Hi everyone,
I have 2 IP's and ready to go again, I need help with my strategy and structure to get to my goal.
Can anyone suggest someone who will give me independent advice without trying to sell me one of their properties.
Great site by the way.Hi Adzlea
Welcome to the forum.
What sort of advice are you after?
If it's financial advice then use an independent broker that understands the ins and outs of IP financing. If you're after someone who will advise on the actual property, then hire an independent buyers agent.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie,
Its financial advice I'm after on how to properly structure my portfolio and what to do next.
Then I will start looking for that particular property.There seems to be alot of hype around the Bown Basin mines as CF+ are easy to find with promises of still 20 -30yrs work.
One of my properties is neutral the other negative, should I be looking for a CF+ to balance it out?
If I do should i set up a trust as we are already paying tax and trying to reduce it not pay more.
Or should I be lookin at something like a NRAS and sit on Capital growth with less risk?It's all well and good to get deductions but at the end of the day its still costing money, at some point you need to have the tables turn and historically you give up capital growth for cash flow, they are getting both at the moment, areas like Moranbah Dysart Middlemount., although I wouldn't expect too much more as prices have been going up $1k a day for months, so then your back to counting cashflow, but how sustainable are the rents @$2-3k a week?
Is it the old saying of the bigger they are the harder they fall?
I need a crystal ball……………..anyone?……..a time machine will do if you can't find one………..Thanks
adzlea wrote:Thanks Jamie,
Its financial advice I'm after on how to properly structure my portfolio and what to do next.
Then I will start looking for that particular property.There seems to be alot of hype around the Bown Basin mines as CF+ are easy to find with promises of still 20 -30yrs work.
One of my properties is neutral the other negative, should I be looking for a CF+ to balance it out?
If I do should i set up a trust as we are already paying tax and trying to reduce it not pay more.
Or should I be lookin at something like a NRAS and sit on Capital growth with less risk?It's all well and good to get deductions but at the end of the day its still costing money, at some point you need to have the tables turn and historically you give up capital growth for cash flow, they are getting both at the moment, areas like Moranbah Dysart Middlemount., although I wouldn't expect too much more as prices have been going up $1k a day for months, so then your back to counting cashflow, but how sustainable are the rents @$2-3k a week?
Is it the old saying of the bigger they are the harder they fall?
I need a crystal ball……………..anyone?……..a time machine will do if you can't find one………..Thanks
No time machine or crystal ball – sorry.
Looking at your post it would seem as if you are aware of the issues of building a portfolio and getting the balance right. Too much negatively geared property and you'll save alot of tax but, as you rightly point out, you are spending a lot to save tax. As a property investor it is important to see tax saving as the icing and not the cake.
Without knowing your long term goals (have you worked these out?) it is hard to provide some advice that suits your long term plans, in particular how you will use your properties for your 'financial future'
if your strategy is more a buy and eventually sell strategy then capital growth, notwithstanding my previous comments, is probably more suited.
If your strategy is a more live off the rent type strategy then a cashflow strategy is probably more suited.
Obvioulsy someone on a higher income can probably afford to weight their portfolio more towards capital growth whereas someone on a lower income probably needs to focus more on cashflow.
Consider working a strategy that sees your cashflow properties funding your growth properties – this means you are genuinely cashflow neutral with depreciation on your growth propertuies proving tax savings and making your portfolio slightly cashflow positive (after allowing for tax savings). This seems to be the best of both worlds to me.
My thoughts only.
Thanks for your thoughts Derek,
In 8 years I want to stop work buy a motorhome($200K + at todays prices) and travel, having a passive income of around $100k
Then when we get sick of that (say about 5 yrs) move back to the house but still have enough to live and maybe go on a few overseas trips.Our no1 IP is actually our PPOR that is being rented out and we plan to own outright (halfway there) that will give us about $400pw (Today) towards our income. while we travel
So I figure I need 1 or 2 properties that will get good capital growth so I am able to sell these and allow for CGT and still have enough to buy a motorhome.
How do I work out how many I will need to give me an income? Allowing for inflation
Do you think this is possible in 8yrs, we are 2 yrs into a 10yr plan having brought our first real IP (no2) last year negative geared but hopefully giving us good capital in Townsville.
So not sure as to stick with trying to get the capital for the moment to be able to give us the longest hold time or whether to start focusing on the CF+ and any capital would be a bonus? As mentioned earlier the mining towns in Bowen Basin or even Hunter Valley? Though holding one of those long term, not sure as a bit more risk.
Hi Adzlea,
You haven't indicated current values so I will make a few assumptions for you. SOme numebrs would be useful though.
You will need at least one capital growth property to allow you to buy your motorhome. I would also suggest a second one because you'll be replacing an appreciatign asset (one property with a depreciating one). In effect you'll go backwards (financially) from this transaction – at the same benefit enormously through opportunity to see our great country.
