1 year on...

[mins]

It has been just over 1 year since i went nuts and decided to buy 2 ip's within a month of each other... And set up a smsf in the process for one of these purchases.

Both properties have been tenanted consistantly. Both are positive geared. My smsf property according to online vals is still the same valuation. My local ip has increased in value by about $10k on what it was valued at last year post renovation.

I am itching to go again sooo bad because everything is ticking along well. But... How do people manage mentally the level of debt they are in. I mean my properties are paying for themselves but i still owe close to. $700k incl my
Ppor. I am on a good income but last financial year it was down significantly. I am comfortable but it makes me a little nervous too and even though i would like to go again, potentially owing over $1 million on a single income makes me more nervous when u are also the only earner in your family.

Any advice?

 

[macca446]

It has been just over 1 year since i went nuts and decided to buy 2 ip's within a month of each other... And set up a smsf in the process for one of these purchases.

Both properties have been tenanted consistantly. Both are positive geared. My smsf property according to online vals is still the same valuation. My local ip has increased in value by about $10k on what it was valued at last year post renovation.

I am itching to go again sooo bad because everything is ticking along well. But... How do people manage mentally the level of debt they are in. I mean my properties are paying for themselves but i still owe close to. $700k incl my
Ppor. I am on a good income but last financial year it was down significantly. I am comfortable but it makes me a little nervous too and even though i would like to go again, potentially owing over $1 million on a single income makes me more nervous when u are also the only earner in your family.

Any advice?

Everyone is different it really is about the mind set,treat it like a business make sure you have safe measures to fall back on like available funds in offset or redraw if needed in bad times,I used to worry as well but things personally in my life have not worked out for me. Me and my ex earned in wages combined last financial year combined 60K,due to a work injury I could not earn or work much. Our debt including PPOR is 1.2m,with equity close to 900k our IPS bought in 80K gross return before costs and they are all positively geared we always had available funds to cover if needed so it all depends on how comfortable you are and to move in a forward direction you will need to get over that fear or it will stop you adding to your portfolio,remember not to lose sight on the true things in life money is for a way of life not life itself.
Macca446

 

[antistar]

It has been just over 1 year since i went nuts and decided to buy 2 ip's within a month of each other... And set up a smsf in the process for one of these purchases.

Both properties have been tenanted consistantly. Both are positive geared. My smsf property according to online vals is still the same valuation. My local ip has increased in value by about $10k on what it was valued at last year post renovation.

I am itching to go again sooo bad because everything is ticking along well. But... How do people manage mentally the level of debt they are in. I mean my properties are paying for themselves but i still owe close to. $700k incl my
Ppor. I am on a good income but last financial year it was down significantly. I am comfortable but it makes me a little nervous too and even though i would like to go again, potentially owing over $1 million on a single income makes me more nervous when u are also the only earner in your family.

Any advice?

Sounds like you definitely need a plan for what to do if / when interest rates go up. Could you service your current debt at 6-7% interest? Maybe higher. If not what can you do about it now in order to be able to service it in the future? Think about a cash buffer in offset etc. How highly are you leveraged? Do these properties have much potential for capital growth? Can you furnish the properties and get a higher return / more depreciation?
Just some thoughts that may help. Cheers

 

[Brady]

- Have a cash buffer, I aim for 6months of interest across all debt
- Purchase where vacancy rates are low
- Purchase properties that are better suited for a tentant than others, dishwasher, nice oven, larger yard, 2nd bathroom, fresh paint/carpet
- Ensure purchases are close to cost neautral if not cf+
- Borrow within your means

 

[Tonibell]

You need to have a belief that you can earn a really good return on the borrowed money - to get that belief you need to have a strategy or system that works.

If you can create equity fairly quickly using the debt, then that gives you a buffer. The bigger the equity buffer becomes - the less you worry about the debt levels. It also good if you can create a cashflow buffer as well - we are still working on that one.

Hopefully with the reno you created some equity - as well as the market gains you now have. You just need to find a good enough deal to make you go again.

 

[Neptune]

Also, don't forget insurance - income protection / TPD etc in case the worst happens.

 

[Tim86]

There is nothing wrong with debt if your properties are nicely positively geared.

I've got about 1.3 million in debt, but my properties are nicely positively geared so I don't stress. The wife stresses about having so much debt but I know in a year or two when I've finished my current projects I could sell everything and walk away with $600-700k profit.

So why stress about a bit of debt in the interim.

 

[strongy1986]

There is nothing wrong with debt if your properties are nicely positively geared.

I've got about 1.3 million in debt, but my properties are nicely positively geared so I don't stress. The wife stresses about having so much debt but I know in a year or two when I've finished my current projects I could sell everything and walk away with $600-700k profit.

So why stress about a bit of debt in the interim.

Problem is most people are just buy and hold so they will have plenty to stress about!

Would of been nice to live in brisbAne the last few years. Was some easy money to be made (if you put in the hard yards!). We have done a renno up there and it was hard work

Still worth it though as those sort of opportunities just arnt available in melbourne. Every house in a decent area is min 700k and the rennovators delights never get advertised, small blocks as well

 

[mikezen]

Problem is most people are just buy and hold so they will have plenty to stress about!

Would of been nice to live in brisbAne the last few years. Was some easy money to be made (if you put in the hard yards!). We have done a renno up there and it was hard work

Still worth it though as those sort of opportunities just arnt available in melbourne. Every house in a decent area is min 700k and the rennovators delights never get advertised, small blocks as well

Hey strongy do you know if bayside is hot ATM? Auction attendances high? etc

 

[Colin Rice]

Have buffers in place either cash or equity so if you loose your job, get sick or don't have a tenant for a while you can keep the boat afloat.

Personal risk insurance such as income protection will provide extra comfort, especially if your cash/equity buffer is on the light side. Have TPD, life insurance (and a will in place) to cover the total debt in case of misfortune.

 

[Deltaberry]

It has been just over 1 year since i went nuts and decided to buy 2 ip's within a month of each other... And set up a smsf in the process for one of these purchases.

Both properties have been tenanted consistantly. Both are positive geared. My smsf property according to online vals is still the same valuation. My local ip has increased in value by about $10k on what it was valued at last year post renovation.

I am itching to go again sooo bad because everything is ticking along well. But... How do people manage mentally the level of debt they are in. I mean my properties are paying for themselves but i still owe close to. $700k incl my
Ppor. I am on a good income but last financial year it was down significantly. I am comfortable but it makes me a little nervous too and even though i would like to go again, potentially owing over $1 million on a single income makes me more nervous when u are also the only earner in your family.

Any advice?

That's nothing. I have millions in debt. More the merrier. All fun and games. Only money