Hi mwb,

  Thanks for the extra info – it all helps…..   Here's a few thoughts and opinions (I am not any kind of "adviser", so do check things out with your advisers – accountant, broker, etc).

  1.  There is $10k of "lazy money" in that Offset Account (and growing, as that P&I loan gets paid down….)   Perhaps look to see if you can open another OA against one of the other loans for maximum effect.  

  With all Interest on the $70k loan being Offset, your current P&I payments should ALL be coming off the Principal – but DO check this, as I have heard some lenders don't allow "100% Offset", meaning that your extra Offset $$ are going to waste.

  2.  Have you arranged Depreciation Schedules for both IP's?  If not, there is some serious money going begging, especially with you on that high wage (with a high Marginal Tax Rate).

  3.  What are your goals for the next few years?  Are you primarily looking for more -ve geared property (and Capital Growth), or is it time to add some +ve geared IP's to the portfolio? 

  4.  Is either property "ripe" for any kind of value add that could lead to a rental increase?   e.g. add a new kitchen, carport, etc.

  5.  How are Perth and Townsville shaping up for future growth?  Are you happy with both IP's?

  How's that for starters?   I hope others who ARE advisers can put me right if I have said something incorrect (I'm here to learn too…. )

Benny

Hi Ramki,

  I find that question a little difficult to answer without knowing more about your requirements.  e.g. "top 5" in what context?   Sounds like Capital Growth, but over what timeframe?   

  e.g.  If I quoted a market that could double within 3 years, but there might be another that could triple in 5 years, which one is best for you?   

  Also, what demographics are you chasing e.g. families, older couples, young progressives – wanting apartments, houses, townhouses, etc.  Please post a little more around what attributes would you see in a  "top 5" suburb,

Benny

Hi Paul and Marn,

   Congratulations – I don't know much about leasehold (is it in Canberra?) but the other numbers all look pretty good to me.   Bonus that your skills as a chef can add even more value.

   A bold move, for sure – but then, "people businesses" can do very well if the owners like meeting people.  The attitude shows, and the goodwill follows.  

   Oh, and congratulations on your first post too (but it seems you have been reading on here before eh?   Anyway, we hope you stick around, tell us how it goes, and share your "wins" and your trials – we can all do with learning from others who do different things.   Good luck with the big shift – I'm sure you will do well….

Benny

Hi Darryl,

  Congratulations !!   What an inspiring achievement, especially for anyone else who doesn't earn a huge salary.  My hat is off to you.

  I'll have to go seek out the mag for myself, so I can read up on how you did this.

Benny

Hi Ramki,

  Welcome aboard !!   The phrase you mentioned was unknown to me (though the wording indicated what it might mean).   So I went Googling!!

  Go here for explanation :-

http://www.brisbane.qld.gov.au/community/community-safety/disasters-and-emergencies/types-of-disasters/flooding/understanding-your-flood-risk/types-of-flooding/index.htm

  Since it is BCC's own site, I think the content can be trusted,

Benny

Hi mwb,

  And congrats on your first post….      I agree about the site too – there are some absolute gems sprinkled throughout (posts and people!!).

  Re your situation, why not tell us a bit more about the other side of things (e.g. incomes, costs, locations, etc) so that the good folk on here can give you the benefit of their knowledge.   The more you can share, the more thoughts can come back to you re "how to better the scenario".  

  Right now, I'm stuck, but congrats too for being one of a few percent of people who are actually property investors.

Benny

Hi Kurtuk,

  Good work !!   I think a valuation will add a bit more certainty to your current situation. 

 A quick Google told me a little about Eatons Hill –

 http://www.realestate.com.au/neighbourhoods/eatons%20hill-4037-qld

  I was particularly interested by the number of "buyers looking" in that suburb.  Sounds to be a bit sought-after – which can only be good news for your valuation.  Note the rental return is less than 5%.

  Also, re Deception Bay, your earlier words, plus a Google :-

http://www.realestate.com.au/neighbourhoods/deception%20bay-4508-qld

  …tell me it appears to be of similar demography to my area on the South side (Logan City – esp Kingston, Woodridge, Marsden, etc).   Houses/units were over-developed in the early 1990's which led to prices stalling for many years until early 2000's.   Then whoompah – they all shot through the roof, primarily because of the better rent returns (I know several investors who cleaned up by buying in these parts back then).  

