26 Year old looking for advice

Ok here goes, my first post.

Hey all a little about myself. Im a 26 year old Male, single, no kids, no commitments. Currently working in a fifo job on $240k /year surplus $2300pw which will finish up in the next 6months, leaving me moving back to brisbane fulltime dropping my annual wage to roughly 80-90k/year surplus $700pw

To date i have looked after my own financial situation and kind of winged it, but its time i get serious, as i don't see myself slaving away working 50-60 hours per week for the next 40 years."retirement"..

My situation to date

Ip #1 in which i am 1/3 partnership with parent and brother bought 2009
- Waterford West (logan) 5000sq property backing onto the logan river
- Currently rented out
- loan $480k
- $6900 in offset account
- Costing me $100/week (this is more then needed for unforeseen costs)
- value to date $520k

Ip #2 in which i am 1/3 partnership with parents and brother bought in 2011
- casuarina (Northern nsw) 3 bedroom 2 bath unit
- currently rented out
- loan $370k
- $8800 in offset
- costing me $120/week ( this is also more then needed for unforeseen costs)
- value to date $450k

Ip #3 in which i am 50/50 with my parents bought 2011
- block of land on russel island
- I own half of this outright my 50% value is $30k

Ip #4
- one bedroom unit in south brisbane purchased off the plan in 2014
- currently rented out ( this is a NRAS property )
- rent $301 /week
- current loan $320k
- $170k in offset account
- this is now giving me a return of roughly $40 per week, this is not including the NRAS incentive.

Also 15k in the spec share market, yes i like a little risk.

Within the next year or two i will be hoping to buy my own ppor, if i am still single this will hopefully be a dual living property in which i will live in the smaller of the two living spaces.

If i was your son, nephew, best mate, what advice would you give me?
Continue purchasing property ( have been looking for cash flow positive properties in the logan area )
Possibly sell one, two or all mid way through the year as the market has "peaked" has it?
Or continue saving putting all savings into my south brisbane property offset account until i am ready to purchase my ppor?
Or look into mutual funds?

All comment are welcome
Thanks
 
keep buying properties

wouldnt sell if you dont need to

maybe see an accountant to have some structures set up for future buys (for asset protection and to minimise land tax)

wait for the next boom (could be before you turn 30) which will see your portfolio double, then you can share the fantastic news with us and we can all discuss what you can do with all that juicy equity :D

keep up the great work!
 
Thanks for the reply cads, i do need to see another accountant, start to get a little professionalism about my situation.

Does anyone have any thoughts on the logan/Gold Coast area or cash flow & CG?

Lets hope sooner rather then later we all see some juicy equity in our properties.
 
The properties bought under a shared arrangement can affect your future borrowing capacity, while it may not be a problem now once your income reduces being liable for any other people's loans could affect your serviceability.
It would be best to get some advice from a accountant or broker regarding this.
Hugh
 
I would suggest this:

1. Figure out your end goal - dream big
2. Form the best team you can, mortgage broker, accountant, solicitor etc
3. Buy and leverage up
4. Sit and wait for time to do it's magic
5. Diversify with the built up equity, maybe shares etc
6. Retire and do whatever you want

:)
 
If i was your son, nephew, best mate, what advice would you give me?

Tm413,

As Michael X says, what and where to buy is dependent upon your chosen investment strategy.

Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

You see property is merely the vehicle. Your strategy is how you intend driving that vehicle to get to where you are wanting to go (ie need $xx income for financial freedom in 21/2/2025). No good buying a small shopping car if you intend driving interstate on a family holiday.

What strategy/s are best for you is determined by where you are wanting to go, the time frame you want to get there in and how hands on along the way you want to be ( manual/automatic etc) - all based around your personal risk profile.

I hope this provides some food for thought.

What is your chosen investment strategy?
 
Thanks for your reply Michael , Hugh & Rix

My ultimate goal is by 40years old age (14 years)
-have my PPOR debt free say 500k in today's value
-$100k passive income
- Provide a financially stable future for my "future wifey & children"

1.7mil in equity/cash at hand @ 6% will give me my desired target!

