Hi all i am wanting to get into prpoerty investing and after some advice, i have read one of Margaret Lomas books and found the info good, and seemed to make sense. My situation is as follows.
Own home Value $440,000 (Just Valued) Mortgage around 135,000 (line of Credit)
I have also just inherited a unit which is fully owned by myself and my sister value around $265,000
Both are Metro Melbourne, with the inhertited prpoerty my sister is also open to perhaps using this to purchase more prpoerty.
My question is i guess there are 2 roads we can take one being the M Lomas method of looking for CF+ or close to CF+ properties, or going for high capital growth.
Using our own home for leverage i would prefer CF+ property or close too CF+ as this means i don't have to dip into my own pocket too much. With the inherited property however because nothing is owed on this i guess we could go for growth since the rent on this prperty could offset any losses on a second property.
WHat do you all think about this strategy?
maybe its just me but I would be taking the CF+ road and would avoid any signifcant gearing against my PPOR……I doubt you will be looking at a high capital growth environment for quite a while now.
Using the inherited place you could easily borrow into another place for a small contribution from you both and possibly have a nicely balanced holding position on two properties without putting your PPOR into the mix
You are in a very good position , we are at the peak of a bubble period and I would hate to see you leverage away your advantage.
On the other hand if you want to go for it you are welcome to my IP's in Melbourne
just send me a note I guess i maybe old fashioned but i have always adopted a combination strategy of both.
When i started purchasing IP's some 10 years ago i decided to wrap many of them and then used the surplus cash flow to pay down debt on my properties I purchased for Capital Growth.
Now even the CG properties are of course cash flow positive and my debt gearing level is extremely low.
Just be careful in adopting Margaret Lomas finance ideals about having 1 big Line of Credit over all of your properties as you will experience consider problems down the track in uncrossing the securities and also a Line of credit is not a recommend loan structure for an IP or indeed a PPOR loan. Certainly it has a home but make sure your mortgage broker structures the loan correctly for you from the start.
Richard Taylor | Australia's leading private lender
Yo CB57
Richard can be a grumpy bugger .. BUT .. he is generally right on the money (though ya might find interesting arguments between Richard and Marc on occasion about Xcollats etc) … Richard and many others appear to focus on paying down debt whenever possible and minimising costs wherever practicable. A good thing, particularly in the prevailing climate.
The jury is always out on finance structures and the best way to go about it … however, Marg also does focus strongly on the research et al – and not withstanding the finance bits 'n pieces (always important) .. the research, the figures and your personal circumstances and risk tolerance will, and should be, at the heart of your decision making.
Jan Somers also talks about folk 'doin dopey stuff' (this is my 'translation' .. additions, sink money in IPs for no reason 'cause buy and hold can be bloody boring) … but there is also a focus on reducing debt in the lulls where you've reached your (personally comfortable) LVR & DSR .. and it be a good thing.
Steve McK talks about a lot of stuff readily possible at a cyclic point .. and he did very very well at it .. right now (I reckon even Steve would say) his approach (and exquisite timing) would now be like watchin a snail slither over a razor blade. One could do it .. but one slip could be severe.
Richard, Marc and others will see you rightin amongst the 'static' .. how many doesn't matter, nor does when .. what matters is having your own strategy, continue the readin and asking questions .. and maintain your own piece of mind in focussing on your goals – and those for your family.
Be well .. have fun … and mitigate any risks
(this is where, generally, Richard says he doesn't understand I word I say
.. but have a dialogue with him … he and a few others are among the more informed, among the fruitbats, you'll find on these sites )R
chrisb57 wrote:I have also just inherited a unit which is fully owned by myself and my sister value around $265,000Both are Metro Melbourne, with the inhertited prpoerty my sister is also open to perhaps using this to purchase more prpoerty.
Hi Chris
One thing to be aware of is what stages of life yourself and your sister are at and what might change in the future.
Check the tax implications but you might be better off in the long term selling the inherited property and doing your own individual investing going forward. That way you determine your future and your sister determines hers. As joint investors the lenders may require you to both invididually provide a personal guarantee over the whole investment loan used to buy another property. Jointly and severly is the term.
By selling you could both buy your own investment property with the proceeds of the inherited one and provide better future flexibility. Either way you are selling and buying in the same market so even if the values have decreased a little you will benefit from a resurgence in the future if you then reinvest in your own properties.
We like to purchase in good locations with consistently good growth and even though some states are experiencing flat markets there are still suburbs that are doing well.
Plus we look at increasing our cash flow and creating our own equity through renovations or real estate development.
You need to have a clear investment strategy that’s a good fit for you and start with the end in mind.
We suspect your decision will ultimately come down to what your own personal comfort levels are regarding debt.
Risk v Reward.Adrian and Amber
http://www.RealEstateDevelopmentClub.com
just send me a note 
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