Jamie Moore wrote:

Property investing isn’t a race, another opportunity will pop up when you’re ready to purchase the next one.

Superb advice here. Property investing is as much about strategy as it is having the means to action it.

Researching areas for their growth / yields and speaking with real estate agents, looking and monitoring prices/rents on the ground  you want to buy etc are extremely important to ensuring if you buy a “dud” on your 1st IP it can leave you chasing for a few years before you can then again re-invest with is why >90% of property investors in Australia never get past TWO INVESTMENTS as they dont see the results and lose passion.

Your first investment should be the “springboard” into your next IP (meaning you shouldn’t have to load up your cash savings again) and so forth with good capital growth and rental yield you leverage off #1 IP to buy #2. With the growth comes a higher rent return and then it’s a no brainer from there.

Good luck, L_S

• This reply was modified 10 years, 7 months ago by  Little_Stone.

mr_dude_guy wrote:

if a property, has gone up in value by say, 120k, i take it i can use that equity as a deposit on another place.

Let’s not complicate this. You can borrow safely upto 80% of your property value.

>81% and over will incur Lenders Mortgage Insurance. Some banks allow 90% but again you pay LMI on that 10%.

i.e. Your house is now worth $500,000 and your debt is $300,000.

$500,000 x 0.8 = $400,000 minus your debt leaves you with $100,000 of equity to use safely.

Hope this helps.

L_S

Hi Dangermouse9,

Looking at it from here, it has $46,000 of use-able equity in it. ($420,000 x 0.8 minus the debt = $46,000). Have you looked into the other use-able equity in your other 3 IP’s..?

Your repayments would go up ofcourse on the mortgage but with your managing agent, is rent going up in price relevant to the growth in the area? This may assist in curbing the difference in negative gearing.

Thirdly, have you researched other areas to invest in for your next IP. Central Coast is a lovely place to live but not high on the investment list of “where to buy” so if you did sell it, the proceeds should be about getting towards that 10 year goal as apposed to buying for later life PPOR.

Richard Taylor wrote:

There are a lot better areas to dip your toe into for a buy and hold strategy.

Always interested in where these areas are of yours Richard. :)

Hi Mandy,

Benny is definitely put it in the right context.

My questions are, by what age (how long to go) do you want to enjoy the spoils of your IP’s and what is the $$$ figure you need them to produce?

By this you/your advisors can work out if you have time to reinvest into a new property cycle if you maybe need to look at other investing strategies if there is not enough years to come.

Also, I assume you’re counting on growth of these areas to get you through? Is there infrastructure or some sizeable change to make these properties increase in value..?

Hope to hear from you,

L_S

Hard question to answer directly. I think Jacqui has depicted it quite fairly.

Goals, Strategy and then Apply from there. If it’s wealth you’re after then there’s on strategy, if it’s to set up a comfortable retirement there is another all together.

I think Scenario #3 would be my pick and when investing use a 20% deposit, pay the fees involved but research is the key here. Must pick the right area so as to not cripple opportunities in the future.

Shank, what was the reason behind selling it..? To buy IP, to buy a new PPOR..?

There are much more experienced forum members, Jamie being one of them as well as Richard Taylor.

However, if your property has grown by $50k (give or take) over 2 years (5% p.a.) is not terrible, but with the area is it maintainable. I've read previously Jamie referring to using an offset feature on the loan if turning a PPOR into an IP to assist in claiming the full benefit of tax deductions. I have to say i havent commented as much as i have read and Jamie's website/blogs are definitley ones to read.

For what you'd lose selling it in costs, my two cents would be to maintain owning it and get it tenanted and at this stage (check local vacany rates in similar properties), your at 85.53% LVR so there is not point trying to take equity out of it upto 90% at the risk of paying LMI so if you were able to continue with the growth and manage the negative gearing and rented a PPOR elsewhere you could grow this property and use it to leverage an IP or perhaps a LOC for a new PPOR somewhere else after a year or two.

Hope this may create some discussion from the more experienced members of this website.

Hi Dave,

Benny is completely right in the fact you are very well set up to proceed into nearly any market, property, shares etc.

The question i have is, what is your strategy/reason/purpose towards investing in property? (wealth or early retirement or a hobby to renovate houses) and with this goal when do you want to achieve it (years)..?

Agree further with Benny re: PPOR nearly being paid off and seeking financial advice.

Any reason you like Perth? Have you done some research to find the goals/growth you need to make these subdivisions or multi units worth while instead of buying a few units and houses in areas with better growth potential..?

Cheers.