$600k to play with, Advice?

Hi Community,

Im currently looking at buying my first house and IP. if you were in my suituation what would you do and how would you structure it, buy one cash..yes/no? i have worked my a*se off and have $600k to play with.

All advice much appreciated
 
Hi Community,

Im currently looking at buying my first house and IP. if you were in my suituation what would you do and how would you structure it, buy one cash..yes/no? i have worked my a*se off and have $600k to play with.

All advice much appreciated

Pls explain "your situation", as it makes a massive difference to decisions.
Casn help better then.
 
Pls explain "your situation", as it makes a massive difference to decisions.
Casn help better then.

Im a FIFO worker 200k+ a year still eligible for first home buyers grant,
I'm looking at buying my house and few IP but should i pay cash for my PPOR and put 20% on each IP?

Im single atm, no kids, have a job, income 200k+, i want to be able to live of my IP
 
Wow. Very impressive position to be in with ample options available to you.

You've got the idea right about using debt to fund IP's and paying down non deductible debt.

If you aim to get 5+ properties, i'd be looking at going at 20% deposits for each.

Through a finance lense - can you earn 5%+ after tax on your cash?

If you can, your probably best investing those funds elsewhere, and using the after tax return to pay down your PPOR.

For example, i've invested in a couple positive cash flow properties earning well above 5% on my cash...and i plan on using the excess returns to pay down my future PPOR.

Cheers,
Redom
 
Hi Community,

Im currently looking at buying my first house and IP. if you were in my suituation what would you do and how would you structure it, buy one cash..yes/no? i have worked my a*se off and have $600k to play with.

All advice much appreciated

Talk to a lawyer about giving your cash away and then borrowing it back. Asset protection strategies and tax strategies abound...
 
Im a FIFO worker 200k+ a year still eligible for first home buyers grant,
I'm looking at buying my house and few IP but should i pay cash for my PPOR and put 20% on each IP?

Im single atm, no kids, have a job, income 200k+, i want to be able to live of my IP

If you paid cash for a 600K PPOR, you'd own it outright.

Then, you could consider taking out a facility to draw out 80% of its value (480K) to use towards the purchase of 8 x NRAS INV properties.

The 480K would consist of 8 x 60K tranches.

Each 60K tranche would cover 10% deposit + stamp duty + a 10K cash buffer for the purchase of an NRAS property to the value of 350-400K . You would borrow the balance ( 90% + LMI) against each of the 8 x NRAS INV properties.

Each NRAS property should produce approximately 18-22K of deductions, so 8 X NRAS would result in your assessable taxable income being reduced by @ 150-160K ie. from 200K to @ 50 or 40K. So you'd only be paying tax on about 20-30K of your 200K salary, as the first 18.2K of your income is tax free . On the remaining 20-30K of taxable income you'd be paying 19% Tax on the majority of it, and 32.5% on a portion of it. Broadly speaking, that would mean you'd be paying approx 5-7K in tax on your 200K income.

Each NRAS property should also generate @ 7-8K CF+ tax free , so 8 x NRAS properties would add an additional 56-64K of tax free income to your 200K salary. Even if you were to be more conservative and assume each of the 8 X NRAS generated 5K tax free, that would still equal 40K.

So you'd have nothing but INV debt, you'd have 240K ( possibly 256-264K) of income and only be paying @ 5-7K in tax. The resulting 233-257K of tax free income would then allow you to aggressively pay down

1. the 480K INV debt you had used to fund the 10% deposits , stamp duty etc for the 8 X NRAS - within 2-3 years
2. the majority of the 8 x 315-360K NRAS INV loans

At the end of 10 years, you'd have your PPOR completely debt free, the majority of your INV debt paid out, and be generating a significant rental income from the 8 properties, which will have returned to full market rent after the 10 years participation in NRAS has ended. If each property started at 350-400 per week today , they only need 3% compounding increase to rent to be generating 470-550 per week by the 11 th year. That equates to @ $3760-4400 per week, or 195-229K per annum. If you have little or no debt left on them, there's your passive income for life...

Of course, if you used the equity in your PPOR to continue to invest after paying it off, you may well have a much larger portfolio and be in an even stronger position. But if you just used the 480K of equity once, for the 8 x NRAS properties, this is what you may achieve...
 
It always feels good to have a roof over your head with no encumberances. No one chasing you for any payments - rent or mortgage. A fully owned PPOR is a sound building block for the future. As you accumulate more income, you can borrow against the equity of your PPOR to purchase other investments be they shares, IPs, currency, etc, comfortable in the knowledge that your ongoing income can help you sustain these investments should they incur a loss and hence, your lifestyle should never be compromised. I fully advocate paying for your PPOR in cash.
 
Personally with a big income and 600k cash I would concur with China and Euro. I would buy the poor for cash (possibly talking to a solicitor about asset protection first) then borrow it all back (deductible) and buy a bunch of investments (NRAS or not, depends on your preference, perhaps a mix, I am yet to see NRAS bargains so I struggle to get exited even though the tax income is nice) regardless you could spread risk and buy across several states in different markets and at different price points too.
 
Hi Community,

Im currently looking at buying my first house and IP. if you were in my suituation what would you do and how would you structure it, buy one cash..yes/no? i have worked my a*se off and have $600k to play with.

All advice much appreciated

Depends on your goals.

Personally:

- No not buy in cash
- No not buy a house, but rent one
- Will aim to double that money in 12 months instead
 
Sit on it for a while. Get ideas from many people, but don't rush into anything. Educate yourself. Better to go slowly and carefully than diving into something risky. If you've worked hard for it, you don't want to see it disappear. Beware of spivs who are willing to take your money. promising that you will get rich quickly. Remember: the money is yours. Don't hand your power/money making decisions over to anyone else. If you do, and things go sour, it will be a hard lesson. If you decide to buy property, research the area for a while. If you want to buy shares but haven't got too much experience, buy only in the top 50/100. If you have someone in your family who has experience and a good track record in investing, ask their advice. If they don't have a good track record, don't listen to anything they say.
 
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