G'day Investors
First of all thanks for all of your posts in this forum. Been reading for months and still have 1000s of post to read.Me:
Engineer working in Marine / LNG projects in WA. Income ~$190k. After tax and all personal costs $8000/month left over. 20k saved in smart saver account. No credit or debt and just me and my car. No wife no kids, there will be no wife and no kids ever.
Had a chat with my bank and they will give me up to $1m base on my current income.Plan:
I did talk to two financial advisors both from two different banks with not much of a positive feed back and then I found this post in tips:scha9799 wrote:I totally think financial planner is just waste of money and time !!TIP: if they are a "really financial planner " why are they still working for someone ? (qulification is just a piece of paper )
TIP: no one care about your money, only you should and must care about your money if you want to be wealth.I'm unsure on if I should devide my investment into 3 properties or 4 and I desperately need a structured strategy on how much to spend in each property and which one I should tag as my PPOR and then rent for 6 years and millions of tips on how to release equity to invest etc.
Who do you suggest I should talk to in Perth.
Note: I'm not a pennysaver and I'm willing to pay for a professional service
Thanks in advance
Hiya
Welcome aboard.
It will sound biased – but you should speak with a decent broker. They’ll listen to your plans and help you devise a strategy. Ideally you’d want to work with someone that owns IPs and understands the ins and outs of mutli property finance structuring.
A financial planner can’t provide credit advice (unless they’re licensed to do so).
Getting it right from the start is important.
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]
Hi Nooob,
Wow… your finance is really awesome. Am green with envy.
I agree – never get financial advisors, they are just waste of money. Same thing with tax accountants and accountants in general. But then again it's my personal opinion and plus I know most of the things they know. I work in Banking and am an accountant. I do all my taxes and my investments myself. I only hire lawyers and building inspectors because obviously they know bits I don't.
Having said that, if I were in your position I will do:
1. Buy 2-3 IPs, not just on2. Claim as PPOR the one which is more likely to appreciate in value.
The IPs should be 'diversified' into high rental and high value appreciation (which usually mean big cities)
High rental can also be high demand (which can mean around low to medium market / blue collar or student accomodation) and high rental $ (which means near the city / white collar area)2. I buy properties for future source of retirement income. This is because rents are inflation neutral – you are hedged for inflation. Unlike say savings, etc. Also you can insure your rental income – you cannot insure dividen. Which means your cash flow in retirement is secure.
Anyway – lots of things to talk about. I don't even know where to start. Maybe ask more questions so I know what else to say.
Thanks,
Catts.Cattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
Thank you all for reading and special thanks to you who replied
Jamie
You are 100% correct. I need a mentor but usually mentors are sooo successful that they don't need to help a noob.
I've been in touch with Mortgage Choice but they were not interested in providing a strategy and I understand that it is not their field.
I found one of these "all in one shops" which is a whole package and eventually they want to sell me their overpriced properties from their real estate department.
Are you providing a strategy for your clients?Catt
Thanks for your generous offer.
To summarize my question (and reduce the hassle for you to read it)
I only need a structure to tell me for example:
First property $X / PPOR, IO
2nd $Y / IP, IO
3rd $Z / IP, IO
Wait ? months for buffer, redraw equity from X and buy another IP then sell Y to release credit for 2 more etc.Long story short; Need a strategy and a structure to follow and down the track as I'm getting smarter I will be able to modify it my self or talk to the same person to modify it for me base on the performance of each IP.
Thanks again, I really appreciate that you guys care enough to read my posts
Nooob wrote:I did talk to two financial advisors both from two different banks with not much of a positive feed back and then I found this post in tips:
Hi Noob,
As a rule of thumb most financial planners are not fully supportive of property in any wealth creation plan. I do know a couple who understand the importance of property in an overall strategy. Those who are attached to banks are, in my opinion, even worse as any advice they give will be based around their bank products.
Initially you will need to ramp up your saving regime so you can take full borrowing advantage of your income level. Reading between the lines you may need to make some serious changes to some lifestyle/spending choices to effect this. In my opinion this should be your first task and while you focus on this spend some time learning and bouncing ideas of people who are in position to give good advice.
Rather than worrying about the number of properties I would first identify how you will use the properties into the future.
Broad brushed statement – if you are seeking an income to supplement or eventually replace your income then you will need to focus on cashflow properties. If you are seeking to sell off the properties over time then you may be more interested in properties likely to increase in value.
At the moment I would be really focussing on properties which can be value added – this will serve to kick your investing along as you need to make up for limited cash savings/equity as you start your journey. Without equity growth you will continue to run into borrowing hurdles which will hamstring what you are trying to achieve.
At this stage I wouldn't be overly fussed about identifying which property should be your PPOR yet – that can come and your situation may change.
,
Hi Noob
I would be happy to send you a copy of the API interview i did which will give you some insight into how i acquired all of my properties and at the time i started was not earning the same as yourself (albeit that was 16 years ago).
