(NB: This is somewhat of a Part 2 to a thread I started on 'where too look for advise on an investment strategy'. It assumes the answer might be 'right here'!)
Calling all Somersoft Vetrans, gurus and general investors.
I'm just starting out in this game and am after some opinions on my investment strategy.
For a bit of background: I am (was?) a first home buyer and have spent the last 4mth doing DD on areas I want to live in (read: blue chip suburbs, great but unlikely to make brilliant investments) before it dawned on me: "what am I thinking! I should suck up my lust for a shiny new home with OK CG and invest in a IP (or two) that is the best investment I can find". The only problem is, now i'm thinking like an 'investor', I need to start acting like one, which means goals, strategy, structures, etc.
I have just come to terms with the idea of living somewhere 'I don't want to' for 6mths if it is a good investment, so I can collect my First Home Owner benefits before going back to renting and converting it to an IP (apologies to anyone who is morally opposed to this strategy!). But it should be known that if i do this it is not because I will enjoy it! So I want to make sure it will be worth it!
So here is a bit about my financial situation.
*Eligible for First Home Owner grant, and have saved $20k+ in my First Home Saving Account (FHSA), which is ONLY redeemable on a PPOR.
*Around $300k cash which I could put toward deposit(s) + buying costs.
*Whilst I have a decent deposit my broker(s) suggest on my income I can get a max loan of around $400k
*Tax rate 30%
*Fairly tolerant to risk (I have no dependents)
*Looking for long term wealth creation. I don't really need more cashflow (apart from to service more loans!) but nor can I afford to be too negatively geared (I probably have a max $2,000 pm I could use to service loans.
*I am looking for a structure/plan that will allow me to grow my portfolio year on year for the long term.
I am still working on my goals (i.e. what I want this strategy to achieve) - frankly I have no idea how high to aim! Atm it looks something like this:
*3yr: Own at least two properties (around 80% LVR I guess); no significant impact on lifestyle (read: cashflow) from properties;
*10yr: Own 5+ IP's properties (around 80% LVR); own a PPOR (LVR <40%); have completed a property development; be reaping some lifestyle rewards from portfolio (I guess this means CF+ or selling something?)
I love my career so 'retiring' on my cashflow is not really a priority for me. That being said my job will never make me rich, so i'd like my portfolio to!
As for me:
*I would definitely call myself a novice. I am learning as quickly as I can from books/seminars/SS, but at present I guess I figure I would need at least onother 2mth+ general education and an additional 2mth+ due diligence (in reality these would be concurrent) before I felt I was in a position to buy (without a BA).
*I am an Urban Designer and have a good knowledge of Town Planning, so development appeals to me, but I wonder if I should just start with an IP first. I like to imagine these skills will also help with my DD.
*I like the idea of value adding (see above), and am interested in renovating, but am time poor would be taking a project managing role at most.
*I am eager to jump in, but am definitely the sort who suffers from 'analysis paralysis'!!!
*What else.... I'm HIGHLY motivated and have a real desire to learn! This is a life-long journey i'm starting on and I'm willing to pay a bit for the right education (with time and/or money).
I am looking for some guidance from those who've 'been there, done that' as to:
- what properties will serve me best (CF+, negatively geared, combination?),
- whether I should start with a buy and hold IP, value add with a renovation (I would PM but outsource labour), or launch my money into a development (I would need to pay someone to do this for me, really) - I am interested in all these approaches, but need to acknowledge that I my knowledge is slim to non-existant!
- Should I buy a cash in my first homebuyer chips and buy a PPOR and live there, then buy an IP when I can, or buy PPOR and switch it to an IP (going back to renting) after 6mths, or just go straight for the IP? I know there are tax implications for each, but with my goals will one give me an advantage?
- should I pay for a course/mentoring to fast track my education?
- Whilst i'm educating myself, is it worth paying a BA to buy me a property and get me in the market 6mth earlier?
OK! Wow. If you've made it this far I thank you! I know there is 100 different questions in there but I thought it important to put it all out there so it was in context so I could get so overall feedback. Please feel free to contribute your knowledge on all or some of the areas of portfolio planning.
