Feeling stuck

A

Altonz

We saved about 30k now and each month we can save another 3000 dollars approximately

Our dilemma

We cant make up our mind on whether we should be focusing on house and land in affordable areas like st albans reservoir albion melton frankston seaford or
Berwick (house and land package) or if we should look at 1-2 bedrooms in suburbs like south yarra st kilda mitcham thornbury clayton coburg.

We also dont know if we are going to be better off continue saving for a bigger deposit and buy a house in more
Desirable suburbs that we could also live in for under 700k

What would be the question we should be asking ourselves in this situation? Can experienced investors give us some advice please?

We have 2 ips that we got last yr n the yr before in regional vic
dont think it had much or any growth though.
However it is not costing us anything other than one ip that is old and needs maintenance (minimal)

From this experience we learned to be more cautious in buying as saving for deposit is getting harder with children and it would be nice to get equity from growth. We were also advised by our accountant to buy a house n land package to maximise tax benefit.

We are learning a lot from this forum and have our ears opened for any advice but we feel a bit confused and often overwhelmed and stuck.

We often ask are we better off investing in another state like
Logan ipswich and redcliffe in qld or in syd where we can still buy a house under 700k?

Or should we just continue buying in regional vic for under 280k that costs us nothing to hold for 10-15 yrs?

Or buy a apartment in desirable suburbs? Or buy a house in less desirable suburbs hoping we can build units n townhouses 5-10 yrs later?

What are your thoughts?
 
All depends onwhich purchase best fits your strategy.

Oh... You don't have a strategy do you?

Well, that's why you don't know what to do next. How can you buy anything if you don't have any idea what parameters you are buying within.

Develop your strategy, and your next move will be known well before you need to make it.

Blacky
 
By the way be careful with the advice regarding 'tax effective'. While it sounds as if it was given with good intent, it can be taken out of context.

Negative gearing is tax effective, but not always a good investment. If you need to lose money to save tax, let me know and ill send you an invoice each month. It's great for reducing your tax burden.
 
As Blacky has pointed out, it seems you don't have an investment plan, or a goal.

Address that.

With those in place, the decisions will make themselves on the back of thorough research.
 
Hi Altonz, when we buy an IP or a PPOR, we'd like to think that we are making 'considered decisions' but in the end, all of our choices are actually a bit of a gamble and a bit of a risk.

We strive to use all the available resources we have at our disposal - knowledge, money, trends, advice, time - to make the best possible decision at that point in time but in the end because there are actually limited constraints to all of the above, limited knowledge (we don't know what we don't know), limited money, limited advice, limited time to do research etc, we make what is known as a 'satisficing decision'.

'Satisficing decision' is a decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution. This is because aiming for the optimal solution may necessitate needless expenditure of time, energy and resources.

Where are you now and where do you want to get to? Where do you want your peg in the sand? There are a lot of investment choices out there, not all of them are necessarily for you, based on your risk profile, family situation, contraints on time to travel interstate, to do research etc. You say you have 2 IPs in regional Victoria bought recently, cost you nothing to hold but is it giving you positive cash flow? How much of your capital is tied up in that? Do you have a PPOR?
Are you paying that off? Do you have an LOC (line of credit)?

You sound as if you are questioning your past strategy and are in a hurry to find the 'optimal solution'. But if you could help us out by filling in some blanks and outlining your past strategy and thinking, that could give us a fuller picture.
 
If you are buying IP's that are cash flow positive, then just keep buying more. Where they are isn't that important, as long as they are not in flood zones or somewhere defective. If you borrow the entire acquisition cost and they put money back in your pocket each month...............keep going
 
Like it's been said before you need to plan long term & a set a defined strategy. Set achievable and measurable goals. Write them down and revisit them when and as required.
 
Tinkler said:
If you are buying IP's that are cash flow positive, then just keep buying more. Where they are isn't that important, as long as they are not in flood zones or somewhere defective. If you borrow the entire acquisition cost and they put money back in your pocket each month...............keep going
Click to expand...

As much as I love +CF properties, the REAL money in real estate is from the capital growth.

