Hi All
I am only new to this site and just starting out in property investing. I am just after some advice or ideas as to what might be a good next step (first step) for my folio.
I have a property in my name that is currently rented out ($320k loan 50k in an offset account and $420 wk rent) but i will have to move into it in the new year. I am also coming into some cash of about 130k around the same time which has got me thinking about property investing hence the reason i am on this site. I have just read a few of Steves and others books and was thinking of using the $130k to invest in other property (positive cash flow) or to keep my current property as a rental and move into a new house. I will probably use some of this cash on my current property to try get a rental increase. Ultimately i would like to replace my current income and have the choice to work or not.
Q1. Should i use my current property as a rental with it being in my name?
Q2. What are your thoughts on the campbelltown area for investment? (i have been looking at this area and believe i may be able to get 2 properties that i can make cash flow positive)
Any thoughts or help would be greatly appreciated.
Thanks
While the question of what to buy and where is definitely relevant, the matter of precisely what is done with the $130k, and precisely how you utilise the property you already have to leverage into the next one…. that's critical. Talk to a good broker to sort this out. On this forum there is Richard Taylor (userid Qlds007) and Jamie M. They are both awesome. You want to ensure that by the end of it all, you have as little non-deductible debt as possible, and have all the debt on IPs. Navigating precisely how to do that given your own precise circumstances is the key, and a good broker will get it right, thus paving the way for you to leverage into wealth. Use a bad broker and the lost opportunity to build wealth will be enormous.
Get in touch with Richard or Jamie. They'll sort you out.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for the kind words Jac M
Jac M is spot on with maximising deductible debt.
Is your current loan set up as interest only or principle and interest?
If you're looking to purchase a number of IPs in the future, I'd look to spread your $130k over multiple IPs using smaller deposits – but this is a broad statement and I have no knowledge of your situation or tolerance to risk.
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]
Heh Jamie that is JacM for you a great kinda gal.
Before you rush out and look to utilise your $130K I think I would ascertain how much equity you have in your current property.
You want to maximise your Deductible interest but remember once you have used your cash you won't get it back again.
If you utilise your equity and keep the cash liquid in your offset account you would be able to re-use in the future.
The structure going forward will be the most important part of the decision making process rather than the purchase itself.
Hope this makes sense.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thank you for your replies every bit of info helps.
My current property is principle and interest. – Jamie M
How am i able to find out how much equity i have in my home? Is it as simple as subtracting what is owed from what was paid or do i have to find the market value? If the later how do i find this answer? Would i just ask my local realestate agent or is there somewhere on line that can give me this answer? – Qlds007
Sorry this is all a bit vague. I originally was thinking to use the $130k as deposits on the next property or properties but was not sure if this was the best idea or to pay my current property loan down. I am now realizing how little i know and it sounds like i need to research alot more.
Thanks
Redrager,
The amount of equity depends on the current value of the property. Your local realestate agent may give you a general idea what the property is worth, but usually exaggerate and anyhow lenders look for proper valuations. Each lender has their own set of valuers they work with, and since it's not an exact science the property value may differ from lender to lender. You may obtain an independent valuation, but if the lender doesn't accept the particular valuer, they will organise their own anyway.
Once the valuation is determined, the amount of equity in the property is the property valuation less the outstanding loan. However lenders won't allow you to access all of if and will limit the amount to a maximum of 90% (depends on the lender).
Example: Your outstanding loan is $320K, valuation comes in say $500K.
Equity is $180K, however allowable equity is $130K ($500 x 90% – $320K)
Cheers
Tom
Red, Tom has given you an explanation of the calculation.
If you want to shoot me an email with the address i can run a report off for you which give you an approx estimate.
Regretfully going to need a full valuation to ascertain exactly but at least it will be a guide.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You have to be careful how you move forward and how you use that cash. For instance, paying it into the loan and reborrowing or just using it straight up will have different consequences. Which you should do will depend on your plans
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
Thanks Tom and Terry
Richard did you get my email i tried to send you my details on the weekend but am not sure if it went through. If not can you let me know and i will send it all again.
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