$300k cash in bank - what would you do?

[wobbycarly]

1. I guess you'd have to buy above average yield tobuy a $300k proerty which rents at $500/week, which I have never done, but apparently others have done.

Dazz picked out an office renting for ~$25k pa, listed for sale at $299k.

2. If you own one outright, then the bank will lend you $300k for another and the loans for both will be at 50% LVR plus purchasing costs. Dare say one might have to cross collatoralise to do so

Ka-ching! Or, HYPOTHETICALLY, take 66% of the $300k office, giving a deposit of $200k. HYPOTHETICALLY leverage that to, say, 66%, to buy ANOTHER office at $600k, renting for another $25k pa. (likely much more, like $75k?)

There's my $900k portfolio (except now I'm leveraged up the billy-o), but it's probably bringing in $100k pa.

Your original question about the suggestion of lying on the beach was not suggested by Aaron, it was suggested by Dazz, who I doubt was suggesting it as advice for someone who only had the $300k they came across magically in this scenario...

(I think )

Glad I don't have Deltaberry scrutinising my numbers - I guess I'm not a household name yet.

(Why am I still arguing this? )

 

[jaycee]

wobblycarly, delta posed the first 2 questions to Aaron, who suggseted bying 2 resi properties.

I dare say Dazz's sounds like the way to go.. it would even bring my mighty portfolio to neutral level.

Now I just need $300k

Then I can try wrap my head around byinig another one as you said....





but hang on, I just remembered... commercial ? what about vacany rates ?

 

[veseli]

I think someone that new how to make 300k cash, surely knows how to double it too.

 

[Dazz]

hang on, I just remembered... commercial ? what about vacany rates ?

Don't do it dude, the risk just isn't worth it. It'll send you broke.

 

[Sunfish]

I think someone that new how to make 300k cash, surely knows how to double it too.

I accept your logic but 300k can "just happen". If someone has made a few mill and gone broke then the odds are that they could do it again.

 

[Aaron_C]

Don't do it dude, the risk just isn't worth it. It'll send you broke.

tenanted residential properties also can send you broke

 

[Deltaberry]

Dazz picked out an office renting for ~$25k pa, listed for sale at $299k.

Ka-ching! Or, HYPOTHETICALLY, take 66% of the $300k office, giving a deposit of $200k. HYPOTHETICALLY leverage that to, say, 66%, to buy ANOTHER office at $600k, renting for another $25k pa. (likely much more, like $75k?)

There's my $900k portfolio (except now I'm leveraged up the billy-o), but it's probably bringing in $100k pa.



Glad I don't have Deltaberry scrutinising my numbers - I guess I'm not a household name yet.

(Why am I still arguing this? )

So the first property's not unencumbered anymore... ah no wonder you're not a household name

But don't worry, neither am I, or actually...

 

[wobbycarly]

So the first property's not unencumbered anymore... ah no wonder you're not a household name

But don't worry, neither am I, or actually...

Who said it had to remain unencumbered?

 

[Deltaberry]

Haha then have fun retiring at the beach - sleeping - as that's about all that one could do with that sort of debt and income, as I said originally.

 

[Sunfish]

The stock market is a dangerous place now. Wouldn't go there for dividends.

 

[jaycee]

Haha then have fun retiring at the beach - sleeping - as that's about all that one could do with that sort of debt and income, as I said originally.

HAha ???

As previously clearly pointed out.

Aaron suggested buying 2 houses worht $600k with a mortgage....

Dazz suggested, since he already has enough income to sleep on th ebeach, he would buy a $300k opffice which gave him extra $25k income and continue sleepihng on the beach.....

No one asked the qeusitno "how do you I make $300k pay me enough income so that I can retire and sleep on the beach all day tomorrow ?" and nobody answered it


lol

 

[PropertyDave]

HAha ???

As previously clearly pointed out.

Aaron suggested buying 2 houses (WRONG) worht $600k (WRONG) with a mortgage....

lol

if you quote someone, make sure you quote them accurately.

ps...im not having a go at you and I dont care about your argument with Deltaberry, just letting you know.

because witha clear and unencumbered title, most banks will doa 50/50 loan on another comm property.

so add the $500pw you're gettig now, plus the potential of a further $500 a week against (somethign bigger but mortgaged) and that's $52k a year without blinking and a $900k portfolio.

terrible.

 

[Aaron Sice]

Aaron said:

1. Buy $300k property. This property will have unencumbered title, so that means it is fully paid off. This property generates $500 rent per week.

2. Buy a second, $600k property with $300k equity and $300k loan.

My question was, where does the second lot of $300k equity (in bold) come from? Didn't you already spend it buying the first property?

Which goes back to my original question, how does one lie on the beach all day and chill with $300k?

Regards,
Person Who Scrutinises Numbers All Day for Household Names

DB,

the $300k would come from browwoing against the clear an unencumbered title.

so it ends up being $250k at an 80% lend against it....point is, you use the unencumbered title for a better lending rate/conditions.

point is, you're using the unencumbered title as leverage and getting a hassle free (comm rent) and higher return (comm rent) compared to a resi tenancy.

you now have a lend for one bigger property at 50%, and one smaller property at 80%.

 

[Aaron Sice]

Who said it had to remain unencumbered?

i never said that.....why do people put words into my mouth?

you guys are confusing me and it's my comment you're debating.

 

[Ed Barton]

i'd leave it in the bank, and am.

 

[wobbycarly]

So the first property's not unencumbered anymore... ah no wonder you're not a household name

But don't worry, neither am I, or actually...

Who said it had to remain unencumbered?

i never said that.....why do people put words into my mouth?

you guys are confusing me and it's my comment you're debating.

Wasn't me. Somehow I think DB took your point about commercial properties and morphed it into unencumbered resi.

 

[Michalsz]

i'd leave it in the bank, and am.

Problem with leaving it in the bank is that future value of your money if next to 0 growth

Best interest on the market for cash at call (at 300k) is around 6%
minus tax at 37% (6.01 / 1.37) = 4.4% (most likely bracket for most people)
Inflation is 3.5%
Net gain is around 0.9%

So yes it's safe, but it will take a 100 years to get anywhere

 

[Deltaberry]

DB,

the $300k would come from browwoing against the clear an unencumbered title.

so it ends up being $250k at an 80% lend against it....point is, you use the unencumbered title for a better lending rate/conditions.

point is, you're using the unencumbered title as leverage and getting a hassle free (comm rent) and higher return (comm rent) compared to a resi tenancy.

you now have a lend for one bigger property at 50%, and one smaller property at 80%.

That makes more sense

I love philosophical discussions.

 

[tom32]

No one asked the qeusitno "how do you I make $300k pay me enough income so that I can retire and sleep on the beach all day tomorrow ?" and nobody answered it

Put it on anything paying better than 6 to 1 odds at fixed odds.

Don't put it on the totaliser or you will find it comes in a little not long after you get your bet on.

Then buy Commercial properties with the untaxed winnings. Too easy.

Putting jokes aside apart from that risky proposition I suspect 300k is only a stepping stone to retirement. It is not of itself going to be enough, but the first 300k is the hardest to save so if you have that much you are well past half way to a million. Or better if you have been gifted it you have a massive 10 year plus start on someone who has to start from scratch with an above median job.

Say you can save 20k from your PAYG income per annum.

Now you get another 20k in income off your investments total $40,000.00 p.a. saved so your saving rate is double what it was when you first started investing and only had your regular PAYG income savings.

 

[Aaron Sice]

That makes more sense

I love philosophical discussions.

it's all hypothetical.