Hi all,
I am a newbie i guess into the market. Here is my situation.I have booked an investment property off the plan to be completed around end of 2005. Currently I am renting but am looking to buy a home. My future plans also include starting a business in 2 yrs time.
My dilemma is what kind of a home would i go for now and how that would effect my investment property and later my business.
Considering i have a hypothetical figure of 80K to play with one of my friends suggested to buy an apartment($200K) and live in it for 2 years in order to save the money out of my 80K.After 2 years when i am ready to start my business then i will have more of my OWN money to put into the business. Then when i have done something useful in my business i can move out and make the apartment an investment property and buy a house then.
But i am thinking I should buy a house now. Put all the money i have in it till i am ready to start a business. When i am ready i might have some equity in the house and then i can borrow against my equity to put into my business. That way the interest on amout borrowed against equity would be tax-deductible(?).
I am seriously a bit confused and don’t know where to go with this one.
Any advice appreciated.
Thanx
You will have to get some knowledge through courses, getting a mentor, property mangement, talking to other investors, joining a real estate investing organization in your area and talking to them. you can also read some rich dad’s books. Rich dad is an awakening. It is not a how to book. You need more specialized knowledge. Read here on the forum and also I think you should gain the financial intelligence to play the REAL game of investing. R.D.P.D. cash flow 101 & 202 are a great place to start, but will NOT give you all the real life scenarios that you will go through
how to generate perpetual cash flows ?
http://www.unitoday.net/healthyjack/mystory_en.cfmHi Soum,
Thanks for your post and welcome to the forums.
I think you have a couple of issues to consider, namely…
1. Existing Investment
On what basis, and what expectation, did you purchase this property. I expect that it is for capital gains, but have you worked out how much you would like (as a budget), and then a plan for what will happen if it is under your expectation?
In working out your budget you could think about how much start up cash is needed for your potential business.
I write this to encourage you to come up with something rather than just relying on the market to deliver.
Following on, in a few years, do you plan on refinancing or selling to access any capital gains. There are advantages and disadvantages to both, but remember refinancing only allows access to a % (perhaps 80%) of the gain rather than the full amount. Having said that, if you sell you have to pay tax and sale costs.
2. Potential Business
It would be wise to start planning and budgeting now. Remember to allow extra as initial start up is one thing, but you may also need to fund the working capital prior to the business being cashflow positive.
3. Home
Be careful not to confuse an investing decision with a lifestyle decision. It seems you may want a home as a form of forced saving, and if this is the case there are better ways.
For example, you could set up some sort of savings account that has bonus interest and then siphon off your paycheque before it hits your bank account.
On the flip side, you may get capital appreciation which most likely will not be taxed (if it is your principal place of residence). But doing this means you have two pieces of r/e that both need growth to work.
Again, the confusion comes because you are trying to look at a home from a financial perspective. I’d avoid doing this.
In Summary
I’d encourage you to sit down and work out what you are trying to do in terms of how much cash do you need, why and when.
That way you know where you are now, you know where you want to get to and therefore you can identify the shortest and quickest path between those two points.
It might also pay to sit down with a professional financial adviser to chat your options through.
I hope this has helped.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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