Hi all,
I have recently been introduced to the board / community from a friend of mine. He was so right in that this site is a heap of info, all of it useful. I havent been in Melbourne/Australia very long but am now looking at maximising whatever I can to hopefully get into property investment.
This is where I wondered what other people would do given a scenario as follows:
You are renting a place which has a lease that runs until August 05. You have never owned a property in Australia and have full residency so are entitled to the Governments First Time Buyers Grant. You want to look at buying your own place at some point but also want to see about investing in property as well. The crunch of this is that you have approximately $120K to utilise on the following:
a: Buying your own place and living in it (believe you have to live in it to get the grant as you cannot get it if you rent the place out straight away)
b: Investing in some form of property along side where you would live.
What would others do if they were in this position??? I imagine people would still buy there own place but also use some of the money to invest in a property portfolio. Question is though, what sort of percentages do you look at for your own deposit etc and what for investment???
I reckon that $350K would be around the sum I would hope to pay for my own place. I would hope to secure a 3 bed place for this whereby I could get someone in for one of the spare rooms which then brings in some money.
From there its investment all the way.
Anybody have their opinions???? Just trying to grasp the best way to even think of proceeding.
Regards
IJ
Well, it’s just my opinion, but…. I’d buy my own place and an investment property.
Talk to a bank or broker about what deposit you need on the investment property (probably 20% – or you may be able to put the whole lot off your home and then use that as security for the investment porpoerty) and then put the rest into your own home as there are no tax breaks for the interst you pay on your own home, whereas you can claim the interest on your Investment Property as a tax deduction. Therefore, I’d always pay off the PPOR first and would most likely have an interest only loan on the investment property, at least until your own home is paid off.
I’d talk to a broker though explaining your goals ie: whether the investment porperty will be +Ve or -ve geared etc as this may affect the best way to set up your loans and how you pay deposits etc.
Good Luck
PKGreat idea. The problem with living by yourself is that you have nearly the same overheads as two people.I rented out a room to a person from work. It worked out very well till I got married.It was a very happy house hold. It worked well because we were both mature and respected each others privacy. John
John Groeneveld
PurpleKiss has it right. Depending on how much money you can finance with 20% deposits you could end up with 4 – 6 cashflow postive properties by the end of the year.
Only pay the minimum deposits you have to as PurpleKiss said all interest is tax deductable.easymoney
Originally posted by easymoney:Depending on how much money you can finance with 20% deposits you could end up with 4 – 6 cashflow postive properties by the end of the year.
easymoney,
Could you explain this theory in a little more detail? I imagine your plan would rely on some serious capital gains in order to purchase a PPOR @ $350k and 4 to 6 IPs (plus all associated expenses) with $120k?
What sort of gearing level would be required to make this work and what level of risk would be involved?
Cheers, F.[cowboy2]
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