I've been up & down on getting into the resi IP game since I can remember, always though we'd amass a brazillion properties and retire at 30 squillionaires, I'm now 37 and only have one, and that was sort of an accident.
We've almost pulled the trigger on IP's a few the over the years, and for one reason or another bottled it at the last minute or had the "bargain of a lifetime" snatched away from under us. I guess when it comes down to it, we are quite risk averse.
Moving here form the UK 5 years ago meant we were a litttle unsetlled for a while, trying to fit in and find direction. In this time we rented a house, built a house, sold that house and reno'd a 100 year old house which has been our PPOR for the last 2 years and we love it. All the while I keep popping my eye in here and every few months, look at properties for sale again and crunch some numbers.
Where am I going with this? We suddenly find ourselves 'settled' for the first time since we left the UK. We never felt particularly unsettled or homesick, but until moving to where we live now we look back and relise this is where we want to be. We can happily see ourselves in this spot for the next 5 years at least, and most of the hard yards are finished on the house so we can relax a little bit, which means my mind has time to wander again and look at investing.
Our situation is that we have our old house in the UK which we rent out, this one we just forget about and let do it's thing. It turns a profit, but the exchange rate is so low that it all gets left in the UK. It's all documented for tax here though, so all above board!
Our PPOR is valued at around $600k and we owe $410k on it, we have a 100% offset with $75k parked, so we're looking at $600k val and effective equity of about $265k.
Mortgage rate on the loan is 5.49%
We both earn good wages and have no kids, no car loans and no consumer credit.
Relatively speaking, we have a lot of disposable income each month with goes straight into the offset. Every dollar saved is a guaranteed net 'profit' of 5.49% due to the offset. At the rate we are traveling, we hope to have the PPOR pad off in full in 3.5 to 4 years.
Our thinking for the last year or so has been that we didn't really want to go down the path of tying to amass loads of property if it meant being really stretched and constantly worried, so was there any point in just picking up one or two properties over the next few years; would that be enough to earn enough future income to even bother with? What were out goals, well, we'd like a nice couple of acres in the country and enough money to enjoy it. So, we thought get the house paid off, then buy a weekender close enough so we 'd actually use it but far away enough to be affordable once the PPOR is paid off. The end result would be a fully pad off house as a 'sink' for retirement, and a weekender that should also be well paid off by then too. Sounds "safe"?
Wite this current disposable monthly income comes the temptation to sink it somewhere else though. So, my question in a roundabout way is, in the current market, is it really worth investing in another property or two over the next 1-3 years as opposed to the safe bet of parking it all in the offset?
We'd be looking at properties in outer suburbs, (or potentially Bendigo as that caught my eye a little), and looking at something in the $250-$350k range with rents around the 5% mark. Crunching the numbers in my spreadsheet, if we borrow the deposit against he PPOR to maximise tax dedections, we could potentially buy a $300k house with out of pocket monthly costs of around $200-$300. We could do the same again in 18 months and still have the PPOR paid off in about 4-4.5 years.
$200-$300 per month to buy a house seems like a no brainer, but if the market stays flat, (or goes backwards!), or you get a dodgy tenant that ends up costing you repairs etc, or a few months vacancy, I can't help thinking that the costs could end up more than we'd 'make' sitting that money in the offset untill the PPOR is paid off?
Sorry for the ramble, my head is spinning from spreadsheets, calculations and realestate.com.au adverts is all, guess I just wanted to put something down, read it back and put it out there for some less analysys-paralysed opions and to remind me why it would be a good idea to start investing in property.
Cheers.
Tone.
We've almost pulled the trigger on IP's a few the over the years, and for one reason or another bottled it at the last minute or had the "bargain of a lifetime" snatched away from under us. I guess when it comes down to it, we are quite risk averse.
Moving here form the UK 5 years ago meant we were a litttle unsetlled for a while, trying to fit in and find direction. In this time we rented a house, built a house, sold that house and reno'd a 100 year old house which has been our PPOR for the last 2 years and we love it. All the while I keep popping my eye in here and every few months, look at properties for sale again and crunch some numbers.
Where am I going with this? We suddenly find ourselves 'settled' for the first time since we left the UK. We never felt particularly unsettled or homesick, but until moving to where we live now we look back and relise this is where we want to be. We can happily see ourselves in this spot for the next 5 years at least, and most of the hard yards are finished on the house so we can relax a little bit, which means my mind has time to wander again and look at investing.
Our situation is that we have our old house in the UK which we rent out, this one we just forget about and let do it's thing. It turns a profit, but the exchange rate is so low that it all gets left in the UK. It's all documented for tax here though, so all above board!
Our PPOR is valued at around $600k and we owe $410k on it, we have a 100% offset with $75k parked, so we're looking at $600k val and effective equity of about $265k.
Mortgage rate on the loan is 5.49%
We both earn good wages and have no kids, no car loans and no consumer credit.
Relatively speaking, we have a lot of disposable income each month with goes straight into the offset. Every dollar saved is a guaranteed net 'profit' of 5.49% due to the offset. At the rate we are traveling, we hope to have the PPOR pad off in full in 3.5 to 4 years.
Our thinking for the last year or so has been that we didn't really want to go down the path of tying to amass loads of property if it meant being really stretched and constantly worried, so was there any point in just picking up one or two properties over the next few years; would that be enough to earn enough future income to even bother with? What were out goals, well, we'd like a nice couple of acres in the country and enough money to enjoy it. So, we thought get the house paid off, then buy a weekender close enough so we 'd actually use it but far away enough to be affordable once the PPOR is paid off. The end result would be a fully pad off house as a 'sink' for retirement, and a weekender that should also be well paid off by then too. Sounds "safe"?
Wite this current disposable monthly income comes the temptation to sink it somewhere else though. So, my question in a roundabout way is, in the current market, is it really worth investing in another property or two over the next 1-3 years as opposed to the safe bet of parking it all in the offset?
We'd be looking at properties in outer suburbs, (or potentially Bendigo as that caught my eye a little), and looking at something in the $250-$350k range with rents around the 5% mark. Crunching the numbers in my spreadsheet, if we borrow the deposit against he PPOR to maximise tax dedections, we could potentially buy a $300k house with out of pocket monthly costs of around $200-$300. We could do the same again in 18 months and still have the PPOR paid off in about 4-4.5 years.
$200-$300 per month to buy a house seems like a no brainer, but if the market stays flat, (or goes backwards!), or you get a dodgy tenant that ends up costing you repairs etc, or a few months vacancy, I can't help thinking that the costs could end up more than we'd 'make' sitting that money in the offset untill the PPOR is paid off?
Sorry for the ramble, my head is spinning from spreadsheets, calculations and realestate.com.au adverts is all, guess I just wanted to put something down, read it back and put it out there for some less analysys-paralysed opions and to remind me why it would be a good idea to start investing in property.
Cheers.
Tone.