Help, and maybe need some direction

Hi, this isnt my first post, but have just changed my name to ask a question and just keep some anominity...and no its not a trick or broker or agent or spam etc...

Ive got a problem in regards to property Investment, so ill try to keep this brief...but just looking at options to think about, as have had good advice but is different from different people.

We have a premises which we have had for 8 years. its now recently been put in as an investment property and currently have tenants who pay on time etc..

Have about 160k equity, which usuable is about 50K. IP value $560K owe $400K. We did this to rent closer to a school the kids have been in and this year were doing yr 12 and the mrs work was 1.5 hrs away, and we pay $500 per week rent.Now kids have left school Mrs got a new job closer few months ago which was unexpected, better pay than what she had, which wasnt due to her looking..poached is the word..lease exp in 3 months and we will move, but to ??

we thought we would continue to rent as it will be now cheaper as dont need the big house , and then look at buying another investment property. Reading and gaining more information, it may be better to buy another place and use it for PPOR, but that wld involve a large deposit , house wld be around 500K.

So we have had mixed messages on best thing to do...

1. sell investment property, pay out loan, buy new place with added equity and to start again.
2. keep investment prop, buy another one, and keep renting,
3.just keep throwing money into investment home to raise a better deposit.

if we want to buy another property now , either way , its coming up with a 10-20% deposit. It can be done, but the difference is an investment wont need as much as a deposit , compared to a deposit for a PPOR.

So im just trying to think whats the best way now so as it is better in the long run... and it may cause a delay in achieving what we want to do..or something that might be outside of square, so just looking for different thoughts, and with that..try to make the best decison and stick with it.

Ultimately, we want to buy 1 inv prop each year and set up to achieve this next 10 years.

Any thoughts?
 
Hi Dilemma,

I'm not sure if I follow you 100% but I would go with option 2. I wouldn't sell unless I thought its in a place where CG was going to take a very long time and the property has no room in my portfolio.

Also what makes you think you need 20% deposit? I mean if you wanted to you could pay 20%, but why not 10% or so?

Cheers

leo
 
Heya,

As Leo mentioned, what are your motivations for selling? There's generally large exit costs associated with selling, and it may make sense as part of a plan to reallocate your capital to areas of greater use - but so early on in the property accumulation phase, it rarely makes sense.

With 50k in useable equity, perhaps you could use that in itself to purchase your next IP? With a 10% deposit, it should be able to get you something half decent in a major captial (~350k mark?).

You seem to have a pretty flexible attitude, it should definitely hold you in good stead for accumulating properties.

Good luck,
Redom
 
thanks LeoT and redom...

CF is good, not fantastic..but good. reason to sell was basica pay off it all, keep 130K use some depost say 10 or 15% and balance offset and then buy next property quickly.

Read jan Somers and looked it up again as she does mention that owning an IP while renting can cause you to slow down or hit wall and lack of funds.

if i buy another IP , then pay down the debt on IP 1, that would flow onto tax limitations , whther thats minimal id have to look at it.

so that is the motivtion for selling, just to set it up for the long term...CG on the capital wld be minimal as its only been an IP since April this year.....do hate renting .hate not being able to do renos or simple stuff..hate wallpaper...and hate paying a landlord so he can pay his loan off...ironic!..ol
 
Why don't you just keep it, then buy another property to live in as a PPOR if you don't want to rent.

I don't understand this comment "Read jan Somers and looked it up again as she does mention that owning an IP while renting can cause you to slow down or hit wall and lack of funds."

Generally when someone rents as opposed to a mortgage on a ppor it tends to be less repayments, hence improving cash flow, less debt which I would think would take longer to 'hit the financial brick wall;.

Leo
 
I don't understand this comment "Read jan Somers and looked it up again as she does mention that owning an IP while renting can cause you to slow down or hit wall and lack of funds."

Leo

I think it was more to do when starting out..ppor, reduce and pay mortgage down, buy IP, keep paying mortgage down..more equity , it was a comment about a ppor vs renting , and trying to increase IP, was harder in long run when u didnt have a PPOR...

in regards to just buying a ppor to live in...thats another option as well....its trying to think of all possibilities, jamming ones head, then focusing on what ifs etc...but appreciate the comments as it does open up some thoughts...

maybe take a step back for few days and then come back to it...and write them all down...might go read that chapter again...thanks
 
I think it was more to do when starting out..ppor, reduce and pay mortgage down, buy IP, keep paying mortgage down..more equity , it was a comment about a ppor vs renting , and trying to increase IP, was harder in long run when u didnt have a PPOR...

in regards to just buying a ppor to live in...thats another option as well....its trying to think of all possibilities, jamming ones head, then focusing on what ifs etc...but appreciate the comments as it does open up some thoughts...

maybe take a step back for few days and then come back to it...and write them all down...might go read that chapter again...thanks

Delemma,

The reason you seem to be all over the place is because you don't have a proper plan in place. (and that's most likely because you lack enough knowledge)

Can I suggest:

1. Write down your goals and timeframes.
2. But 3-5 books on investing in property (aussie authors)
3. After you read it, choose some strategies you think might meet your goals and you can discuss on SS.
4. You should have a much better idea then what to do with your current 'dilemma' which IMHO is not really a dilemma at all.
5. Now you have clear goals, a path, direction, strategies. When you feel your ready then take action and put what you learnt to use.

Many people think that to be successful you have to avoid 'failures' at every turn. They couldn't be more wrong. The path to success is filled with necessary 'failures' mate. Don't sweat it. Embrace it, learn from it and move on.



Good luck

Leo

p.s Just wanna give you 1 example how clarity can make a huuuge difference to wealth creation. Take just one of your comment: "if we want to buy another property now , either way , its coming up with a 10-20% deposit"

Not knowing whether you should go for 10-20% deposits can make a massive difference. Do you go 10%? 20%? less? more? Understanding just this one thing and applying it to your own goals, risk profile etc can make a huuuge difference. I know people who put in 20% deposits for like 3ips.. only to realise that they should have just put in 10% because their goals and attitude was quite aggressive.. but they simply just " didn't know any better" at the time. So in stead of 3ips.. they could have had 6. That's double the asset power earning you growth/wealth while you sleep.

So now you see how important it is to really take the time to read. 1 small thing like this can have significant ramifications.

Cheers

leo
 
cheers....thinking about it more..probably more right...trying to get to stage 4 instead of doing 1, 2 and 3 if you know what i mean...

im on it..thanks:D
 
cheers....thinking about it more..probably more right...trying to get to stage 4 instead of doing 1, 2 and 3 if you know what i mean...

im on it..thanks:D

No worries mate! Start from the beginning, it wont take that long to get a decent amount of knowledge mate. It will be more beneficial to you than you can imagine right now ;)

Cheers

Leo
 
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