While these properties are increasing in value I would suggest looking at cashflow properties to get you to your $100K mark.
I assume you don't want to have a huge property portfolio to manage while you are on the road so make sure the properties you get are high cashflow to provide the income you want. For this reason you may be looking at commercial property or property in mining towns.
To allow for inflation simply work the numbers based on todays figures. While inflation will increase costs it generally has a similar effect on property prices and rents. Another oprion would be to use your two benchmarks $200K and $100K/annum and compound the figures by 3% which is the top of the RBA's inflation band. Given the RBA has been very active in trying to keep inflation in this band I expect they will, on average, maintain an inflation figure thereabouts into the future.
I cannot comment on the Qld localities you have identified.
While I do note your initial comments about not wanting someone to sell you 'their property' my current focus area is the WA mining communities of Port Hedland and Karratha which are both communities which exhibit the features you are looking for.
Hope this helps.
PS – having done the big lap I can recommend some 'must go' places for your trip too. Seriously look at some sort of 4WD ancillary vehicle to get off the track. Some great country out there.
Hi Adzlea
You are bang on in understanding you need to plan and structure to enable you to move forward as so many clients i see have no idea and just go on their merry way.
Structure is the key to property acqusition and i must say without it i wouldn't have been able to acquire 40 properties by the age of 40 giving me a very nice passive income.
It is the same principal i used i try and use for my forum clients so they can grow their portfolios.
As Derek has mentioned there is limited data provided in your situation so difficult to comment further.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Derek and Richard,
I appreciate your comments.
I would like for you to comment further, so can you indicate what is it you need to know and if you wouldn't mind could I PM you so as not to tell the whole world my details
.
I have been considering mining towns as I live in Moranbah and have been kicking myself I didn't buy here 12 months ago as people were telling me not to invest in mining towns and if you do they are much higher risk. Blah blahMissed that opportunity didn't I. An article I was reading said houses have been going up $1k A DAY and they aren't far off.A friend of mine brought a house 271 days ago and just made a $268k profit now she's selling. Didnt even have to go through an agent they are knocking on peoples doors up here asking if they want to sell ,its crazy.
I know first hand that there are exeptions to the rule and you can get massive growth and massive yeild if you are in the right place at the right time. I suppose I am a little peaved with myself that I didn't know better. But that is water under the bridge and I must move forward, I am just worried that I am being blinded by the situation here and don't want to make a wrong decision.I was looking at a new 3 br 2 bath unit for $670k renting at $2100 pw. here in Mbah You know the saying if its too good to be true it usually is,
well I figured that if i have a 5% dep of around $34k and allowing for SD & LMI I would end up with a debt of about $700k
repayments are approx $1100 allow for costs etc there would still be $800 cashflow pw then the good old taxman takes his bit bringing it down to $650 ???? (guessing depending on structure) if I was to put this back into itself it would be owned outright in 10yrs, so a $35k investment will become $1M approx in 10 yrs, but obviously this is a long time in a mining town and of course as long as the rents don't go down there wouldnt be a problem and that is a big issue at the moment up here. In saying that I then do a backflip and ask myself what if????? have I missed the boat there is alot to be made but at what risk? If something unforeseeable happens to coal in the next 10 yrs I could be left with a huge debt thats worth nothing and no one wants to rent. Am I over analysing? Just realised I hadn't added body corps to the equation! This was just a quick look into it and by the time I rang the RE they were all under contract but there will be more. The other thing that concerns me is the amount of investors comimng into the area and can it go down as quick as it went up.? Need that crystal ball again..Being a newbie I still have to learn alot on HOW to find the right property, but at the moment I'm not sure what I am looking for so am going back to the start (or end) and trying to work out my strategy. What is it I need to get what I want in the end. When i know that then I can do some more research on that type of property
Ahhhh I feel like I have two little people on my shoulder one saying go for it and the other saying what if…. .
Our No2 IP was brought through TIC as I wasn't confident enough to do it on my own, but their theory is only buy negative geared etc etc and from reading past forums, Richard knows what I'm talking about, now I find myself questioning their theory and strategy and whether this is going to give me what I want.
Hi Adzlea,
Will be brief as I am heading off on holidays in Sydney for a week.
Information I need is.
Current value, purchase price & date and location of current properties.
Also need before tax cashflow figures for each property.Should be enough for me. Happy to receive a PM.
Might be a couple of days before you get a response. Happy to take a phone call if that is easier 0409 882 958.
Hi Adzlea
Just on a financing point of view you may well struggle to get 95% lvr in Moranbah.
Course as mentioned not to say you wont get a high lvr but need more hard data to provide a more structured answer.
I have a forum client who was getting $1000 / week in rent until Jan 15 2012 when the 12 month lease will expire. She already has someone want to sign up for $1995 / week for the same property.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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