Thanks in advance!
Calling all Somersoft Vetrans, gurus and general investors.
I'm just starting out in this game and am after some opinions on my investment strategy.
For a bit of background: I am (was?) a first home buyer and have spent the last 4mth doing DD on areas I want to live in (read: blue chip suburbs, great but unlikely to make brilliant investments) before it dawned on me: "what am I thinking! I should suck up my lust for a shiny new home with OK CG and invest in a IP (or two) that is the best investment I can find". The only problem is, now i'm thinking like an 'investor', I need to start acting like one, which means goals, strategy, structures, etc.
I have just come to terms with the idea of living somewhere 'I don't want to' for 6mths if it is a good investment, so I can collect my First Home Owner benefits before going back to renting and converting it to an IP (apologies to anyone who is morally opposed to this strategy!). But it should be known that if i do this it is not because I will enjoy it! So I want to make sure it will be worth it!
So here is a bit about my financial situation.
*Eligible for First Home Owner grant, and have saved $20k+ in my First Home Saving Account (FHSA), which is ONLY redeemable on a PPOR.
*Around $300k cash which I could put toward deposit(s) + buying costs.
*Whilst I have a decent deposit my broker(s) suggest on my income I can get a max loan of around $400k
*Tax rate 30%
*Fairly tolerant to risk (I have no dependents)
*Looking for long term wealth creation. I don't really need more cashflow (apart from to service more loans!) but nor can I afford to be too negatively geared (I probably have a max $2,000 pm I could use to service loans.
*I am looking for a structure/plan that will allow me to grow my portfolio year on year for the long term.
I am still working on my goals (i.e. what I want this strategy to achieve) - frankly I have no idea how high to aim! Atm it looks something like this:
*3yr: Own at least two properties (around 80% LVR I guess); no significant impact on lifestyle (read: cashflow) from properties;
*10yr: Own 5+ IP's properties (around 80% LVR); own a PPOR (LVR <40%); have completed a property development; be reaping some lifestyle rewards from portfolio (I guess this means CF+ or selling something?)
I love my career so 'retiring' on my cashflow is not really a priority for me. That being said my job will never make me rich, so i'd like my portfolio to!
As for me:
*I would definitely call myself a novice. I am learning as quickly as I can from books/seminars/SS, but at present I guess I figure I would need at least onother 2mth+ general education and an additional 2mth+ due diligence (in reality these would be concurrent) before I felt I was in a position to buy (without a BA).
*I am an Urban Designer and have a good knowledge of Town Planning, so development appeals to me, but I wonder if I should just start with an IP first. I like to imagine these skills will also help with my DD.
*I like the idea of value adding (see above), and am interested in renovating, but am time poor would be taking a project managing role at most.
*I am eager to jump in, but am definitely the sort who suffers from 'analysis paralysis'!!!
*What else.... I'm HIGHLY motivated and have a real desire to learn! This is a life-long journey i'm starting on and I'm willing to pay a bit for the right education (with time and/or money).
I am looking for some guidance from those who've 'been there, done that' as to:
- what properties will serve me best (CF+, negatively geared, combination?),
- whether I should start with a buy and hold IP, value add with a renovation (I would PM but outsource labour), or launch my money into a development (I would need to pay someone to do this for me, really) - I am interested in all these approaches, but need to acknowledge that I my knowledge is slim to non-existant!
- Should I buy a cash in my first homebuyer chips and buy a PPOR and live there, then buy an IP when I can, or buy PPOR and switch it to an IP (going back to renting) after 6mths, or just go straight for the IP? I know there are tax implications for each, but with my goals will one give me an advantage?
- should I pay for a course/mentoring to fast track my education?
- Whilst i'm educating myself, is it worth paying a BA to buy me a property and get me in the market 6mth earlier?
OK! Wow. If you've made it this far I thank you! I know there is 100 different questions in there but I thought it important to put it all out there so it was in context so I could get so overall feedback. Please feel free to contribute your knowledge on all or some of the areas of portfolio planning.
Thanks in advance!
