$60,000 invest or use it to buy?

Hi All.
We have recently sold an investment property,will settle in January.I should receive about $60,000 from the sale.

I'm thinking of buying another one.
$60,000 doesn't go very far in todays market.
I'm wondering if it's best to invest it somwhere and try to get about 8% return and use the interest to help pay for a negative geared property.
Or put the $60,000 towards the purchasing price of the new property,hence reducing the initial debt and the repayments.
$60,000 really doesn't put much of a dent into a $400,000 loan as far the repayments go.

Any thoughts?Perhaps its simply six of one?

Cheers Shelly

:)
 
Originally posted by Shelly
Hi All.
We have recently sold an investment property,will settle in January.I should receive about $60,000 from the sale.

I'm thinking of buying another one.
$60,000 doesn't go very far in todays market.
I'm wondering if it's best to invest it somwhere and try to get about 8% return and use the interest to help pay for a negative geared property.
Or put the $60,000 towards the purchasing price of the new property,hence reducing the initial debt and the repayments.
$60,000 really doesn't put much of a dent into a $400,000 loan as far the repayments go.

Any thoughts?Perhaps its simply six of one?

Cheers Shelly

:)


Hi there,

Just curious why you sold it actually? :)
 
Just a quick thought, have you considered the Capital Gains Tax after your sale ? Before you do spend it all :)

Regarding what to do; I'd sit and wait until the sale is complete, until we see how prices move in the new year, unless you can find the perfect bargain now.

Another interest rate rise may see some bargains pop up.
 
Hi Shelly,

not sure of your financial situation, but I'd personally park it in PPOR loan (if u have a loan on it) OR an offset account linked to the negatively geared property you mentioned till an opportunity did arise & u know what your CGT obligations are...

If you need the negative gearing (due to being a very HIGH income earner) may change things, but it all depends on your circumstances, risk you would like to take, taking a punt waiting with the cash in an offset to see if prices ease to pick up a bargain?, etc...

Not sure if I was any help, but just thinking out loud...

Cheers,

MannyB.
 
How to use that A$60,000?

Depending on who you are.

If you have the similar background of LB, then invest it in share. Today, WBC is trading A$15. I believe LB has made a nice profit on this short trade on WBC.

If you are Ocean View who is very professional on RE, then buying the house is the way to go. There are always some opportunities there in RE.

If I have A$60,000, I will buy an old, not new, house because I know properties better and have no ideas of shares. I will buy now or around Chrismas time no matter how interest rate is doing. More good opportunities may exist now than when things are clear.
 
We sold because partner needed the money to move onto another project.
We made a rather fair profit and my partner sold the property in one week using a private internet site,so no commission........that part feels really good!

Yes have considered CG tax and will be paying it.

I don't favour shares,bad luck in the past despite several attempts.

I don't have a mortgage on my PP.

I'm not a high income earner,don't think that's the only reason to buy negatively geared property.
I want capital growth,not getting any younger.

Thanks Shelly
 
Sorry to sound confusing,the internet real estate site is obviously not private.
What I meant is, its not like Real Estate Australia,where you list with a real estate and they advertise your property there for you.

Cheers Shelly
 
Anything that beats leaving it in the bank

I favour property my self, and ones focused on capital growth at that. But managed funds or shares can be good too if you know what you're doing.

Too many choices but what a wonderful choice to have to make

Darryl
 
Shelly

Why not follow Brenda's lead (How we bought 20 IPs in 5 years) and look at smaller properties further out which you could buy outright or buy and borrow for two (or three).

If you are not getting any younger (tell me when you figure out how to do that!) then perhaps this is the windfall which gives you the opportunity to explore options which will return income to you within a reasonable space of time.

$60,000 deposit on a $400,000 property is going to take a while before it starts providing you with any income to live off or to increase further serviceability. In the short term, it will certainly have noticeable holding costs.

The truth is out there!

Kristine
 
Shelly
You can always look around for cash strapped property investors who are willing to pay good interest rates for money to use as deposits.
I know one very well!! :D :D :D
;)
 
Shelly
If you want to park the money for a while and get better than average returns it might be worth putting it into one of the safe overseas mutual funds.

I spoke to a broker recently who was quoting perfectly safe and easy returns of around 16%. As long as you declare the overseas investment in your Aust tax returns it's perfectly legitimate.

Bill
 
Thanks everyone,sorry Lissy can't help you this time:)

Kristine,I've figured out a couple of things that will help you age quicker.As for the reverse,in America human growth hormone is popular:confused:
If I hear of any break throughs,I'll let you know.


Personally I would rather park my money in the bank than into a managed share fund.
A few years I ago I took the advice from one of the American real estate gurus who favours mutual funds big time!
Checked out what the popular Aussie fund of the moment was and proceeded to deposit a small amount each month.
One of the most stupid things I've ever done.
In that same time frame if I had of bought another investment property I would be up to $200,000 richer.I pulled out of the fund,sick of waiting for a profit,my investment lost me a few hundred dollars.
Shares are not for me.

