500k equity - what do I do?

[Truly Exotic]

correct me if im wrong, but isnt there a massive difference between $500k cash and $500k equity?

with the cash you can spend on whatever you want, but with the equity, don't you need to technically get a loan from the bank of which serviceability comes in into play, so if you had no job or low income but $500k equity, the banks won't lend you anything or very little?

 

[Aaron_C]

Yes that is right.

As for Commercial properties - keep looking around. At the moment retail isn't looking so good so there may be good opportunities for the right cashed-up buyer.

 

[jasonnevis]

correct me if im wrong, but isnt there a massive difference between $500k cash and $500k equity?

with the cash you can spend on whatever you want, but with the equity, don't you need to technically get a loan from the bank of which serviceability comes in into play, so if you had no job or low income but $500k equity, the banks won't lend you anything or very little?

Yes I believe you are right, the equity is not cash as it it locked in a asset, ie, house. Servicabilty is key as far as I understand. That's why I look for cashflow positive properties. because the rent pays off the loan, and as long as you can prve that to the bank then they are cool with loaning you the money.

At the end of the day, banks arn't stupid, they can limit the loan to a 20% 80% structure and at the end of the day the property you are intending on purchasing is worth what its worth, they know that and if **** hits the fan they sell the property on you and get their 80% back.

This is the way I understand it anyways.

 

[jasonnevis]

Yes that is right.

As for Commercial properties - keep looking around. At the moment retail isn't looking so good so there may be good opportunities for the right cashed-up buyer.

Any suggestions as to where I should be looking. I don't knwo a thing about commerical, but am certainly will to start investigating.

Cheers!

 

[Aaron_C]

Start with CBD properties and see what you can get for your budget. Take time to look at leases, understand the mix of tenants in that area and what they are looking for. Also get an indication of yields/market rents for the type of property.

 

[veseli]

I think you might have a point there with the next coming GFC, from my research it will dwarf the 2008 blip.

Will the aussie realestate market dodge it you think... we are in a very good position...hmmm

I wouldn't be tossing it with my dollar that's for sure. You think we are in good position? think twice, Australia is hiding it through media. What media says that's what people believe, in reality 90% of business is struggling to pay its bills. But that's another topic.

My way of making money is short term investment. Buy Build Sell and it works perfectly.

Deep inside me i think you know how to double it too, you just want other peoples opinion, if you were capable of making 500k im sure you know how to double it too, unless it was luck or a gift.

 

[Truly Exotic]

Yes I believe you are right, the equity is not cash as it it locked in a asset, ie, house. Servicabilty is key as far as I understand. That's why I look for cashflow positive properties. because the rent pays off the loan, and as long as you can prve that to the bank then they are cool with loaning you the money.

agree,

are you looking for severely cashflow positive properties or basically neutral ones??? my opinion is that unless its commercial, or serviced apartments, or renos or dual occ, that stand alone residential cashflow positive properties are very hard to find or maybe I just suck at finding them (which Im happy to be proven wrong)

 

[Rolf Latham]

agree,

are you looking for severely cashflow positive properties or basically neutral ones??? my opinion is that unless its commercial, or serviced apartments, or renos or dual occ, that stand alone residential cashflow positive properties are very hard to find or maybe I just suck at finding them (which Im happy to be proven wrong)

just got to use the right buyers agent : )

just had a client exchange on a house and granny In Blacktown NSW with a yield of ...............14 %.

ta
rolf

 

[Truly Exotic]

just got to use the right buyers agent : )

just had a client exchange on a house and granny In Blacktown NSW with a yield of ...............14 %.

ta
rolf

wow rolf,

are these and similar deals widely available or are these one in a million? or ones that the average joe like me has access to?

and may I ask what price range?

 

[jasonnevis]

just got to use the right buyers agent : )

just had a client exchange on a house and granny In Blacktown NSW with a yield of ...............14 %.

ta
rolf

Yes that's a great return, which buyers agent was it?

 

[Rolf Latham]

wow rolf,

are these and similar deals widely available or are these one in a million? or ones that the average joe like me has access to?

and may I ask what price range?

Hiya


its not one in a million, but its NOT something you can set as a benchmark for a BA to find for you either, that would be unrealistic.

Depending on the demographic and your willingness to build, you can get into double digits, if not by purchasing a completed product, then certainly buy buying a suitable site and adding granny


Middling 4s

ta

rolf

 

[Rolf Latham]

Yes that's a great return, which buyers agent was it?

none other than Jacque Parker that posts a lot here.


BUT, note, as per my other post above, dont set such expectations on any BA to find such a particular property. They exist and they occasionally have a weird return to value ratio, but they are needle in haystack variety

We have had great deals come across our table from all the folks that post here regularly that are BAs.including Propertunity, Andrew Allen, Nathan etc

ta

rolf

 

[emptyvessel]

If you have an income surplus of 100 k per year or more ( and have surety of that income), id certainly be looking to gear at > 80.

ta
rolf

Rolf, can you help me understand why you would do this? Is it because the tax deduction for LMI at 100k+ neutralises the cost of the premium in terms of annualised cashflow?

 

[Van Persie]

Hi,

Currently have 500K equity to play with. What would you do?

So many options I'm procrastinating....I know, it's such a hard position to be in....


Cheers for any suggestions

Congrats. Celebrate, go on a holiday. That's what I'd do.

 

[jjestate]

So your saying buy 2 x ips for 500k each... where about would you get them?

Cheers!

2 to 3x off the plan IPs would be suitable, ideally not in the same location.

like Rolf said 14% yield isnt every day stuff and if you were only to consider IP at those yield that would be unrealistic.

There are plenty of IPs in particular off the plans which have an current market yield at 5% to 6% (likely to be more when complete). In my opinion, those are realistic and certainly great opportunities available for you consider in terms of IP.

 

[china]

probably no capital growth

just got to use the right buyers agent : )

just had a client exchange on a house and granny In Blacktown NSW with a yield of ...............14 %.

ta
rolf

The trade off is that there is close to zero capital growth for these properties.