Hey all
Just finished reading 0-130, best reading I have in such a long time!My brother and I have just sold our only investment which allowed me to pay off my PPOR, now I have 1.2M in equity.
I am 30 and my wife is pregnant with our first child (so excited). I really want to create CF+ investments so I don’t have to work as hard as my parents did which we never got to see…I am asking if anyone could help in which property investment tactic I should take which will make me rich.. Lol
How someone can help..
Thanks y’allKosta
Hi Kosta
Welcome to the forum.
Sounds like you’re in a great position to kick start a portfolio (in terms of equity anyway).
Finance structure is important here. You don’t want to use the entire value of your PPOR to secure your IPs.
Instead, you can set-up a loan against your PPOR which will act as the deposit/acquisition costs on your IPs (generally enough to cover 20% of the properties value). You would then set-up separate loans for the remaining 80%
Careful structuring and lender selection is important at the start – particularly if you’re looking to buy a few IPs.
Hope that helps.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Kosta,
Congrats on the first bud on your family tree.
For me it would appear as if the 'equity' is burning a hole in your pocket and reading Steve's first book is a little like pouring petrol on the fire. Key issue for you to remember is you are only 30 and you do have time on your side so decisions do not have to be made in haste.
I would add that the world has changed a fair bit since Steve wrote his first book and times are different.
Was reading an article in BRW Dec, 2011 edition yesterday and they note that property investors will have to be more actively involved in their property investing than they were 10 years ago. Many mum and dad type people made great gains more by accident than design and some of the simple buy and hold type deals will not provide the same returns over the next five/ten years. In essence BRW were advocating a value adding type approach along with selection of property alongside major developments where jump up in values were more likely with development progressing.
First thing to do is read a few other books so you get a more balanced point of view – Lomas, Yardney, Somers, Spann all wrote decent property books which you may find of use.
Second thing to do is to start to identify people you can work with and rely upon to help you along the way. Brokers, accoutants, solicitors that sort of thing. Taking advice from friends and family can be risky unless they too are successful proeprty investors.
Third thing is to set yourself some sort of long term goal – this may be a little foggy at the moment but it will become clearer as you read more widely and start recognising strategies that are more suited to you and your situation.
And finally start small – get your head around the ins and outs of property investing through practical experience rather than book learning. By starting small you minimise the chance of expensive mistakes and your learnign journey will begin.
All the best with it.
I feel like doing the Dr Evil pose for you .. and going .. A MILLION DOLLARS !
Actually the whole Austin Powers first movie travelling back and forth in time gives you a good idea of what your first problem is. And thats thinking that in the early 21st century a million dollars is a lot. Its a substantial amount but its no longer a lot.
Two bits you didnt fill in that are actually extremely important. Your income .. and your liabilities. That would give an idea of what you are currently capable of. Having an equity loaded asset is fabulous, but the income stream you have minus your liabilities is your actual borrowing power.
My assessment sight unseen on those remaining details would be to look at a couple of IPs that you can use to produce near to immediate cashflow. That will probably mean you are looking at a CF+ proposition. Or a couple of them.
Your current weakness is a single entity that you are reliant on for equity. As such .. try to only borrow up to 65-70%. This allows for a fall in prices by up to 30% without the banks invoking a call on your assets. That recommendation is only for your own safety in these troubled times.
Hi guys thanks for taking the time to reply!!! You guys are great and very wise!!
My wife is on 70k and I’m on 50k. We have no liabilities except for credit cards combined 10k. And really no cash in hand. So I’m thinking whether or not to take out the whole amount to loan. Do know really what to do cause I am really keen to invest and keep investing.I was thinking of starting small but hopefully start buying a few each year with hope to get into property development.
Sounds easy doesn’t it? Lol. But would to hear ur thoughts.Thanking you in advance
KostaHi Kosta,
welcome to the forum : )
1.2 Million at age 30 is way ahead of many people already, congrat !
there is a option you can invest to have healthy cashflow position constantly.
you can put 1.2 million in the bank at interest rate 6%, you can have healthy can safety cashflow about 72,000 per year. which mean one of you don't have to work full time already.
Or
Keep working and purchase a few properties borrow against your 1.2m equity,
it's really depend how long you really want to stay in the workforce.
scha9799 wrote:Hi Kosta,
welcome to the forum : )
1.2 Million at age 30 is way ahead of many people already, congrat !
there is a option you can invest to have healthy cashflow position constantly.
you can put 1.2 million in the bank at interest rate 6%, you can have healthy can safety cashflow about 72,000 per year. which mean one of you don't have to work full time already.
Putting money in the bank and living off interest is not a strategy that anyone I know would suggest. Inflation will erode the buying power of your interest and you will have to go back to the workforce pretty shortly.
Investing in assets that grow in value at a rate higher than inflation is the only way to either grow or conserve your wealth. If you put the money in the bank and withdraw the interest each year then you will not achieve this goal.
cheers,
Lukescha9799 wrote:you can put 1.2 million in the bank at interest rate 6%,
First part of this post would only apply if it were cash and not equity.
patcon wrote:Hi guys thanks for taking the time to reply!!! You guys are great and very wise!! My wife is on 70k and I'm on 50k. We have no liabilities except for credit cards combined 10k. And really no cash in hand. So I'm thinking whether or not to take out the whole amount to loan. Do know really what to do cause I am really keen to invest and keep investing. I was thinking of starting small but hopefully start buying a few each year with hope to get into property development. Sounds easy doesn't it? Lol. But would to hear ur thoughts. Thanking you in advance KostaHi Kosta
Even though you have $1.2 million in equity – you still need to prove that you can service the debt before any lender will release it. There's also a big difference between actual equity (your $1.2 million) and useable equity (the amount a lender will allow you to access).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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