I don't know who Brenda is,she sounds rather clever.I'll do a search.
The idea of owning a heap of properties in regional towns, doesn't appeal to me personally.That's just me.
I don't love dealing with tenants,rates,land tax,repairs etc.
I would prefer to own fewer better quaility properties and feel certain of the capital growth.
I'm not concerned about living off rental income in retirement(not far away).I think it's possible to achieve a reasonable but not fantastic return without all the headaches of dealing with property.I might have a mixture of both property and parked funds.
I have a few other properties.

My partner was speaking with a very wealthy guy recently who said he puts his money with solicitors on the Gold Coast,has for years and receives 10%.

Locally,solicitor's group offering 6.5% return.

Thanks again,I have enjoyed the replies.
Still not sure what to do though.I'm favouring the 10% from the Gold Coast.
Cheers Shelly:confused:
 
Last edited:
Originally posted by wbthom
If you want to park the money for a while and get better than average returns it might be worth putting it into one of the safe overseas mutual funds.

I spoke to a broker recently who was quoting perfectly safe and easy returns of around 16%. As long as you declare the overseas investment in your Aust tax returns it's perfectly legitimate.

Hi Bill

Any additional information would be appreciated, such as:

How "safe" are these funds?

Is this return of 16% gross or net of exchange rate movements?

What if the $AUD falls (or if it rises)?

FYI, the US SEC has this to say.

Thanks.

MB :)
 
Hi Shelly,

sounds like u don't need to use the cash for debt reduction & with the property market having peaked may not be worth rushing to buy an IP just yet (unless one of the opportunities of a lifetime head your way)... (unless you have time in your hands you can consider finding a run down place to give a quick makeover & trade?)

May be worth considering investing in the stock market... you may need to do some research on the topic (some good books out there & even subscribing to various mags, ie. Shares) &/or speak to a reputable stock broker (try finding a good one asking for references)...

In terms of investing your money through a solicitor, it may be good & well BUT after seeing a couple of solicitors in the past (on TV courtesy of A Current Affair) having lost the cash of their clients, etc... but then again you may have someone you can trust & have appropriate guarantees?

Cheers,

MannyB.
 
Sorry to hear that you can't help Shelly, here I was, all ready to pay 12% too.
Sigh...
Back to waiting for those elusive private investors! ;)
 
Felicity,with such a lovely smile,those private investors shouldn't be too elusive.

I know what you mean Manny,I've seen some of those frightening
solicitors stories as well.
The local group here are very solid.Both partner and I have found them helpful with lending.
Thing is, their rates are not very impressive,either way.

I'd love to tackle a cosmetic make over,nothing major.Not much time,I'm afraid.
From what I've been told by the real estates its never been the sort of area where its been profitable.
Location and land size pretty much dictates the value.After that,it's probably a second bathroom and double garage which would be advantages for selling and renting.

I'm not in any hurry,so will be keeping my eyes open.
As usual I'm only interested in a good deal,they've already been a couple lately.I can see a few more around the corner.

I've read books on shares and even bought the Rifkin report twice!,yep,I can be a bit slow.
As I said,I just don't have it with shares.I find them boring anyway.

Cheers Shelly:)
 
Shelly,

May I suggest you invest your $60K in property through a listed property trust? Look at the benefits:

1. Non-residential sectors of the property market should perform better in the next few years. Choose between office, shopping centres, general, etc.

2. Stable distribution rate. 8% is typical, cn find trusts returning about 10%.

3. Capital growth and bonus issues are extras.

4. High liquidity - can sell in 2 seconds. Low transaction cost.

5. You can borrow via margin lending. Typically for large property trusts LVR is 70%. To sleep well I suggest borrow conservatively, sa 50%. This will give you additional 2-2.5% return bringing the total return to 12-12.5% with very low risk.

Regards,
Lotana
 
Hi,

If it were my money i'd be double checking both Lissy and Lotana's suggestions. I'd put it into a mortgage offset until a destination was decided.

-Regards

Dave
 
I think Lotana's idea of investment in a property trust is a good one - I've had some excellent returns from investment in some commercial property syndicates over the last 12 months, averaging over 9%. However, be careful of those investing in office space - today's Australian Commercial Property lift-out points to rising vacancy rates in that sector, with more pain to come

Ric
 
Shelly,
If you do want another IP and your main interest is CG....you may like to consider taking a drive North over the border .
There are a few factors at work in SE Qld. currently.
1. The Qld. cycle is later than the NSW/VIC and the 'forecasters' (BIS Shrapnel , Residex etc ) are generally predicting that's the place to be from now to 2006. 2. You've also got the sea-change thing happening. People are moving towards the water/beach. 3.You've got migration patterns going "back to normal" ( after the Kennett years ) which means people go to Qld. 4. And apparently there is housing shortage...after years of surplus. Put 'em all together and you are looking for an IP near the water, close proximity to Brisbane.
Just a few thoughts you may like to read up on .
Regards
LL
 
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