Your average Bank Financial Planner will have idea as they are paid a wage and told which products to promote.
They are not able to provide Credit advice or indeed is any Accountant, Lawyer or the like as that is the domain of a Licensed Mortgage Broker.You are so right that most are linked to property organisations that want to be able to sell you an over-priced property and will see you as easy meat.
Get your financial structure right first and then once this is in place you can look to source your own property (or even engage a Buyers Agent as long as it is someone acting on your behalf and not on behalf of a marketing organisation).
Really you set up for the future if you carefully set out your plans and goals and set an effective financial structure in place moving forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Nooob wrote:Catt
Thanks for your generous offer.
To summarize my question (and reduce the hassle for you to read it)
I only need a structure to tell me for example:
First property $X / PPOR, IO
2nd $Y / IP, IO
3rd $Z / IP, IO
Wait ? months for buffer, redraw equity from X and buy another IP then sell Y to release credit for 2 more etc.Long story short; Need a strategy and a structure to follow and down the track as I'm getting smarter I will be able to modify it my self or talk to the same person to modify it for me base on the performance of each IP.
Thanks again, I really appreciate that you guys care enough to read my posts
Sounds like a mortgage broker is needed to me.
They can help you plan for planning how much you can afford to borrow and when. Its then up to you to decide on what sort of property and where.
Stay clear of someone trying to sell you their properties, but if you need help then maybe a buyers agent is needed.
Considering other aspects is also needed so you need a lawyer to assist with what names (I think you mentioned no possibility of a spouse though?) and estate planning – pre and post death. Lawyer and/or accountant may be able to advise on land tax and structures such as trusts etc But probably down the track a bit more
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Noob,
A strategy is a very special thing, you need to develop it your self. Be very wary to get it from somebody else even if they say they tailor made it to your specific needs.
A strategy needs to accommodate your long term goal, your risk appetite, your income, your savings / spending pattern, etc.
Having said that, I cannot give you the fool proof strategy. But here's what I'd do if I were in your shoes ie. if I have that much spare cash… u lucky thing!!
My personality:
1. Risk averse – after all I am an accountant and work in a Bank. I understand the risks associated with Banking, gambling shares, etc. Hence, I like to see my wealth grow steadily though somewhat slow but I don't want to get short term shocks / sharp decreases.
2. I like to have a lot of buffers – I like to have approx. 6 months worth of cash so that if I can pay my dues for 6 months without working. The ideal, apparently is 3 months.
3. My investment is for long term ie. to generate retirement income. So I keep what I have and add more, rather than swap what I have for bigger ones. Besides the costs are so high (stamp duty + solicitors fees + agent fees, etc etc) why bother swapping? Just get more new ones.
4. Quality is important, but quantity is definitely desirable. So rather than have 2 big houses in say Kensington and Vaucluse (blue ribbon suburbs), I'd rather have 1 house in inner west (still very good but much more affordable) with apartments in various blue collar and white collar suburbs.
5. I like a simple life. Simple also means flexibility. Bells and whistles usually comes with higher fees and difficult to monitor. So I do not cross collateralise, etc. The only bells and whistle I have is 100% offset facility. Everything else is simple and cheap.
So given $8000 per month disposable income I will:
buy 5 properties one of which must be a house in a area with capital appreciation (north shore or inner west of Sydney)
the other 4 can be where the rentals are good, however wouldn't hurt to get to areas with good capital appreciation as well, like Potts Point, Elizabeth Bay areas.
I'll pay attention to my land tax – most likely 4 properties will exceed my Land Tax threshold. So I'd be considering looking at Victoria or Qld or Adelaide. Currently I'm interested in Frankston in Victoria.
I say 5 properties because I currently pay only roughly $6000 for my properties. With $8000 + negative gearing, you can get at least 5.
Good luck mate – you lucky lucky thing….
Cattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
Nooob wrote:Jamie
You are 100% correct. I need a mentor but usually mentors are sooo successful that they don't need to help a noob.
I've been in touch with Mortgage Choice but they were not interested in providing a strategy and I understand that it is not their field.
I found one of these "all in one shops" which is a whole package and eventually they want to sell me their overpriced properties from their real estate department.
Are you providing a strategy for your clients?Yep. I listen to what the client is aiming to achieve and structure their finances accordingly.
The "all in one" shops can present a conflict of interest. I think it would be in your best interest to select your own broker, accountant, conveyancer……and I certainly wouldn't be too keen on buying a property from any of them!
If you'd prefer to use an expert to assist in locating and purchasing a property – then I'd search for an independent buyers agent in the area that you're looking to purchase.
Cheers
Jamie
Not to
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]
Have you read books by Margaret Lomas. If not then I suggest you start there. They cover the type of structure you are seeking.
Given your position I would also look at her company Destiny for a mentor role.
