Help – I am a new investor and my mind is boggled!

Hi cbarry,

Welcome to the forum.

It's a bit of a tricky one to do a buy and hold in Sydney if you are looking to purchase something else in the near future. Doing so would somewhat stifle your ability to borrow again as your serviceability level would deteriorate with the negative gearing. It'd also be harder for you to save for your next deposit due to less net income.

I've invested in units in the Redfern/Alexandria area and whilst some good capital gain have come, it has been a slow road to building a portfolio due to poor loan serviceability. A lot was to do with a limited employment income.

As an alternate strategy, you may want to look at picking up a positively geared property first, perhaps in a regional area. Something that nets you say $4k per year. You may need to put $20-30k down or less if you want to be creative. After this purchase, then use your remaining $100k as a deposit for something in the Sydney metro area. This will leave you with a potentially neutral cashflow but still with good exposure to any capital gains that comes from the Sydney market.

Also, don't necessarily rule out 1 bedders. Generally they have a better yield and in my experience grow at a similar pace. Choose carefully and keep away from the small ones though.

Best of luck.

Plummer

Don't know the Sydney market too well. but i would definitely only invest in areas you know well.

If it's looking like your salary will not increase in the near future then it may be worth your while to look at purchasing 2 (one unit one house for diversity) higher yielding properties between 300 – 400 and dropping 60k on each. This will put you in a relatively neutral position, but position yourself for any potential capital gains.

If your strategy is to increase from the capital gains (sit and hold) then it is important that you do not eat into your income from a negatively geared property (or 2) as this will tie you up with loan serviceability until you achieve the capital gains. 

I don't know too much more about your situation other than what you've provided above, and just throwing this in the mix for you to consider, but possibly could be good to look at a unit (inner city) and a new house and land investment for the tax benefits (if your income will be growing).

Good Luck!

+10 Jac's… I despair when I see newbies with these negatively geared hold and hope strategies. Even worse when their horizons only extend out past a few suburbs because that is the limit of their comfort zone.

Cannon fodder for the market.

Charlotte, The capital gain less adjustments is added to you Taxable income and is paid at your marginal tax rate.

If the asset is held for more than 365 days then a concessionary rate is charged 

Cheers

Yours in Finance

Get another broker. That one isn't worth 2 bob.

A good broker does more than just get you the finance. They help you understand and analyse the deal. They should also help you refine your investing strategy that enables you to be properly structured for future growth/investing opportunities. You reconfirm that advice/info with your accountant and at a deeper level.

Just simply buy something doesn't cut it.

Or maybe that is something that a sales person says – to talk you into something that will make them a commission.

She's the 2 bob variety.

If a broker doesn't understand property investing how can they advise on the product and the way to set it up to buy an investment property?

Like all teams there's Grand Final winners and Wooden Spooners. Your team need to be experts in property investing and preferably investors themselves. It's the golden rule when picking your team. An accountant who specialises in estate management won't cut it. A solicitor that specialises in family law won't cut it.

There's players and then there's 'players'. Your guys need to know property with their eyes shut.

Professional skills often overlap and then there's just knowledge and experience from being in the game. When you talk to your broker they can often see problems that while not necessarily their pervue they can alert you to potential problems, give you an overview and give you an agenda to discuss with your appropriate expert team member.

If you talk to investors here with multiple properties they will tell you that an expert team is the essential foundation component to achieving success. It's not a guarantee but it substantially reduces the risk.