Advice needed (another new goofball)

[The_KID]

Hello all i am brand new to this forum so go easy on me.

This is very similar to another thread in this area and i apologise in advance.

A little about me....

I am a 22 yo real estate agent who has brought up on a love of property.

At the age of nineteen I purchased a block of land for $120,000 and it has taught me some great lessons. It was an excellent way of forcing me to save money and it was a good practice to cut my teeth in the world of dealing with property professionals. i currently owe 80,000 on the block.

This time last yr myself and a friend purchased a four bedroom house for 375,000, which was approximately 40,000 under market value. had it evaluated by a collegue at 415,000 last week. I currently owe 180,000 on the house(for my half) . We have two mates renting a room off us at $110 a week each.

Two weeks ago i have onsold the block of land for 161,000 giving me approximately 20 grand profit but $75,000 clear to play with.

Now my question;

1. Should I place the 75k on my other loan, giving me a balance of around the 100k and pay it off as quickly as possible ( i believe i can have it paid off in three years)?

2. Should i possibly look at another investment property, probably a small house on large block with subdivision potential, with the 75k as a deposit and rent that out or redevelop?

3. Should i punt all my money on a david hayes two yr old at caufield next saturday?

I know its probably a stupid question, but reading the posts on here you all have good things to say and i would appreciate any advice (on property, not horses)

Thank you,

The KID

 

[Peter_Tersteeg]

It depends what your long term goals are. Are you intending to purchase more property for greater wealth in the long run or do you want to own properties with little to no debt on them?

In the short term (whilst you've got nothing else to do with the money), put it on your existing mortgage and reduce your repayments. Make sure you've got access to it through a redarw facility. When you do find the next property, use it as a deposit.

Paying of houses is a good thing, but if you want to create wealth, leveraging your money rather than aiming to pay everything off will get you there faster. In your situation I'd go for option 2.

Option 2 is riskier than option 1 (property prices don't always rise, subdivisions don't always make money), but the risks can be managed and are usually quite low.

Option 3 has the highest potential reward, but I'd suggest the risks are way to high.

 

[myoung]

As you have choice of where you put your $75K, the answer most likely lies with where you plan to live(ie non deductable debt).
As a general rule, pay off loans that are not deductable first or have an 100%offset account, especially if you plan to turn into an IP at some stage. ie you are better off tax wise to owe money on your IP rather than PPOR.

 

[marg4000]

I suggest that, for now, you place the money into a 100% offset on the house you are living in. This way you preserve the original debt should you turn this house into an IP in the future.

Then you are well placed to take advantage of future opportunities as they arise.
Marg

 

[The_KID]

thanks for the advice.

flicking through this site i realise how much i have to learn.....and i thought i knew it all.

At this stage i might lob the 75k on the loan and start looking in the area i think is ready to go bang!!!

Thanks again.

KID

 

[Aimjoy]

At this stage i might lob the 75k on the loan and start looking in the area i think is ready to go bang!!!

Sounds like Grampa Simpson at the casino:
Grampa: Put it all on 41. [nudges Homer] I've got a feeling about that number.
Roulette man: The wheel only goes to 36.
Grampa: Okay, put it all on 36. [nudges Homer] I've got a feeling about that number.