My total equity at the moment sits roughly at $400k

Therefore $1.7 mil (equity wanted when 40) + 500k (ppor) - 400k ( equity on hand atm) = $1.8mil

$1.8mil/14 years = $128,500 pear year is what my worth needs to grow!

Doing rough numbers looks like i need to step it up a gear!


:0
 
Hey Tm413,

Well done on what you have achieved so far. That is really amazing. I laughed to myself when you said it was time to get serious. Mate, you are so on your way already. More time in the market and the more equity will come.

One piece of advice I would give and it was touched on above a bit is to try and separate yourself from your brother and parents if possible. All may be smooth sailing now but circumstances change in the lives of others and all of a sudden there could be a chance that you are forced to sell. Forced sales bring about arguments and then the possibility of a fire sale.

Another major reason to separate is to have a stand alone asset of your own that you can then choose how much to leverage and borrow against.

One way of separating would be to have a meeting with your parents and brother and discuss how to break up the properties fairly. It sounds hard work now but it will most likely be harder work later. Especially if you bring a wife into the situation.

I have been through farm succession which was tough but once my wife and I were separated from family we were able to move forward in a big way and have never looked back. The shackles were released.

Something for you to think about anyway. Don't forget this is only my advice and of course you can do what you like.
 
Definitely agree with the above re: separating assets from family. It is better for a number of reasons that you go out on your own and build a portfolio of your own.
 
Hi Charlie, thankyou for reading & thankyou for your input, it is a situation i need to get under control as soon as i can. I do wish i had gone about the structure a different way, but at the time i was 19yr old & it sounded like a good idea as a stepping stone.

My fear now is that my parents & brother won't be able to service the loans alone as they also have other commitments & living off a minimum surplus as it is.

I guess its something i need to consider as a serious option to pull away & take my own path.

As im on a healthy wage at the moment with low rates (which i personally think will be around for the foreseeable future 2years minimal IMO ) should i be looking at securing a neutral fingers crossed positive cash flow property if i can find one, as i will look more favourable to the banks. Will a drop in wage to say 80k / year limit me from borrowing say 300k?
 
I too would suggest consider separating yourself from the others for a few reasons:
1. Estate planning
2. asset protection

and most importantly,
3. Borrowing capability.

Also keep in mind you should set yourself up with as much cash as possible for the PPOR purchase. so the others buying out your share may assist inn this regard. You can then pay a bigger deposit for the PPOR and you can then reborrow to invest.

You have done well so far and good to see you using offset accounts instead of paying loans down.
 
Hi Charlie, thankyou for reading & thankyou for your input, it is a situation i need to get under control as soon as i can. I do wish i had gone about the structure a different way, but at the time i was 19yr old & it sounded like a good idea as a stepping stone. It was - you've done well

My fear now is that my parents & brother won't be able to service the loans alone as they also have other commitments & living off a minimum surplus as it is. Maybe you need to take a bigger loss when you negotiate the separation so it puts them in a better position. This will make them more likely to let you separate. It might feel bad to take a bigger hit now but it is better than taking a massive hit later.

I guess its something i need to consider as a serious option to pull away & take my own path. It has to be done one day in the future anyway. It will be more awkward later.
As im on a healthy wage at the moment with low rates (which i personally think will be around for the foreseeable future 2years minimal IMO ) should i be looking at securing a neutral fingers crossed positive cash flow property if i can find one, as i will look more favourable to the banks. Will a drop in wage to say 80k / year limit me from borrowing say 300k? I can't really help you out on this one
Answers in bold above.
If I were you try and get one of the shared properties in your name only and then you have a massive base to build significant wealth and quite quickly with the low rate environment.
 
I'd also suggest that you look at the shared properties. While it is all going well for you now, once your income drops, you maybe in a bit of bad situation, especially if you want to buy a PPOR.

