Hi all,
Newbie here and would like some insights or advice :)
My partner and I have lived in the eastern suburbs of Melbourne all our life and currently have 2 properties on this side.
We have about $500k equity and a $325k loan in our place of residence and an “investment property” worth $700k with a $500k loan and $100k in the offset account. The reason I say “investment property” is because it is currently rented to family members at way below market value hence we are not getting any benefits from negative gearing etc. I pay about $200 per month from my own salary into this property on an interest only loan. The $100k in the offset is actually contributed by the family members who live inside the property so it is not available to draw on.
We made a foolish rash decision last year to purchase an off the plan townhouse for $500k (2 bedroom, tiny land, strata title) and put in $50k deposit. It will likely be settling sometime next year. We are both getting cold feet now since the land is soo small and we don’t see too much potential for capital growth.
My aim is to eventually be able to quit my day job and live off passive rental income hence I am doing research on purchasing another investment property this year. We would be drawing on equity from our PPOR for this purchase.
I have been looking at all sorts of strategies and areas however would like some thoughts on the following:
– Sell the off the plan before it settles and use the funds to purchase elsewhere with land. Will I likely be able to get more than my $50k deposit back? Is it better to wait until it is built and then sell to potentially see if there has been capital growth?
– Ringwood / Mitcham areas. Purchase a large land and hold? Rental in these areas seems extremely low for the amount you pay for the actual land. I don’t want the property to be bleeding us dry each month, however we are both confident these areas will experience further capital growth.
– Further out east in areas such as Croydon/ferntree gully.
– try and find a positively geared property in areas such as ballarat / geelong ($300k budget) and hold onto these. How would these perform over the long run?
– Purchase an apartment near unis (eg monash clayton) and rent out to students, eventually turning this into a +ive geared property?
Sorry for the long post. Any opinions would be welcome :)
Hi Newbie
Rather than focus on what suburb to buy in, it is far easier to identify the “annual income stream” goal, and work out what sort of rental yield properties would match that. And only then go looking for the suburbs that fit your criteria.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Newbie
Firstly welcome to the forum and I hope you enjoy your time with us.
I will assume the reason why your funds are in the offset account linked to your current investment property rather than your PPOR are they are family funds. Certainly would be of more benefit to you if you could switch these funds to your PPOR offset account.
In regards to the new OTP acquisition you might find selling the property prior to settlement harder than you think.
The other concern might be the valuation of the OTP property as we are finding more and more in Melbourne not coming upto purchase price.I would probably make sure you have access to sufficient funds to complete the purchase in case this happens as trying to extend past settlement date may incur interest penalties.
In regards to moving forward ensure you structure loans correctly to avoid issues down the track.
In the current lending environment we are seeing more and more clients frustrated in their current lender as they want to expand their portfolios but restrictive lending practices limits this.
The other consideration would be Land Tax. You might want to look at investing interstate especially if you are looking for cash flow.
Feel free to shoot me an email and I can send you a copy of the API interview i did on how i built my portfolio.
Might give you some ideas on varying cash flow concepts.Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API Interview.Richard Taylor | Australia's leading private lender
Thank you for the replies :)
I have emailed you Richard for a copy of the interview.
In regards to the otp property, Would there be any penalties if we were able to sell it before completion? There seemed to be a huge amount of interest in it when it was released so I am hoping we will be able to sell it easily.
Jacqui, I am sorry I am quite newbie. What sources would you suggest I use to look for those type of suburbs? I have been doing research on realestate.com and Rpdata however the suburbs that I am familiar with all seem to have very bad rental yields.
Hi Newbie
RPData can be deceptive since a lot of agents do not disclose their sale/rent prices they have achieved. So the results are skewed.
Grab yourself a copy of the Australian Property Investor magazine and sift through the statistical pages.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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