Hi guys,
I’ve been a reader of these forums for a few months now, and I’ve been doing an absolute stack of reading on IP strategies, and investing in general, trying to kickstart my financial independence. Im also really glad that a forum like this exists, for aussies who have been there and done that to help out those starting out!
my situation:
moved out of home for the first time only 3 mths ago..with my girlfriend. Currently renting (cheaply) in the northern east suburbs in melbourne(south morang). Very happy to be living the out of home adventure, but keen to be getting into investment real estate.
We have not yet saved a deposit, but are both working full time, net combined income approx 75k~
We are both soon to be working in the city, and would like to live closer to work (inner city, apt etc) but i am NOT keen to buy in thi s area, as i dont feel that we can afford anything that will show growth or be a worthy investment.
My basic plan is – save a deposit, while renting, to afford a home for mid 200’s, i dont think finance should be an issue with our incomes. Buy a newer house in a newer estate, either up north here or south east maybe, berwick etc. Rent this out, and use negative gearing to pay for most of the difference in the mortgage.
Move into city apartment at docklands or similar and rent there while paying off suburbs IP, till we have sufficient growth equity/cashflow to buy another.I know this forum is all about +CF property investing, but i think that a negatively geared strategy suits our busy lifestyles, and the newer home has the bonus of the depreciation tax deduction..from what i’ve read anyway.
We are currently both driving about an hr each way to work from where we live, so the higher rent of an apartment in town should be negated by the petrol/parking savings, and although i havent fully worked out the sums, im pretty sure the rent income + tax benefit should cover most of an affordable mortgage..assuming we buy the right property.
If anyone has any tips or further advice, or if this seems flawed please shoot it full of holes, i’ve been reading John Fitzgeralds “7 steps to wealth” which has me pretty convinced a negative geared, buy & hold strategy would suit us best. The only part im unsure on is if buying new is worthy, or buying cheaper still and older might be better off.
Btw – both in our 20’s, no plans for kids etc for the next few years at least!
thanks guys!!
Matt
Hi Matt,
It is importantr when you get started that you keep in mind that therte are two things you need to be able to keep moving forward, in terms of investing, those being equity and income. You already have a reasonable income, but little equity, so you first step should be to remedy this. You are unlikely to make great gains in equity by purchasing an existing property and doing little or nothing to it, given the current market. I would suggest a strategy that includes renovation or small development would get you moving more rapidly.
Regards
Alistair PerryOh how I wish I had been as smart as you are when I was in my early 20’s!!
You doing v well at this stage, just planning your investment. A lot of people don’t get around to it till later in their life.(I am one of them)
There is absolutely NO DOUBT you will do well in the long term.I am not a big fan of losing money each year hoping that CG will help me out later on. (OK just before a boom)
I prefer a cosmetic reno, or a light development perhaps in these times.
Maybe you could find a large corner block somewhere that is able to be subdivided.?Best of luck – you are winners already! [biggrin]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Hi Matt,
Like you I am new at this but given that you are young and starting out you are already ahead.
I don’t know whether you have factored in the 1st home owners grant and I think you dont need to pay capital gain either up to a price ??? If neither you or your girlfriend have bought a property before you are both eligible I think (unless you have been together for longer than 21months) or something like that. I dont know how accurate my information is but if what I have been told is true then you could both purchase a property each but you would have to live in them – maybe look for a couple of units and live next door to each other. I think it equates to about a saving of $15,000 which is huge when starting out.
Please let me know if I am wrong anyone out there……
Hope this was of use
Julie [thumbsupanim]
Hi Matt,
After reading Steve’s books (if you have) I’m not sure how you could be in favour of a negatively geared buy and hold strategy, although we are not here to cast aspersions.
I would tend to agree with the first two post in regards to increasing your equity (or profit) in some way, although Julie makes a good point about using both of your FHOG’s.
We recently bought a house on a corner block in Adelaide’s northern suburbs for $102k which we are in the process of subdividing and hope to sell the resulting block for about $50k (approx $35k profit). I think this was a reasonably rare find and am sure that Melbourne prices are higher than Adelaide but I just want to get you thinking about your options.
Cheers
Mike
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