It's mighty hard to make a living from a property that's +CF $5,000 a year.
 
vaughan said:
As much as I love +CF properties, the REAL money in real estate is from the capital growth.

It's mighty hard to make a living from a property that's +CF $5,000 a year.
Click to expand...

Not true

If you can get good cash flow then you can keep buying.

Even if there is no capital gains... You can still pay down your investment mortgages pretty quickly because you have no holding costs
 
Thank you everyone for your time and thoughtful comments we are very grateful that we found a community like somersoft where people are willing to share their valuable experience and knowledge. We hope soon we will be one of the experienced and successful investor to help newbie investors also.



@Beanie girl and Y man: we are renting now. We thought it was cheaper to rent in suburbs that we like than to buy but we do get tempted to buy ppor when we see a beautiful house in a beautiful suburb, where mortgage payment maybe approx 200-300 dollars per week more than rent we pay currently. Although we also know it may hold us back from saving another deposit for the next house.


Like you said beanie girl it is true that we arent able to travel much insterstate as we are extremely time poor. We both work full time and study part time and have kids to look after and etc! So it wld b realistic to focus just in melbourne at this stage.

We might aim for a house near cbd like in footscray west for around 500-600k this yr if prices dun jump too much and use cg to subdivide in one of our ip in regional vic..

Until we are certain with our strategy i guess we should continue saving for now
And continue learning and reading from somersoft and others to stay safe :)
 
You've got kids to look after and you're thinking of possibly 2 bedroom place? Doesn't make sense!

Get a strategy, find out what your family goals are in the next 5-10 years (ie anymore kids) and this will drive your strategy (at least in the short term). Until you do this, you're wasting your time with questions like the above in my opinion...
 
Hi Altonz, i am in a similar life situation so i can emphatise. We only started out investment journey late 2012 so there is still lots to learn and do before reaching our goal. Imo i would not get to set in the strategy as life is so unpredictable and you will be required to change up your strategy to reach your end goal. But you do need to know what your end goal is, whether you want a $x portfolio unencumbered or $x passive income per year to replace your income. And then work backwards from there.
 
littletee said:
You've got kids to look after and you're thinking of possibly 2 bedroom place? Doesn't make sense!

Get a strategy, find out what your family goals are in the next 5-10 years (ie anymore kids) and this will drive your strategy (at least in the short term). Until you do this, you're wasting your time with questions like the above in my opinion...
Click to expand...



No of course not 2 bed for ppor. think i created a bit of confusion in the
Prev post!
2 bedroom unit for ip only in the better suburbs or 3 bed house in more affordable suburbs

If it was for ppor we want min 3-4
Bedrooms and we would be looking at 700k

@Dbz_vic thank you :) That is actually what we would need to do. You are exactly right! How are you doing with your ips? We also bought our first ip in 2012 too :) good luck dbz_vic!
 
Hi Altonz,

Have you worked out your borrowing capacity? Although it may make financial sense to keep buying IP's and renting, at some stage, with a family, you are going to want to have some long term stability and buy your own PPOR. Would it be best to do this sooner rather than later, as prices will no doubt keep rising, especially in the more desirable suburbs. You may find you are priced out of the area you want to live in if you don't buy.
Would you have the cash flow to buy both a PPOR and another IP? Its worth exploring all of the options.
You may also like to think of a strategy. Will you accumulate as many IP's as you can, and then set them to pay down over time? Will you sell a few off to pay the others off so that you can live on the rents? Will you use your superannuation to pay off the loans? Would you consider investing in direct shares along the way to help support your cash flow? The options are many and it can become confusing.
I think once you lay our a rough plan, your choices will become a lot clearer. You need to consider the needs of your family as well and I'd be inclined to seek out a PPOR sooner rather than later. Especially if you want to live in the inner areas of Melbourne.
All the best with it.
 
You are so right jingo. Thank you. That is one of the reason why we have been confused and feeling a bit stuck at the same time. Will ask ourselves the questions you suggested! Thanks heaps again!!
 
Hello
Another question to ask yourselves is which schools you would like to send the kids to. If wanting a particularly popular school, will you require something in its catchment area?
 
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