‘Accidental’ investor – next step advice requested.

Hello all,

We have just moved to Melbourne from the UK, where we have kept a property and is currently let – that property allowed us to draw down on it's equity and still cover itself with the rental monies.

So, we are hoping to expand on our portfolio in Australia, but also need somewhere to live.

We have $70k for a deposit, plus we can get another $70k from some UK savings plans we have.

I am working and earn a decent wage, but a lot of it is taken up with rent on our current place, Emma has yet to find work ( it's early days – we have only been here one month ). She will also likely earn an above average salary.

As we cannot yet borrow any money, as I am on 'probation period' and we don't have any extra income left to finance a mortgage, we have been thinking of what our best strategy would be in order to secure some land or proprerty as soon as possible. Obviously, as soon as Emma is working, we will have a whole extra income to utilise.

At the moment, we thought we would buy a piece of land on a new release estate. We have found some nice blocks that are not titled until next September. So, we can grab one of those with only a 10% deposit ( block is around $180k ), and not have to finance the remainder until next year. We would use part of our deposit for the 10%, then the rest as a lump sum payment in September to reduce the need for a large mortgage on it.

Then when Emma starts work,hopefully in the new year, we will look to buy a house in one of the less popular suburbs for around $270k to hope to rent out and make a good capital gain on. We would use the other $70k from the UK as a deposit and rent the place out until our tenancy here finishes next October. We would then move into it, borrow an additional $300k to build on the land and then move into the house that we build and rent the $270k house out.

That way, we can grab the land now before it goes up in price, build when we are ready and still afford a moderate investment house. Also, we will not have borrowed to capacity to do it and will have no more than 80% loan to value on either Australian property ( 65% on the UK house ).

We have not thought further down the line than this yet. Any comments on our plan would be greatly appreciated, as would any tips on where to go from there.

We think it is a good idea as it is not too risky, we get to build a house that we want to live in, and we get an investment property, plus the UK one we already have.

But, I read an article tonght from an investor that wouldnt go anywhere near land on new estates as an investment. Primarily, this land will be for us to live on – but if circumstances change within the next twelve months, it would be nice to know that we can sell on and at least not make a loss.

Any comments would be greatly appreciated.

Thanks,

Tony.