hi everyone, this is my first time here and im very keen and interested in property investing. my question is im 23 years old and just brought my first house by myself in september last year. im currently in the process of doing it up and want to/ going to have in completted by september this year. id like to know peoples thought on what i should do next?
– Fix this place up and buy other one’s and keep doing this and make a profit to help reduce my loan
– Stay at this place and focus on putting us much cash onto the loan to be able to start investing?
anyones thought’s would be very greatful.
thank youHi Beggsy82
Well done for buying your first property at 23! You have a bright future indeed.
What you need to do now is set your investing goals. Start with working out what you want to achieve and why, then set goals that will help you to achieve it. Then, every action you take should be considered with the following question in mind: “Will this action take me closer to my goal or further away?”
Are you planning to sell your home once you’ve done the renovations? If not, perhaps the money put into renos could be better invested in property that is earning you an income. Delayed gratification if you like. Live in a house that is not as nice as you’d like it to be right now, and put your money into investing.
Food for thought, I hope it helps.
Good luck
Janethi janet ,
thanks for you advice. yer i was thinking that id sell this house and use the funds to buy my next one around the same price and use the profits to reduce my loan. i totally agree that i have to delay gratification iv just quite playing footy on saturdays and gone back to work to earn extra cash.
i tipping that to buy my first invesment property that im going to need some funds behind me to start, for a deposit. thats why im thinking il renovate to start to reduce my loan unless there’s a better way to do it?
am i better off paying of my loan then redrawing whativ paid off to use to invest?
thanks…Depending on your risk tolerance if you pay more off your home loan you can then cross colaterialise your next loan. What does this mean ?
Instead of trying to save another deposit you use the equity (after getting a valuation) in your home as the deposit in the next investment property.
The risk is if you can’t pay the first or second loan you can lose the first house as it is colaterial for the second house..and lose the second house as well.
This goes against Steve mcknights book though due to the risk involved.One advantage of paying down your current loan, then borrowing against the increased value of the property (as opposed to selling it to release the money) is that you won’t incur selling costs. So it’s worth factoring that into your calculations.
Do your numbers based on the 2 scenarios: Reno and sell current house then buy IP, or reno current house and redraw increased equity to fund deposit for IP.
If you end up going for option 2 (ie redraw equity from current property), make sure that you structure the loan for the IP correctly for tax deductability purposes. I would suggest that you don’t just redraw and thereby increase the existing loan. Put the redrawn funds into a separate loan account so that it is clear at tax time exactly how much interest you’ve paid on the IP.
Hope that makes sense.
Janet
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