Hi guys
I am new to investing and i am wanting to set up a portfolio to set me up for retirement
I have a mortgage and just purchased my first investment property.
Is it worth going to see someone like Margaret Lomas for advice on how to get my next property or should my accountant be able to advise me on how to set this up?
My goal is to buy 6-8 properties in the next 5 years.
It is not the number of properties that you buy that is important but rather the quality of what you buy. For instance in Australia it is important to buy properties for capital growth. If you buy a $400,000 property and one is increasing by 5% and the other by 10% and all you are intending to do is keep the property for 20 years the difference works out to by around $80,000 per year. This is what is important how do you make your money work more effectively. Personally I like to partner with people for development projects. You need to sit down and work out your short and long term objectives.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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Hi mick
Welcome the forum and congrats on purchasing your first IP.
Like Nigel above said – it's not about the number of properties. The properties are just a vehicle for reaching your goals.
I'd start by reading widely – check out books by a few different authors and get an idea of the different investment strategies.
Forums like this are also a good free resource.
In terms of professionals to contact – a decent broker will listen to your goals, run scenarios for you and structure your finances correctly. A good accountant will ensure that you're maximising your tax returns. If purchasing interstate, a buyers agent can assist with sourcing a good deal.
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]
This says it all from a previous article
https://www.propertyinvesting.com/strategies/negativegearing
There is nothing wrong with negative gearing however the deal has to stand on its own negative gearing should just be a side benefit. However if you are losing money on a property it is important that you make up for it with capital growth. The problem is that many so called experts tell you to buy house and land where there is little or no capital growth. My view is that unless you are looking at mining towns and that can be risky you should stick to inner city ares of our major cities.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
thanks James, appreciate the feedback and am trying to read as many magazines and books I can that are relevant.
I guess I am trying to 'copy' Margaret Lomas' strategy without having to spend the money to go and see one of her advisors.
I know it an cost a few thousand dollars to get good advice, but on saying that, I'm sure that there are advisors out there
that don't charge that much…I guess its all about networking and word of mouth.-one of the reasons why I joined this site.
saintmick wrote:I am new to investing and i am wanting to set up a portfolio to set me up for retirement
How do you see property 'setting you up for retirement?'
The answer to this question will help you determine what property investment strategy (ies) you should employ.
saintmick wrote:thanks James, appreciate the feedback and am trying to read as many magazines and books I can that are relevant.I guess I am trying to 'copy' Margaret Lomas' strategy without having to spend the money to go and see one of her advisors.
I know it an cost a few thousand dollars to get good advice, but on saying that, I'm sure that there are advisors out there
that don't charge that much…I guess its all about networking and word of mouth.-one of the reasons why I joined this site.
No worries at all.
If you have the time and motivation then there's no reason why you can't educate yourself. There's plenty of investors here who have never paid for property mentoring type advice and are quite successful.
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]
excellent article thank you…
thanks Nigel..good advice
I've been told if you buy within 10km of a major city you can't go wrong.
good question. I guess property will help fund our retirement.
I want to know how people buy 8-10 properties and make a living from them? Are they all positively geared?
saintmick wrote:good question. I guess property will help fund our retirement.I want to know how people buy 8-10 properties and make a living from them? Are they all positively geared?
Hi SM,
You still haven't answered the question – don't panic as many would be property investors haven't really thought this bit through.
Basically there are those who aim to live off excess/surplus rent. Typically these people will pursue a cashflow investment strategy.
Then there are those who will look at a sell down strategy to realise their profits. Typically these people will pursue a capital growth type strategy.
Having said all of that, property investing isn't quite cut and dried and there is a point of balance which differs from person to person.
With those thoughts in mind your later comment suggests you will be more cashflow focussed than growth focussed.
The follow-up question is how much do you want?
Let's assume you want a passive income of $100K/annum (before tax) then your 10 properties will need to deliver an average income of $10K/property – $200/week.
Note this figure has to be surplus to costs.
saintmick wrote:thanks Nigel..good adviceI've been told if you buy within 10km of a major city you can't go wrong.
Sure you can. If you bought a property within 10km of a major city that earned a low rental yield compared to the mortgage and you had to pay heaps out of your own pocket to prop the mortgage up, that would hinder your progress. More importantly, be very careful of buying into areas where there are a lot more of the same kind of property (eg an apartment in a building of 1000 more of the same kind of apartment). This can lead to you having way too much competition to attract tenants or buyers. That in turn leads to long vacancies (or taking ages to sell your property), and forced discounting to compete with other landlords (or vendors).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM good advice .
We are also looking in Geelong
Hi Mick
I have to say i couldn't disagree more with the Margaret Lomas recommended set up and loan structure but in saying that i am not a fan of cross collateralised loans.
Why give lenders that much control over your portfolio.
When they decide they don't want to led you any more money then 'here endith your investing',
I started building my portfolio in 1996 and certainly not every property was positively geared.
Structuring your lending correctly from day 1 will put you in the best position to go forward and acquire multiple properties.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks QLD007
Well this is what we are trying to get our head around, exactly what you are talking about.
We don't want to cross collaterise either but we are just trying to figure out what is the best approach. positive geared properties or a mixture of both.
How do you not cross collaterise your properties? can you go to any lender for finance and will they give it to you?
/
But
Hi Mick
That's the million dollar question and something i guess we do for a living.
Trust me your average Bank will have no idea and even if they did it is not in there interest to protect your position.
Most Bankers have cross collateralising your loans as part of their KPI performance indicators (Trust me i have been there and done that for a very short time when i arrived in Oz) and their bonuses are based on how much of your security they can tie up.
I built my portfolio on a mixture of both positive & negative but now thanks to good capital growth and us paying down the majority of our debt they are all very very much positively geared.
Drop me an email and i can send you an article i did on cross collateralising and the reasons why you don't want to go that route.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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