Hey we aren’t even new we are about to begin! We are debt free with spare cash of $1520 per month. We don’t have huge savings yet as we have spent the last 12mths paying off our mortgage but now we have this amount to play with. We live in Toowoomba, prices are soaring but the rental return is aroung 6 to 7%. Median house price for 4 b’room brick $170.000. Timber homes are around the $140 – 150,000 mark. Do we save the cash like Steve suggested or do we start with a property purchase. We have a home valued at 230,000 in this market. Neither or us is real comfortable with the complications of wraps and flips. We would be happy with positive cash flow rentals and plenty of them. How did you all get so savvy with these wraps and things? Help!
Kimkath61Hi.
We also live in Toowoomba, 12mths ago we bought our 1st investment property near$170,000, the rent doesn’t cover all the costs, hence we are looking at what is best now, to sell, or buy another cheaper to maybe cover all costs.between us i hope we find the right answer, as i think investment is the way to go, but done right.Hi, welcome to the forum and congratulations on paying off your mortgage!
Sounds like you have quite a few options so let me briefly outline a few and make some suggestions and then you can maybe let us know what your preferences are.
1. Your home is worth $230,000 and no debt – so the most aggressive option would be to borrow against your home to fund deposits for IPs. You should be able to borrow 80% comfortably (and no LMI to pay) – giving you say $180,000 to spend on property. If you target $100,000 properties (paying 20% deposit + purchase costs of say $5,000 = $25,000 per property) you would be able to buy around 7 IPs in a fairly short space of time, assuming they are all pos. cashflow and your lending capacity isnt exceeded due to lack of rental income. But I would not suggest this to you straight away, better that you start with 1 and go from there [
] Also, you may not be comfortable borrowing against your own home to invest without some more experience – whilst its a low risk, should things go bad its your home on the line. I use $100,000 homes as an example – prices sound higher in your area – what is the median price for 2 or 3 bed brick homes??2. The other option, then, is to save your $1,520 per month until you have saved the deposit for your first IP. Based on the above requirement of $25,000 this would take about 16 months – yes, a long time. You could start off with a lower deposit and borrow more for the first couple of properties. A 90% lend will only take you 8 months (half the time) to save the deposit.
3. Whatever you do, my tip is to firstly decide what to do with the $1,520 per month you can save (presumably this is what you have been paying off your mortgage up to now) as this tends to disappear without a specific plan! Start putting it into a separate account that will be for your property deposits, eg an ING Direct account.
4. I would suggest you start with a single property purchase! You will learn most from practical experience, and you have a place here that can answer any questions that come up. If fear starts to creep in, always ask yourself – what is the worst that can happen realistically? If you can’t get past that, then put another post here for us to help you through it.
You don’t need to understand wraps, flips, lease options etc. but before you invest make sure you understand positive cashflow property (sounds like you do) and ONLY buy an IP that meets this criteria. If you follow this one rule, then at least it will pay for itself and give you a buffer against interest rate rises etc…
Good luck
Tas [
]Hi, its wanabee in Toowoomba again, i read what Tasinvester replied, sounds good, we should talk some times to see how we are both going.
I’m just about to sign on the dotted line to buy a IP in QLD that will be Neg geared. I have a $100,000 plus job and I pay $35,000 Tax I’m trying to minimise tax and cash in on cap. growth. After watching Steve on today tonight last night I’m wondering if I’m doing the right thing. If I go for positive gearing, what do I do about paying tax? Do I just keep paying more and more tax but be content with more money in my pocket each week? HELP Please
Tassie Devil
That was a FANTASTIC reply, kimkath61 you asked for advice, short of seeking proper financial advice, listen to Tas. The only thing I would add is work out what your goals are, why are you investing and always make sure your investments get you closer to your goal.
pamurph
MONEY MONEY MONEY[
][][]MUST BE FUNNY IN A RICH WOMANS WORLD. SHOW ME THE MONEY[][][]MORE TAX MEANS MORE MONEY.
Having said that their are other ways of minimising tax other than negative gearing, it is called structuring. And welcome to the forum, just in time by the sounds of it.
Cheers
Leigh K[]Read, learn, grow but most of all do it.
] Also, you may not be comfortable borrowing against your own home to invest without some more experience – whilst its a low risk, should things go bad its your home on the line. I use $100,000 homes as an example – prices sound higher in your area – what is the median price for 2 or 3 bed brick homes??
]
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