Hi everyone,
I joined this forum a few weeks ago and have been very impressed with the quality of advice and willingness to help shown by many posters. Please let me know if my post needs restructuring or answers lie elsewhere. I know it's a bit long but I felt the background necessary.
Current situation:
Age 45, wife 41, two boys aged 7 and 5 both in school.
We both owned PPOR in London before we met and kept those when we bought a joint PPOR. We reno'd all 3 properties and made substantial gains as we rode the market.
Moved to Sydney 3 years ago when my wife lost her parents suddenly, loved it so much we sold up in London and, just as prices were pretty low here in 2013, bought a PPOR on LNS.
PPOR: $2.4m (2013), $2.8m (2015). $1.4m mortgage with NAB after remortgaging 3 months ago to free equity for IPs.
Now have $600k ready to go in an offset account.
My wife is a GP earning $140k, I part-own a small IT company and pulled $100k last year inc super. Have moved my UK super over here into an SMSF, but that money needs to sit for 5 years before it can be put into resi property.
I understand that we are in a very fortunate position, but we have got there through our own hard work in day jobs - and being wiling to risk purchasing and holding when others (in property!) were advising us we were paying too much etc etc. My wife is a fantastic wife and mother, but is now fed up of looking at people's privates every morning after 20 years. Losing both her parents at the same time as starting her own family has been very hard on her and it's time I did my bit and used our capital to good effect. We are both great savers and have not been on an overseas holiday for 3 years, spending only on the mortgage and few luxuries. Most of our clothes are 10 years old at least!
Goals
To replace income from salaries and pay off the PPOR mortgage within 14 years, so that when the boys go to university we can retire comfortably aged 58 and 55, rent the PPOR out for at least a year and travel the world.
But...we would love to smash that so that the wife at least could give up work sooner rather than later. She has great taste/insight into property in general, renos and decoration and doesn't take any ***** from tradies. She would love to be running our IPs full time ASAP.
I guess we would fall into the passive investors category for now, in that we would like to never sell the IPs (to avoid CG tax) and see it as a 14 year play to acquire as much as we can.
Plan
This is where it starts to unravel.
I've read the books by Michael Yardney and Steve McKnight, kindly loaned to me by a friend who loves his property. They resonated very strongly given our past capital gains in inner London suburbs. We know we need to get moving and do *something*. Don't really feel we need to pay $2k to a financial planner to hypothesise buying properties in yr1, yr5 all dependent on guessed growth. We know we need to get at least $3m IP portfolio in the next 3 to 5 years, if we can get more all the better.
Went to see Mr Yardney's company Metropole, and listened to similar advice from another friend who recently went to see a similar company. They are all saying buy 1-2 bedders Coogee to Bondi or Neutral Bay to Manly ($750 to $800k) - which again resonates with our experience in inner suburbs, and gut feel that in the long run capital gains there will be highest as Sydney population grows and the wealthiest want to live near the beaches as well as the city.
But then I googled the companies and came across very mixed reviews both on this site (which is how i discovered this site!) and elsewhere. Also the 2% (16k on an 800k unit) seems pretty hard to swallow, and we've stalled on that approach a bit, despite it's immediate appeal.
So we're now thinking of buying on our own in Neutral Bay or around, or looking at another buyers agent. For now we feel perhaps we should be spending time with the boys at weekends rather than being at 10 opens, but equally we could do some to get us going.
Very concerned though by CharlieandKath's thread about Sydney silliness:http://somersoft.com/forums/showthread.php?t=106468&page=5
"From Early on in this thread not many warnings so I got the feeling that there was a fair wave to ride yet.
2nd half of the thread we have sash, see change and skater warning of caution ahead and the worm will turn soon but of course no one knows. Fair bit of experience in those three posters alone.
I'm beginning to take note."
But equally we are used to investing close to home, Sydney seems to have the best long term prospects - and with a young family we need to make things simple - so Sydney seems like the best choice.
Are we mad to carry on regardless of the warnings?
Would it make more sense to buy through a trust so that affordability (already stretched by the $1.4m mortgage on the PPOR) is less of an issue and more reliant on the IP income. Mr Yardney seems to indicate that is the way to go, but I struggle to see how it would work with negatively geared IPs, and we wouldn't get the tax benefits...). But equally if we do in my wife's name or our own names I can see affordability stalling us at 1 or 2 properties anyway.
Are our goals within reach, or do we have to be more active investors?
Would it make sense to start with a Neutral Bay unit, then look for something perhaps a bit riskier?
Or should I be getting on a plane to Brisbane tomorrow?
I'm sorry for the unstructured nature of this post - but I just wanted to make a start and have procrastinated about posting this for too long anyway. I'm just paralysed by the fear of being stuck in a couple of negatively geared properties that don't move for 5 years, or worse - and hoping that a few words of wisdom or encouragement might tip the scales and spur me to do something. I guess our previous IPs fell into our lap by the nature of being PPORs before IPs, and we chose well - it feels a lot more intimidating starting from scratch like this as the stakes are high and we don't know the market here at all.
To round off I will definitely make the next Sydney meetup, but any advice or pointers in the meantime would be very gratefully received. Michael_X's thread really inspired me today, and I've learned a lot already from these forums (including why to avoid x-coll), but the journey is only just starting and with the market peaking it feels like a bad departure time!
Thanks for listening if you made it all the way through my thread!
