"Even a journey of a thousand miles...

[Tim]

Acey,

yes the ratio of investment in a sector relative to total position is definitely a factor, and one that I considered in my post.

Out of current equity of $570 ($780k - $210 mortgage on PPOR), that means that the equivalent of just about total equity is now being placed in one managed fund.

To say that $500k is not a lot of money for some people while statistically correct, overlooks the fact that for most people that is an enormous sum of money, far outweighing their total capital base on retirement, and that it just is a lot of money regardless of position.

In this case however it represents almost 100% of total existing equity, so the ratio seems high.

Tim

 

[MichaelW]

Is anybody else thinking what I am thinking? That to me is seriously risky, to not consider diversifying that $500k and only having it in one managed fund.

Tim,

Good point. I guess I feel I don't know enough about "other managed funds" on the market. I've been in a perpetual fund before for about two years and the management fees consumed any profit it might have made. I kept "feeding" it and not going anywhere.

I like Navra Retail but I do recognise that its an "all eggs in one basket" risky approach. I'm not going to Super Choice my super into Navra but leave that $100K odd sitting in my current company super which is doing OK.

With the fund, I'm putting $250K of my equity into it and leveraging another $250K against the fund. The balance of my equity via the LOC will be invested as 20% down on IPs. This may not be an immediate play given the state of the market. I'm stepping back from a one-big-IP approach and will look initially for some smaller neutral geared properties to protect my servicability.

Thanks for the feedback everyone, and please do keep it coming. I'm making notes and will review the approach shortly for some QA. I'm not taking any of this as "financial advice" or gospel. Just some of the points do resonate with my current thinking so are tempering my approach somewhat.

Thanks again,
Michael.

 

[Tim]

Michael,

the scenario you outline in your original post indicates repaments for borrowings (above your existing PPOR loan) at around $73k per year.

How much is the:

1) rental income from 1 IP at $500k
2) Distribution income from Navra Retail ($50k??)

Do the sums stack up?

Also I am curious, is the $500k IP provided or sourced through Navra or is it up to you to go and find an IP based on rental reality?

Cheers,

Tim