4 deposits on 3 new units / older house worth $300k each in high growth areas. Add in acquisition costs, that would use up about $120k of your $160k. You still have $40k buffer.
You can use the negative gear to offset your $80k income but I would make a conscious effort to eventually get them positive either by increasing equity etc. I think Melbourne has a lot of opportunity from new apartments which are about 10 – 15km from the CBD. I have been looking in Melbourne coz Sydney is relatively a lot more expensive. But I managed to buy 3 properties in Sydney over the last 6 months due to some good fortune with the banks, interest rates and research.
Try look at Melton South, especially houses with about 600sqm land and very close to the train station. You have the option to subdivide in the future, build another house on 300sqm and sell the original. That would cut your mortgage time by half. I think it’s going to be a hot spot.
Hi Madeinitaly,
I think its great you want to retire in around 7 yrs, but I think you will need a more aggressive strategy than some of these post suggest..
Have you thought of using 5% deposits, IO loans and LMI to help you leverage into multiple properties ?
With the cash and income you have you could leverage quickly into 4-5 property using the above tools..
Thanks AW, I was looking at Melton South last night and I ended up arguing with my partner about it….she reckons is too far out and is a dead end and according to her it would take ages for that area to pick up…mind you she is not interested in investing so I suppose I understand her negative attitude.
Putting a deposit for 4 units is a bit scary for a beginner investor like me but I do understand your point entirely.
You see whilst I have not purchased any property so far, I've read and studied the impossible about property but fear and procrastination has taken the better of me so far but I intend to beat it now.
Cheers
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