Hey guys im new to this site, was reading through some topics and found that the people here seem to be very helpful.
Ok here is my situation.
Im 22
I currently have a Unit which im living in, no mortagage owning thanks to money i inherited. worth about 340K
I recently (april) bought my first investment property, its a house located in Rosemeadow for 312K which has tenants renting it out. My loan is P+I, atm im trying to put everything i can into it to lower it as much as possible.
Im not on high income, about 45K atm
I got some figures from my bank, by early next year i should be good to borrow up to 450K. due to having equity in my other property.
My question is, do i go out and buy a house around liverpool for that amount amount and get a Interest only loan to hold the property or do i focus on paying my rosemeadow property. Ive researched about negative gearing and cant wait to talk to my accountant at tax time. The thing is, ive always been the type who pays things off fast, by holding property i know that i wont be knocking much of my motgage, more of a long term thing.
But any wise words from mbrs would be great.
Cheers,
Hi Ch4rlie
Welcome to the forum and I hope you enjoy your time here.
It's great to hear that you've been researching and come across negative gearing. It's a great tool but, like most tools, can be dangerous when not used correctly. We've helped out numerous people who've gone too far with negative gearing and due to changes in their life, have not been able to service the negative gearing monthly shortfall.
We use both negative gearing and positive cash flow strategies. We use the positive cash flow properties to support our long term buy and holds (usually negatively geared).
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I would see what other people have to say. But one thing I would do is change your loan from P&I to Interest only with an offset facility. It gives you the flexibility of having access to the money you pay down on the loan without having to refinance
Shane
Hi Ch4rlie,
I would like to add to Paul's comment that you should always keep a good buffer to help reduce the risk of holding negatively geared property.
In you comment you say you are earning $45k per year. You own a property worth $340k and have purchased another for $312k.
If you structure your loans properly then after buying the additional property you would have assets of $1,100k approx.
At 80% LVR you would have had to invest around $200k including stamp duty and legals to purchase both these new properties. That would leave you with around $70k (buffer for emergency and subsidise negative gearing) if you borrowed 80% off your original unit. In my opinon that's a bit risky given your age and the current economic situation. If you still wanted to proceed I would suggest a cheaper property that leaves you a buffer of at least $100k or look at higher LVR on the new property. Other than that I would postpone further investment for another year or so. Hard to do when we are young and keen but good to live and fight another day and hold onto what you have.Speak to people with large portfolio's of property and educate yourself completely so you can see through the sales pitch that is often delivered. Most importantly be patient, and contrary to your beliefs – learn the advantages of not paying things off. You require the mindset of the wealthy to play in this game……
Forgot to mention by next January my home loan should be around the 260K mark.
What i calculated is when my loan reduces to about 200K the rent will be able to cover the repayments thats about 3-4 years away.
I was thinking in the meantime i could hold another property locking in today prices rather then buying something later for a ridiculous price. I know that prices sometimes increase more then what some people are able to save.
Thanks Shane, i was looking into doing that.
trustee and PaulDobson,yes i am affraid i might be too commited too early. When i said 450 limit that increase all fees and charges, legal fees and inspections, stamp duty
Ch4rlie,
You are doing well and only 22. Most people only start a portfolio much later in life and even then we start by buying one or two properties. Over time and slowly building that equity and knowledge you will eventually be able to buy 2, 3 or maybe for at once but to do this too soon is financial suicide and then like a lot of others you would be saying Yeah that property stuff sounds good but it doesn't work. Give it time……and more time….be patient.
G'day. It's really great to hear of someone so young being as switched on as you seem to be. Congrats on already having acquired a significant property portfolio and being ambitious enough to be looking for more.
My suggestion is that you continue your financial education learning all you can about wealth creation from a variety of sources. Also, consider looking for cheaper, positive cashflow investment properties further afield. For the same amount of money as you would pay for anything in Sydney, you could buy 2 properties in regional SA or possibly even Adelaide, for example. Don't be in any hurry. Look at the opportunities which come your way from multiple angles to see how it might best be manipulated to work for you.
Good luck in all your future endeavours.
Susan.Thanks heaps for the advice guys
Dont worry i wont rush into things, plus since i work at a bank im always using the loan calulators to calculate different sinarios so i know what i can and cant afford. I guess im really motivated to build a decent property portfolio like some on this site.
I'll continue researching and surfing this site.
regards,
Charlie
You must be logged in to reply to this topic. If you don't have an account, you can register here.