  Note the gross rent return in Deception Bay compared to Eatons Hill…  more chance of being cash-flow positive – but then, a higher return often comes with higher risk, so one to consider…..    Gross return is yearly rent divided by cost as a percentage, so:-

   Deception Bay = 310 x 52 / 285k = 5.6%   vs   Eatons Hill = 4.3%

  That gross return is a "place to start" when evaluating how well a property might do when first looking.  Of course it is a simplistic go/nogo method of sifting through chaff to find the wheat, and not much more than that.   Similar to Steve's old 7 second rule, it is easier to call a year 50 weeks – so simply halve the rent per week and multiply by 1000.  e.g. 310/2 =155 x 1000 = 155,000.    This comes to just over half the cost of the house, so just over a 5% return.  Steve would look for a 10% return back when he was starting, thus looking for the 7 second rule to bring a number equal to the cost of the place.  

  This worked well in some areas (e.g. Kingston, Woodridge) in the late 1990s and early 2000s.  Investors could buy in for $75k (or less) but get better than $150 a week rent.   My first purchases back then (in Redlands, Logan) were around 8 – 10% without having to look very far.   Will those times come again?   I'm sure they can/do in some areas, at some point if the property cycle.   Watch for it…..

  Good luck with the val, 

Benny

Hi again,

  Yes there are….

  You may not like some/all/any, but here are a few thoughts that might guide you in one way or another.  I’ll summarise each, but if one particular option seems to sing your song, then jump back in to ask for more info re that one, OK?

First though, in what area is your PPR (in case others can add a comment re the location)?   Can you find what similar properties are selling for there (e.g. via RE agents, websites, media articles, homepriceguide.com.au, your bank, etc).   This should have you finding a “value range” in which your place sits right now.  Many variables will affect this, including location, land size, condition, # of rooms, garaging, etc.

Next, did your master bathroom really NEED an upgrade, or was it to suit your wishes?  If the former, then it is likely an older home in a settled area, and the upgrade would hopefully have added $20k+ to the value.  Kitchens and bathrooms are the major “put-offs” to many buyers – so your purchase price maybe allowed for “spending on the bathroom”, thus was under market value at the time. 

Could it be that your place today is really worth between $560k and $590k?   If so, that changes the whole dynamics of your situation. 

But  let’s take a look at some other options:-

1.  Cross-coll – always an option, but can be a b*tch to unwind later…  And if your home value is really nearer $540k, there is little advantage in considering it anyway.  Others first eh?

2.  Find data that supports a higher value for your place now – e.g. the upgraded bathroom, any recent comparables (similar houses sold in your area and their prices), completed works (or plans) from Council that may indicate a lift in local values overall.   Talk to your bank re getting a valuation for finance (and tell them what you wish to do).   They will likely talk cross-coll (of course) and will maybe suggest a “bank valuation” for purpose of releasing equity in existing.  Don’t sign up with them yet, but bring the results back so that some of the great people here can add even more up-to-date answers.

  BTW, I do agree with those who have said “You don’t have enough Equity right now”.  If too skinny, you would be creating a rod for your own back.  BUT, if a bank val comes in at $570k or higher, that could shed a whole new light on the situation. 

4.  Research the idea of moving out of existing, but keeping it as a rental.  Then rent somewhere else for yourselves.  This then opens doors to assistance from a rental income, depreciation, tax concessions, etc.   This can improve your Servicability out of sight (you say it is already good now).   But then LVR (equity) is your current sticking point, not DSR (serviceability) – so can you add value to your PPR right now ?  Pretty up the place – ahead of a bank valuation….   Does it need a paint?   A small (few thousand) investment in appearance can add tens of thousands in perceived value !!

5.  Whatever else happens, KEEP ON reading and learning.  Buy some good books too (I prefer books, as they are easily portable, and you can scribble on each page, highlighting important bits).  

There will be an answer – and it will show itself to you, so long as you keep looking for it !!   Do get back to us with any further thoughts/questions, etc.

Benny

Hi Jade,

  I haven't ordered one in a few years now, but I recall $500 being about "the norm" back then (about 7 years ago).  A quick Google held a (possibly) pleasant surprise though – Google corpred.     Or maybe someone else on here already knows of them…..  

  I must admit my initial reaction was to think "Why are their reports so cheap?"   But their website provided the answer……  

Benny