I own my own home with an outstanding mortgage. My income is about to shrink dramatically, but I have a substantial amount of cash. I am thinking firstly of paying off my mortgage, but will have enough to invest in a property for my impending old age. I do not have a pension.
Q. I am getting different advice from some investment companies and don't know who I can trust. I don't want to buy "off plan" at inflated prices, using companies who may be in the pockets of developers etc…. Is it best to buy a new property (at a possibly inflated price) or should I buy something a few years old?
Q. Should I buy for cash, outright and rent out, or what? If I borrow some money, I may be able to buy two properties. So you see my dilemma.
Q. I will need some income coming in from my investment properties, rather than have it all go on repaying a loanSo – any advice on who would be a good trustworthy advisor in Sydney?
Nothing is risk free, I know, but there are a lot of sharks out there – all saying something different. As I am relatively cashed up, my situation may be different from the norm.
Any positive input would be greatly appreciated.
As you are near the end of your working life you may need to consider diversification of your cash and low risk investments.
A good financial adviser should mention this but also they should be not trying to sell you one product but many different options so you are diversified.
As they say it is risky to put all your eggs in one basket.
Hi, while I'm a property afficionado, I'd like to caution you about the downside to property investing. Tenant & vacancy problems, + management costs, maintenance etc erode yields.
Your problem is going to be that you need the income to live on & depending on the amount of cash you have in hand [if you still have a home loan, that amount is going to be lessened still] and your reduced income means that you don't enjoy the tax benefits that high income earners get. Which begs the question why you didn't buy earlier but that's beside the point.
Property yields @ 4% so if you have $600K cash, you get $24000 a year to live on, maybe less.
Sorry to be the bearer of not so good news but you really need to look at your situation carefully.
KY
Thanks for replies – much appreciated. I think diversification is the key to all this. No I don't want to put all my eggs in one basket, but am still very interested in buying a property to rent out. On the lower north shore of Sydney where I live, there are more people than properties and many people can't afford to buy here, so rentals have been good for over 5 years. But I still don't know whether I should buy a property outright or maybe mortgage for some of it and that would leave me some to put into other savings. I have an overseas property which I have hung on to as prices in my country have taken a dive, but at least it is rented out and is owned outright by me, so no fat interest rates to pay ! Somehow, I don't see this happening here – but maybe properties will level out, rather than go down in value. Its all to do with how much my nest egg will be worth in say – 12 years, if I just put it into savings. I feel (still) that if I invest in property it will be worth more. You're right in that I will have less to live on initially, but but I think I would have enough – so to speak, if I pay my own home off first. Then when the time comes that I can no longer work, then hopefully, my investment will have grown.
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