Hi All,
Need some advice. Currently live in our own home which has a small mortgage left (approx 150k) and was valued recently at approx $700k. As I am currently a stay at home mum, we have one income (approx $100k/yr) and have been cleared to be able to lend approx $400k from the bank.
We are wanting to get into property investment, with the aim to buy multiple properties for future financial security for ourselves and our kids.
We currently live in the general suburb we want to stay in, however not the specific area which is quite a bit more expensive. Our aim is to move to that part of the suburb at some point.
So recently we started out looking to use the $400k that we can borrow to purchase an investment property and have submitted an expression of interest of a property under the NRAS scheme (for quite a bit less – $290k).
However we are now feeling a little shaky about the area (rural QLD, just out of Toowoomba) although the NRAS appeals to us.
We have also just been exposed to the idea of selling our home and renting, while then having the profit from selling this house (maybe $500+k) and maybe whatever we can borrow from the bank to use to start purchasing a couple of investment properties. We have heard that we would be saving money on all the costs and responsibilities of maintenance/upkeep of our family home, whilst gaining some income from our investment properties.
Obviously this is 'not the Aussie way' and feels a little daunting although it does make sense to us. We are pretty low risk people but definately feel we can be making our money work better for us than it is currently.
So if any of you more experienced investors than us can offer some advice on the pros and cons of renting while building a property portfolio, and maybe even something on thoughts of NRAS, we would very much appreciate it!
If you have already answered these questions elsewhere, sorry, and could you point me in the right direction to find this info.
cheers,
Mel
Hi Mel
If you do a search on NRAS you'll find a heap of info.
There's nothing wrong with renting and investing.
However, you don't need to sell your home in order to invest.
If you'd prefer to keep your home, you can always access equity in it which will be used to purchase your investment properties.
A major benefit of this approach is that the "borrowed" funds will be tax deductible – this wouldn't be the case if you were to use the cash from the sale of your home towards the deposits on your investment purchases.
If you go down this path, it would be worthwhile using a decent broker/banker to structure your finances correctly.
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]
mjm2 wrote:We are wanting to get into property investment, with the aim to buy multiple properties for future financial security for ourselves and our kids.
Nothing wrong with the broad concept – specifically how do you intent to do this? Lots of rental income and live off rent or wait for the properties to grow in value and then sell and live off profits?
While this question seems so simple – the answer really determines what sort of basic property plan you should follow and, further to this, what sort of property to buy.
mjm2 wrote:We currently live in the general suburb we want to stay in, however not the specific area which is quite a bit more expensive. Our aim is to move to that part of the suburb at some pointIf this is your goal then stick to it.
You are already entrenched in the suburb of your choice, albeit not quite in the exact area, so stay there. Your existing property will continue to track the suburb's performance so you'll be keeping up with the area. Any upgrade in the future will be achievable.
mjm2 wrote:So recently we started out looking to use the $400k that we can borrow to purchase an investment property and have submitted an expression of interest of a property under the NRAS scheme (for quite a bit less – $290k).However we are now feeling a little shaky about the area (rural QLD, just out of Toowoomba) although the NRAS appeals to us.
I am not a big fan of NRAS primarily because the stuff I have seen is over-priced and the product is frequently sold on tax benefits with the merits of the property being overlooked in discussion. A key question to ask yourself is why are you buying this property? Does it fit your overall plan (above)? and would you buy it without NRAS tax credits?
mjm2 wrote:We have also just been exposed to the idea of selling our home and renting, while then having the profit from selling this house (maybe $500+k) and maybe whatever we can borrow from the bank to use to start purchasing a couple of investment properties. We have heard that we would be saving money on all the costs and responsibilities of maintenance/upkeep of our family home, whilst gaining some income from our investment properties.Sounds like a salesperson wants to increase the number of property sales to you. As Jamie says above you do not need to sell you home to invest. Jamie is a broker and knows what he is talking about.
One step at a time and see if you really do want to be serious property investors – only then, if the answer is yes, consider selling your home.
I might add my home is sacrosanct and selling it was never part of our plans – we wanted certainty of environment for the kids and ourselves.
mjm2 wrote:Obviously this is 'not the Aussie way' and feels a little daunting although it does make sense to us. We are pretty low risk people but definately feel we can be making our money work better for us than it is currently.See above comment – hold your horses and only when you are really comfortable and have been property investors for some time – then come back and revisit this question. I often tell clients property is not a sprint, it is a series of small, specific and measured steps.
Hope this helps
Thanks for taking the time to respond Jamie. Appreciate your comments. It's all so new to us and so it is great to hear from people who know what they are talking about!
Cheers,
Mel
Thanks so much for all of your feedback Derek. Much appreciated.
Yes I think now that we are open to and excited about taking the property investment journey, we are enticed by the sprint, but as you say, its not the way to go.
When you say:
Lots of rental income and live off rent or wait for the properties to grow in value and then sell and live off profits?
Is it ignorant to answer that by saying could we not do both?? I'm assuming they are different properties that would give each of those outcomes? Would you buy your first one for rental income, the second for sitting on to grow in value and so on? I'm assuming I am over simplifying it though!!
See you have been thinking about things already.
It is possible to use a strategy of buying alternating properties (one for cashflow and the next for growth or vice versa).
The reality is that is over-simplifying matters as your situation may demand an extra cash flow (or growth property) property at some stage along your journey. What you buy next is best determined by a broker because they will understand you capacity to borrow additional money. As a borrower of money you will require income (cash flow) and security (growth) – a good broker will be able to have conversations with you explaining that your serviceability or security level is getting a little tight and you can act accordingly.
The key to successful property investing is borrowing money and that is why a good broker is advantageous.
But back to the other part of your question about 'getting both in one property' – that is entirely possible and there are a number of investors who follow that line of thinking. They seek property which can be sub-divided, renovated or developed. These strategies add value and increase rent return – which is something difficult to achieve with new properties, including NRAS options.
Hope this helps.
Thanks Derek. It does help thankyou!
Cheers,
Mel
No probs
You must be logged in to reply to this topic. If you don't have an account, you can register here.