TheSilverBear
I joined this forum a few weeks ago and have been very impressed with the quality of advice and willingness to help shown by many posters. Please let me know if my post needs restructuring or answers lie elsewhere. I know it's a bit long but I felt the background necessary.
Current situation:
Age 45, wife 41, two boys aged 7 and 5 both in school.
We both owned PPOR in London before we met and kept those when we bought a joint PPOR. We reno'd all 3 properties and made substantial gains as we rode the market.
Moved to Sydney 3 years ago when my wife lost her parents suddenly, loved it so much we sold up in London and, just as prices were pretty low here in 2013, bought a PPOR on LNS.
PPOR: $2.4m (2013), $2.8m (2015). $1.4m mortgage with NAB after remortgaging 3 months ago to free equity for IPs.
Now have $600k ready to go in an offset account.
My wife is a GP earning $140k, I part-own a small IT company and pulled $100k last year inc super. Have moved my UK super over here into an SMSF, but that money needs to sit for 5 years before it can be put into resi property.
I understand that we are in a very fortunate position, but we have got there through our own hard work in day jobs - and being wiling to risk purchasing and holding when others (in property!) were advising us we were paying too much etc etc. My wife is a fantastic wife and mother, but is now fed up of looking at people's privates every morning after 20 years. Losing both her parents at the same time as starting her own family has been very hard on her and it's time I did my bit and used our capital to good effect. We are both great savers and have not been on an overseas holiday for 3 years, spending only on the mortgage and few luxuries. Most of our clothes are 10 years old at least!
Goals
To replace income from salaries and pay off the PPOR mortgage within 14 years, so that when the boys go to university we can retire comfortably aged 58 and 55, rent the PPOR out for at least a year and travel the world.
But...we would love to smash that so that the wife at least could give up work sooner rather than later. She has great taste/insight into property in general, renos and decoration and doesn't take any ***** from tradies. She would love to be running our IPs full time ASAP.
I guess we would fall into the passive investors category for now, in that we would like to never sell the IPs (to avoid CG tax) and see it as a 14 year play to acquire as much as we can.
Plan
This is where it starts to unravel.
I've read the books by Michael Yardney and Steve McKnight, kindly loaned to me by a friend who loves his property. They resonated very strongly given our past capital gains in inner London suburbs. We know we need to get moving and do *something*. Don't really feel we need to pay $2k to a financial planner to hypothesise buying properties in yr1, yr5 all dependent on guessed growth. We know we need to get at least $3m IP portfolio in the next 3 to 5 years, if we can get more all the better.
Went to see Mr Yardney's company Metropole, and listened to similar advice from another friend who recently went to see a similar company. They are all saying buy 1-2 bedders Coogee to Bondi or Neutral Bay to Manly ($750 to $800k) - which again resonates with our experience in inner suburbs, and gut feel that in the long run capital gains there will be highest as Sydney population grows and the wealthiest want to live near the beaches as well as the city.
But then I googled the companies and came across very mixed reviews both on this site (which is how i discovered this site!) and elsewhere. Also the 2% (16k on an 800k unit) seems pretty hard to swallow, and we've stalled on that approach a bit, despite it's immediate appeal.
So we're now thinking of buying on our own in Neutral Bay or around, or looking at another buyers agent. For now we feel perhaps we should be spending time with the boys at weekends rather than being at 10 opens, but equally we could do some to get us going.
Very concerned though by CharlieandKath's thread about Sydney silliness:http://somersoft.com/forums/showthread.php?t=106468&page=5
"From Early on in this thread not many warnings so I got the feeling that there was a fair wave to ride yet.
2nd half of the thread we have sash, see change and skater warning of caution ahead and the worm will turn soon but of course no one knows. Fair bit of experience in those three posters alone.
I'm beginning to take note."
But equally we are used to investing close to home, Sydney seems to have the best long term prospects - and with a young family we need to make things simple - so Sydney seems like the best choice.
Are we mad to carry on regardless of the warnings?
Would it make more sense to buy through a trust so that affordability (already stretched by the $1.4m mortgage on the PPOR) is less of an issue and more reliant on the IP income. Mr Yardney seems to indicate that is the way to go, but I struggle to see how it would work with negatively geared IPs, and we wouldn't get the tax benefits...). But equally if we do in my wife's name or our own names I can see affordability stalling us at 1 or 2 properties anyway.
Are our goals within reach, or do we have to be more active investors?
Would it make sense to start with a Neutral Bay unit, then look for something perhaps a bit riskier?
Or should I be getting on a plane to Brisbane tomorrow?
I'm sorry for the unstructured nature of this post - but I just wanted to make a start and have procrastinated about posting this for too long anyway. I'm just paralysed by the fear of being stuck in a couple of negatively geared properties that don't move for 5 years, or worse - and hoping that a few words of wisdom or encouragement might tip the scales and spur me to do something. I guess our previous IPs fell into our lap by the nature of being PPORs before IPs, and we chose well - it feels a lot more intimidating starting from scratch like this as the stakes are high and we don't know the market here at all.
To round off I will definitely make the next Sydney meetup, but any advice or pointers in the meantime would be very gratefully received. Michael_X's thread really inspired me today, and I've learned a lot already from these forums (including why to avoid x-coll), but the journey is only just starting and with the market peaking it feels like a bad departure time!
Thanks for listening if you made it all the way through my thread!
TheSilverBear
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