I’ve started doing fly in fly out work as an Electrician which should be pretty continuous for the approximately 4 years I want to do it. This means I basically pay about $150 rent every 5 weeks and I don’t own a car nor have any interest in getting one anytime soon so my outgoings are very minimal. I should earn minimum 180k this financial year if not around 200 so I’m paying plenty of tax not that I plan on negative gearing. Allowing myself play money I can still bank 10 grand a month easily. I will have about 80 grand for a deposit by April next year. My goal is to work hard now and setup multiple investments over the next 4 years with the hope of being financially free by the time I’m 40 in 14 years. Sooner if possible. Looking around at the moment the closest thing I can find to being cash flow positive are 1 bedroom apartments in Brisbane city. For around the 350k mark they return around $500 a week. I figure with about 80k down it’s about break even and can look after itself. I’m not sure though whether units in the city are a good idea or not? If I was to get something like this would it be wise to try and pay down the first one or save up another 80k and get another unit or house somewhere else and just keep repeating that while they all pay themselves off. Do city units have much of a potential for capital gains? Any advice or tips are appreciated.
As you do not have a cash flow issue I would be looking for the best chance of capital growth rather the concentrate on cash flow properties. They are great and I love them but you need capital growth.It is possible to get both though. I don’t think a 1 bed in Brisbane is a good choice.
Do not pay down the first property. At the moment you have no non deductible debt but later you will want to buy a PPOR (principal Place of Residence) and if you pay down the investment loans you will need to borrow money to buy a home and not be able to deduct any of ot.
Get a loan with an offset account (NOT a redraw) and put extra money into that. Then you can withdraw it later and buy a home and still get the tax advantage.
You need to speak to a good broker to ensure your loans are set up correctly and plan for the future.Hi Bozzie
Welcome aboard.
Why are you restricting yourself to only CF+ properties?
Agree with the IO loan with offset set up as mentioned by catalyst above.
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 Bozzie
Not sure i would be diving in to buy a 1 bedroom unit in Brisbane City Unit at the moment due too the increased holding costs but you can certainly buy plenty of quality properties in other areas which will give you cash flow and potential capital growth.
On your income there is no reason why if your loan structure is set up correctly from day 1 you cannot increase your portfolio rapidly over time.
We have a number of clients in a similar position who have acquired a number of properties and built up a decent portfolio.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Would you mind elaborating on a client scenario that you mention in your post?
I’m an Aussie based in the UK and have a portfolio or properties in London but considering diversifying with some property back home.
Also, what do you consider to be rapid development. For me, starting out in London was difficult because of the high cost of entry into the market but I have found it’s very much a hockey-stick in terms of growth.
Thanks
Mike
Mike
Email MeHi Mike
Sure what do you need clarified.
Have a number of clients on a similar income to income and asset position to Bozzie who we have helped acquire 4/5 properties over an 18 month period.
I am originally from the UK but living in Brisbane and built up a portfolio of 40 unencumbered properties in a 10 year period giving a gross rental income of over $900,000 AUD per annum so it can be done.
Cheers
Yours in Finance
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This reply was modified 10 years, 1 month ago by
Richard Taylor.
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for coming back to me.
I’m not disputing in any way that it can be done. Just very interested in how you structure the deals and finance for such purchases?
Perhaps you could give the breakdown at a very high level of how you would do this?
I’ll give you an example of my most recent project to give you an idea of what I’m Looking for.
Clapham Common 1 Bedroom Flat – Renovation
– On The Market Value £285k
– Purchase Price £265 (motivated seller, retiring and disposing of portfolio)
– Renovation Mortgage requiring 25% deposit, with immediate remortgage on completion of works
– Renovation Cost £25k
– Total Money in deal £106k
(25% Deposit £66k)
(Purchasing Costs £15k (ouch – I know!))
(Renovation £25k)
– New Valuation Post Renovation £365k
– Refinance @ 75% LTV (£273k Mortgage)
– Cash out clear £76K
– Cash left in the deal £30kI’ve whipped through the numbers quickly off the top of my head. But essentially in 2 months I’ve created £60k of profit with a basic strategy of buying well, adding value and refinancing. Because the rents are so high in London this 1br flat creates £392 cashflow per month also. I can now recycle the majority of my initial deposit in another deal.
I’d like to do something similar to this in Australia :-)
Thanks
Mike
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Mike
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