I like the idea of you being a bit 'generous' to your parents & brother. Can you buy them out? I'm not sure of the values, or the rents in the area's, but from looking in, the waterfront property could be good to keep, but the Unit seems a bit expensive for a little town, plus the shortfall seems quite a bit, especially if all parties are contributing $120pw to hold it.

I'd sort it out now, before you loose the big $$. Let your parents know that you'd like to buy a PPOR, but you won't be able to unless you opt out, or buy them out of the shared properties.
 
Welcome.
You have done well so far. Good on you.
I agree with the restructuring.
Rixter makes some good points with goals.
Your goal of $1.8m is quite achievable in 14yrs. If you keep focussed I'd say you will surpass that.

I know when I first set my goal (for 6yrs) after 2 years I upped it by 50% (and achieved it). Reach for the stars!:D
 
My prediction:

You're only able to borrow now because you have such a high income to make up for a rubbish structure for your loans (don't worry I've been there and done that).

The problem with owning a property with your family members, is that the bank looks at it this way when calculating serviceability: You get one third or half the rent (depending on your share of ownership) however they calculate that you need to service 100% of the loan. So say rent is $300 pw, bank says you get $100 of that, but you have to service the full $300 000 loan.

So you're going to run out of serviceability quick smart. Probably the only reason you're currently surviving is because of your very high current income. Head back to earth with a normal income and according to the banks calculators you probably won't be able to service even what you currently have, let alone buying a ppor.

So either buy a ppor now while you have the high income.

Or buy out your parents.

Or get everyone to agree to sell.

Note if you buy out your parents/brother they will need to pay capital gains tax, and you will need to pay stamp duty. Plus if there are any fixed loans, they will need to be paid out, plus you will need to pay new loan registry fees, etc...

I would be tempted to try and convince everyone to just sell up, use your profits and start buying your own stuff. Maybe sell in the financial year when you go down in income so that you don't pay as much capital gains tax.
 
My prediction:

You're only able to borrow now because you have such a high income to make up for a rubbish structure for your loans (don't worry I've been there and done that).

The problem with owning a property with your family members, is that the bank looks at it this way when calculating serviceability: You get one third or half the rent (depending on your share of ownership) however they calculate that you need to service 100% of the loan. So say rent is $300 pw, bank says you get $100 of that, but you have to service the full $300 000 loan.

So you're going to run out of serviceability quick smart. Probably the only reason you're currently surviving is because of your very high current income. Head back to earth with a normal income and according to the banks calculators you probably won't be able to service even what you currently have, let alone buying a ppor.

So either buy a ppor now while you have the high income.

Or buy out your parents.

Or get everyone to agree to sell.

Note if you buy out your parents/brother they will need to pay capital gains tax, and you will need to pay stamp duty. Plus if there are any fixed loans, they will need to be paid out, plus you will need to pay new loan registry fees, etc...

I would be tempted to try and convince everyone to just sell up, use your profits and start buying your own stuff. Maybe sell in the financial year when you go down in income so that you don't pay as much capital gains tax.

Or go to lenders that apportion the debt! :)

It does limit your lender choice significantly, but as with most quirky situations, solutions are available in the competitive lending environment.

Cheers,
Redom
 
Or go to lenders that apportion the debt! :)

It does limit your lender choice significantly, but as with most quirky situations, solutions are available in the competitive lending environment.

Cheers,
Redom


Which banks would work for that setup? Any cons?
 
The cons are that it will probably hold you back in terms of achieving a large portfolio on your own. You can undoubtably go further on your own than you can using the tiny pool of lenders that will apportion the debt.

The pro is that you could probably go and buy your IP/PPOR sooner rather than later. It depends how big you want to get, how complex you want to make it and how soon you can find a solution to the joint ownership situation.

In a nutshell - if you want to grow a really large portfolio, you'll need to sort out the joint ownership situations.
 
Or go to lenders that apportion the debt! :)

It does limit your lender choice significantly, but as with most quirky situations, solutions are available in the competitive lending environment.

Cheers,
Redom

Are amp still doing that?
 
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