I have met with them and got a few ideas about strategy structure etc. And I am considering joining them in the future given the unbiased access to markets all over Australia. I have not used them up until now because I have only invested in markets that I am very familiar with.Regards
BrettWOW…
You guys are amazing, thanks for all the good info and tips.Qlds007 (Richard
I'm reading your interview, pretty impressiveTerry W
I'll be back in Perth this afternoon and I will talk to mortgage brokers here to see if I can have a better luck this time.
In my last experience the broker was not interested in taking my high tax into account.
If I don't place my self in negative gearing next year, I have to pay +$15000 extra on my tax and the broker was talking about putting money in my supper.
Hopefully I'll have a better luck this time.Catt
Can't believe how much effort you put in reading my posts and replying.
I'm thinking very similar to you and I have low expectations.
As soon as I have $1000/week income from my properties, I'll get my hippie van and start traveling around the world.
Your comment about the state land tax is something that I haven't looked into before. I will start to gather some info on it to have a better understanding about my limits per state. Thank you so muchJammie
I'll get in touch with you shortly to discuss on how you are able to help me on my way up.
Thanks for your responds.Brett
I've checked Margaret's website ages ago after I've red her strategy planing in API and YIP magazines.
She had seminars here in Perth but non of them was match with my RnR (3 weeks on, one week off)
They have an office here in Perth. I'll book an appointment and I'll let you know how it was.Everyone else
Thanks for reading. I'm pretty sure that my questions are related to any new starter
Hi, Richard Taylor & Terryw are 2 of the best at what they do.
A buyer's agent [one goes by the name Propertunity is very good] will be worth his weight in gold in your case.
* Your savings rate is VERY low if you only saved $20K on a 190K p.a. – not being critical, just a comment on the numbers you've thrown out.
Can you review your PAYG situation?
Good luck,
KYAgree !
1) give brokers a call to see how much you can borrow up to.
2) develop your own strategy
( spend some money to buy some books to read check up author, Steve Mcknight, Michael Yardney, John Fitzgerald…..)3) most of the authors have different strategy/opinion to the property investing you just have to see which one is more suitable to your situation.
4) go and apply your own stragety, meaning buy properties !!
5) on this property investing journey, there are a lot of spuikers ( they like to call themselve "guru","expert") ! watch out ! if you get unpleasant experience don't give up, keep going, and remember the lessons stick with good people and discard the bad people.
Good luck and enjoy this journey : )
As posted earlier, make sure you read into land tax and remember it is different in every state. Another thing is don’t fall into the trap of “negative gearing otherwise i’ll pay more tax”. The way i look at the positive gearing sernario is if your not making money you are loosing money. You would be better off making a little more money and paying a little more tax than you would be loosing money afterall right? At the end of the day, your going to pay tax regardless, so why waste time reducing your money when you could be making more. Have you ever asked for a pay decrease instead of a pay increase?
My 2c, good luck, take your time and do your research and you’ll do fine.
Hi Nooob
I think the issue for you straight up will be deposit. If you only have $20K saved, this will be hard to use until you get a bit more deposit.
The other issue is the sad state of Australia's legislation on investment advice. I have been a qualified Finance Broker as well as Licensed Real Estate Agent (only investment based) for over 16 years and over that time the Finance industry has had massive reforms in that now you can open your mouth about investment advice, where as sadly the Real Estate Industry has not done anything in regards to it's investment legislation. For example, I have to be a Licensed Financial Planner to advise anyone on even $10 worth of Shares, but I can be some 18 year old Real Estate certificate holder and tell you that the $1Mill property I have for sale is 'The best investment for you" .The whole industry needs a shake up and quite franky I can't wait. It will hurt a lot of the archaic Real Estate offices and many will close their doors as it all gets to hard. This will weed the Men from the Boys.
Anyway, the fact is, you need to look at the numbers as they never lie. They will always tell you which way is best suited for you and then you can work out which way to go.From the income numbers you have told us, your income tax is a big problem, and one which can big minimized buy buying the right mix of properties that will give you some great tax benefits as well as giving you goods growth and income.
I have dealt with Clients from all over Australia, and although states differ in their Real Estate laws, the facts still remain. You need to go with people who specialize in their field.
Be careful not to over annalize. The months you have spent researching are months you have spent not earning growth on a property, so keep it simple and don't do your head in with too much info.
Just find someone who has a good track record with a company in the past. Thats the best way to find someone good.kum yin lau wrote:…
* Your savings rate is VERY low if you only saved $20K on a 190K p.a. …To answer this one; I've been working for a small construction company which their pay was 1/3 of what I'm getting now and I just moved to a bigger company (7 months ago).
On the other hand I used to owe some money on my car and credit cards that I've cleaned all of them and I just pulled my head to the surface.
By the time I get my strategy together my savings will allow me to go for the 1st IP.Good job then. Less overall monthly commitments will improve your finance servicing down the track.
Yay a question I can help with! Give Matt from Opening Doors a call. Google them. Not the government thingo, they had the name first. He is a finance broker who’s a very smart investor himself, very helpful with strategy suggestions and has the knowledge to back them up.
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