Excited

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From: Colin Sproul


Hello Everybody,

This is my very first post so I hope I`m doing it right.

I would very much appreciate some advice from all experienced investors.

I have just sold my home, at settlement after all debts are paid I will have approx. $60,000.00 to spend. I was going to use this money as a deposit to get another home loan for lots more and buy a big new shiny house and put myself in more debt, but somebody mentioned investment property to me. Well I have briefly (very briefly) investigated the option and today received in the mail the "More Wealth" book. From what I have heard and read it has made me extremely excited and eager to get cracking with my new venture. But along with all the excitement comes the anxiety and fear of failure. My first dilemma I find is that the purchaser of my house is going to rent the property and has given me the option to do so. My question is, in your opinion should I rent my home off the new owner (which will be very convenient as we love the place and will not need to move) and invest the full $60,000.00 in an investment property or should I do otherwise. I hope this is not a stupid question and is understandable, I am just so excited !!!...I have so many questions......maybe I should just calm down and perhaps have a lie down!!!..anyway I would really appreciate all of your invaluable opinions and input...

Thank You in advance !!

Colin.

P.S. What do you say to negative cynics...I hate them !!!
 
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Reply: 1
From: Nigel W


why not. The new owner gets an instant tenant and one who loves and will probably look after the property like it's home (cause it just was!). You don't have the expense and hassle of having to move!

Win Win.

Also, why not try to negotiate a lower rental because the owner will save at least a week or two's rent from the tenant change over...ask him or her to knock $5/pw off the rental to recognise that.

Welcome to a whole new world of financial adventure. Beware the cynics and nay-sayers but equally be skeptical (but not too cynical) of the instant wealth spruikers.

good luck.
 
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Reply: 1.1
From: DB Bear


Fantastical Colin! I recommend that you read LOTS of books, keep hanging around this forum and go to the Freestylers Meeting for your state. The website is www.freestyler.net.au. At the Freestyler meetings you will not only get information from others who have been there before but you'll also get positive support.

Hope to see you around.

Deb
"DB Bear"
Melbourne Freestylers Co-ordinator

PS: The first meeting's for free so you can get to check out if it's for you or not.
 
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Reply: 1.1.1
From: Mike .


Hi Colin,

I'm happy for you that you've discovered property investing but the timing could have been better. I wish it happened before you sold your home because now you are contemplating staying to rent and you could have kept the house and still invested without the selling costs incurred.

Your original intention was to get a bigger place. That is a lifestyle choice. Have you now changed your mind? If you do stay and rent, depending on your serviceability, you may be able to purchase a couple of cashflow positive properties straightaway. If you upgrade to another home you may not have enough equity to also buy an investment property straightaway.

If you take the second option your home may be used as security for an equity loan for a deposit on an IP unless you convert the equity into a Line of Credit and use that for your deposit.

Don't rush into anything. Rent for awhile and do some more research first. When and how did you discover this forum?

Regards, Mike
 
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Reply: 1.1.1.1
From: Gail H


It is exciting - lucky you got your wake up call before you upgraded to that expensive new house. The expensive new house should come a bit further down the track when your investment property portfolio is well underway. In fact, I've now become quite attached to my modest little home, because it doesn't cost me much, and a huge mortgage on your home residence can represent a big hurdle to property investment. When I see people with their monstrous mortgages, I think "suckers". I would like to upgrade one day, but investment comes first.

Renting your home back sounds like a fine idea, but you will ultimately have to decide whether you will be renting longterm, or buying elsewhere.

Good luck

Gail
 
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IDEA REVIEW - Buy a 'Luxury Home' and wait a few years... ?

Reply: 1.1.1.1.1
From: Ross Sondergeld


Hi Gail H,


Subject: Excited

You said, "It is exciting - lucky you got your wake up call before you
upgraded to that expensive new house. The expensive new house should come a
bit further down the track when your investment property portfolio is well
underway."


IDEA REVIEW - Buy a "Luxury Home" and wait a few years... ?

OK... Let's say an individual buys a "dream home" first. Then moves in for
the PPOR exemption.... then rents it out for 5 years. The moves back... and
moves out again... to keep PPOR.

But either rents or lives in a cheap house...


I think anything is possible...

Just think of Brad Sugers "Wealth Wheel". (i.e. high growth property and a
collection of cash flow positive houses with income streams.)




Ross on the Gold Coast
Buyerside Real Estate


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IDEA REVIEW - Buy a 'Luxury Home' and wait a few years... ?

Reply: 1.1.1.1.1.1
From: Gail H


Sure Ross, but in that scenario, the luxury home is in reality an investment property - living in it is simply a mechanism to securing capital growth free of CGT. I don't have a problem with that. I just thing people who saddle themselves with a large mortgage before they get their portfolio going can impede its progress if they are not careful.

Gail
 
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Reply: 2
From: Gregory H


Hi Colin

Now do some research on p/i exit strategies. Yes, it is a distraction while you are trying to climb the never ending learning curve but it's not until you want to sell that it dawns on you that the legals/tax/estate planning etc. could have been shrewder?

I've been trying to get the other half to do the same thing as you but she wont be in it. Renting to improve p/i portfolio is too far out of the square for (some) newbies etc.

Good luck.

greg
 
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W

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Reply: 1.1.1.2
From: Colin Sproul


Hi Mike,

Yes it was a lifestyle choice to upgrade to a bigger and newer house (along with some pressure from the wife) but there wasn`t anything wrong with the existing lifestyle. What happened was that I got a real estate agent to conduct an evaluation on my property so I could find out what how much equity I had in the property so I could then refinance and establish a line of credit, which I have now done and from looking at messages on this forum it looks like a LOC can be beneficial. After discovering how much my house was worth and realising I could make a nice profit I thought what the heck lets sell and get bigger and better. It was then that a friend mentioned you shouldn`t have done that you should have purchased an IP with the equity etc. etc......I found out about this forum thru the Somerset web site which I found via a search on a search engine.

Thanks for your input.

Colin.
 
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IDEA REVIEW - Buy a 'Luxury Home' and wait a few years... ?

Reply: 1.1.1.1.1.1.1
From: Ross Sondergeld


Hi Gail,


Subject: IDEA REVIEW - Buy a 'Luxury Home' and wait a few years... ?

You Said, "Sure Ross, but in that scenario, the luxury home is in reality an
investment property - living in it is simply a mechanism to securing capital
growth free of CGT. I don't have a problem with that. I just think people
who saddle themselves with a large mortgage before they get their portfolio
going can impede its progress if they are not careful."

I totally agree.



Ross on the Gold Coast
Buyerside Real Estate

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Chat with friends online, try MSN Messenger: http://messenger.msn.com
 
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