Confused about structure NOOOOBBBIEE

Discussion in 'Property Finance' started by Anitapumpkin, 16th Jun, 2015.

  1. Anitapumpkin

    Anitapumpkin Member

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    Disclaimer: Apologies in advance. I feel like I've read the whole internet and watched every investors video but I'm, STILL a Noob.

    I've already made my first couple of mistakes and a hoping to glean some insight from you experienced types on where to go from here.

    I am single, 35, earn approx $45K per year. I absolutely love my job, but it's not going to get me anywhere unless I make my money work harder.

    To date:
    Sept 2014 - Bought 2 brm pathetic unit in Hobart for self to live in and renovate.
    Purchased: $168K (95%LVR) , reno $15K (did most of it myself) Reval: $210K
    May 2015 - Bought a Broken Hill 3brm house
    Purchased: $110K Borrowed $120K to do small reno and have cash for next investment; Tenanted for $240/wk.

    June 2015: Whoa! SOMERSOFT! NEWS FLASH! Hey hey hey! The other kids are trying this too! There are even some grownups around here!

    Hmm... Slow up! Just because you're 35 and scared, doesn't mean you should be buying in Broken Hill and now you're cross-collateralised which is a term you'd never heard of 2mo ago.
    Found a broker in Syd who can get me 3.99% but starting to learn that's not everything, hey...

    Thoughts to get this Noob on track?
     
  2. Rixter

    Rixter $uper Investor (Retired)

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    Anita, first off welcome to SS.

    What and where to buy is dependent upon your chosen investment strategy.

    You see property is merely the vehicle. The strategy is how you intend driving that vehicle.

    Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

    Property investing is not about property rather about the strategy and the way you intend to use the vehicle to get to where you are wanting to go. No good buying a small shopping car if you intend driving interstate on a family holiday.

    What strategy/s are best for you is determined by where you are wanting to go, the time frame you want to get there in and how hands on along the way you want to be - all based around your personal risk profile.

    If you dont know what you are looking for all property's will appear the same. Thus the confusion and frustration.

    I hope this provides some food for thought.

    What is your chosen investment strategy?
     
  3. Anitapumpkin

    Anitapumpkin Member

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    Omg. How insightful. You are spot on. I have discovered a love of property and will spend many hours researching areas.

    My only goal with this is to look after my mum in old age and live comfortably myself. I come from a low income background so my goals may be far humbler than many here but they are genuine.

    How do I choose a strategy and what are the options? I've been to a couple of investor nights and although I can see people have more experience than me, they aren't willing to part with their knowledge without me showing them the big $$. hmm.

    So, where do I start researching strategies? And if I want to retire on $100K ish in 10-15years time, what are your thoughts?
     
  4. The Y-man

    The Y-man Member

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    You did something - and more - which beats doing nothing hands down.
    Good on you.

    The Y-man
     
  5. Terry_w

    Terry_w Member

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    2 aspects to structuring in relation to purchase of property.

    1. legal ownership structure
    2. loan structures
    - structuring for tax optimisation
    - structuring the security for the loans

    How you structure ownership will depend on a whole host of factors depending on where, what, family situation, cashflow, future plans etc

    How you structure loans is more straight forward, generally,
    1. never cross collaterlise
    2. Always pay IO on investment loans if you have non deductible debt
    3. never use cash for investment while you have non deductible debt.
    4. Avoid borrowing and parking money
    5. never mix borrowins - no investment and private loans together.
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    Hi Anita,

    Firstly, nice work with the cashflow on Broken Hill! :)

    Second, cross collateralised loans aren't an ideal start as you've discovered. It might not be possible to untangle at this stage without some expense, but it's important for the future to understand how best to structure your loans moving forward so you don't create a larger issue that will become increasingly difficult to remedy.

    If your current broker isn't investment savvy, find one who is - there's heaps to choose from here who will work with you to plan out your next few purchases and make sure you're structured as efficiently as possible.
     
  7. Anitapumpkin

    Anitapumpkin Member

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    Further info:Until last week, my strategy was to accrue low val positive CF properties for a couple of years then sell and move to bigger things. Now with the lending tighteners, I'm realising I may have to sit and wait and save to buy closer in to gain CG. that's about as far as I've got
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    There are still lenders lending, so it really comes down to finding the right ones and using them while you can.

    Don't give up your strategy based on rumours and 'maybe' - sit down with your broker (over the phone/skype if need be), see what's actually possible and go from there.
     
  9. Anitapumpkin

    Anitapumpkin Member

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    Brilliant. I can't thank you all enough. I've actually just gotten more info in 10min Somersoft help than I got from a 1hour 1 to 1 session with a "coach" this evening.


    Y-man - Abso-fricken-lutely I did. Most people never buy their 1st investment. HIGH FIVE!
    Terry - Where were you 6 months ago?
    Jess - Lovely lady. Seriously, are you able/will you look after me?

    RANT:
    I'm not hesitant at all to pay someone for expertise or experience or work, infact I'll pay you handsomely if you demonstrate your credentials.
    BUT, I resent people keeping every single card right at their chest until you cough up.
    #Badvibes
    #helpyourmates
    #therereallyareenoughresourcesonthisplanetforusall
    #generosityandkindnessalwayswin

    Thank you again. I will be following up on all of your suggestions in the coming weeks and will keep you updated. :)
     
  10. Terry_w

    Terry_w Member

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    I was here, typing away...
     
  11. Anitapumpkin

    Anitapumpkin Member

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    I can tell :)
     
    Terry_w likes this.
  12. Rixter

    Rixter $uper Investor (Retired)

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    Maybe contact Westminster..you would like her strategy.
     
  13. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    I'll PM you Anita - but yes, happy to help :)