Hello all,
I am after some info and I guess some good advice on where to go from here.
My goal is to obviously better my financial situation without taking too much of a risk.
I am currently a married 24 yr old male. I have just finished building my second property after making a small profit on the first and have approximately $210000-$215000 in equity (Our homeloan is $190000 and the value of our home is $420000-$430000. Our combined income per year is $140000 and we are fortunate enough to not have any loans. I live in Toowoomba and have built this house out at Highfields which is a short drive to Toowoomba CBD.
I am really wanting to know what avenues I should explore as I'm not 100% certain what to do from here. One side of me wants to sell the house and move into an older property (around $220k mark) so that I don't have a homeloan. I could then work on gaining a second property by dumping all my cash into the offset account of IP. Another side of me wants to sell and buy another block of land so that I can build a duplex (live in one and rent the other).
What do you guys suggest and/or what would YOU DO if you were in my situation……
Thanks
Jamie
If the property is worth $420k then your equity at 80% LVR is actually $146k (already deducting your existing home loan of $190k). At 90% LVR it is $188k.
I am more of a buy and hold investor so it really depends on your investment strategy. I like the duplex idea as I have done this several times in Sydney and made signifcant CG. The only risk associated with this is do you have experience or confidence in getting approval for the duplex? Also are you able to purchase the block without selling your existing IP?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Jamie
What would I do?
At 24, with that much equity up my sleeve, I'd personally look to accumulate a few IPs early on – probably just a simple, boring buy, renovate and hold type strategy.
I'd probably take the current loan up to 80% now and spread that equity release over a few purchases in my own town. I'd look for properties that I could cosmetically renovate without too much hassle or cost so I can easily add some value. I'd then rinse and repeat the same process.
That's what I'd do. I'm sure many others would do things differently.
What do you want to achieve?
If you want an unencumbered PPOR at 24 then your suggestion of selling and buying an older property makes sense.
If you're interested in building wealth through property investing then consider leveraging your existing equity for IP purchases.
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]
Great info guys! THANKS!
I don't think I'd be too concerned with seeking approval for a duplex as my wife is pretty good with things like that. We could get the land while still in our PPOR and start the whole process. Just faced with a whole heap of 'what if' type questions… How long will it take? What if we can't build a duplex on that block? etc.
The one thing my wife and I are pretty is good at is extra repayments. Because we don't have kids or big outgoings, we find that it is easy for us to pay an extra $700-$800 per week on top of our home loan. By saving at the rate we are then we'll own our current home by age 30. BUT… and here is where my mind starts racing haha.
We could buy a PPOR (220k) and have no home loan. Buy an investment property on P&I and own it along with PPOR by age 30. We could then use our incomes, plus income from IP.1, to attain IP.2…Then keep the process going…
All this is fine and dandy to say while we don't have kids, but I see it as an easy plan considering my income is set to raise by 30k over the next 9 years.
There's so many possibilities and that is why I am here asking you guys. You have a lot more experience than i do and I know you won't feed me crap to make a few $$$. Please keep the replies coming as I value each response. If you think my idea/s are rediculous, tell me, I'd rather know now
bullet46 wrote:All this is fine and dandy to say while we don't have kids
Yep – they can really put a drain on the old finances. It's not so much the cost of kids (even though they can be expensive) – but the loss of an income (or portion of) that can hurt.
I read a comment on another forum that I thought was really good – the poster mentioned something about kids being the worst financial decision he ever made…..but at the same time, it was the best thing he'd ever done.
Anyways – it looks like you have options. We can all tell you what we'd do but at the end of the day, you're the one that makes the decision. I'd keep learning – from this forum, books, magazines, etc and work out what you'd like to achieve and then set a course of action to get there.
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 JamieM.
My wife keeps saying to me "lets have kids at age 27" but believe me when I say that I am pushing it back as far as possible at the moment. As close to 30 suits me fine. The loss of income is of concern, but I guess like a lot of people out there, we are trying to time it in around her long service leave. See what happens I guess.
At this stage I guess I am trying to explore as many options as I can. My goal isn't really to become rich, but more to live a comfortable lifestyle where I don't have to do it as tough as my parents have done. I do want to generate an income other than exchanging my time for coin so that's really why I am out looking for ideas/options.
I would personally go with keeping the existing property and then purchasing another property to potentially build a duplex on. I do have a plan B when looking for duplex sites – that is, the ability to be able to rent them out whilst being able to get the DA. If the DA doesn't come through at least I have the cashflow to sustain the investment. Which area are you looking at?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
TheFinanceShop wrote:Which area are you looking at?Due to our employment (Teacher and Purchasing Officer) we must stay in Toowoomba. We currently live in Highfields which is very close to Toowoomba itself.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
