Here's what I would do - what would you do? 2 x $450K

C

ChasingSugar

Hi there,

I am about to add to my portfolio (see my Target 2020 thread). I am looking for capital growth so I can move into an active ramp up phase. I basically need to add 2 properties per year for the next 6 years, to my portfolio of 8 investments already. I am looking for 20 properties in the year 2020, hopefully with net equity position circa $3-4 Million. Then I get to do what I want to do!

I am in Victoria, and all my properties are located here too. They are all houses either in major regional or south eastern suburb areas. I need some serious capital growth, and I don't think it would hurt to diversify.

I'm thinking apartments/units in an inner location. I've got circa $450K to buy one now, and will have circa $450K to buy another one mid year. This is actually the most I have ever spent on a single property!

Doing research, I really like South Yarra, Hawthorn and Elwood as a location, and as possible capital growth spots going forward through 2020. I was interested what you might do with the above goals, and the above budget?

So, I would look to spend on 2 apartments, 2 bedrooms, 1 bath + car park, in either of South Yarra, Hawthorn or Elwood. They would need to be boutique (less than 18 apartments), on a quiet street, have a car park, have some form of outdoor space, be under the median price for that suburb on purchase and be in a building of character preferably (not a pooh brown box!).

Your thoughts would be appreciated!
 
my primary comment from my side of the fence is that you have a specific end goal with a time line which is good !

have you mapped the finance /credit side of the goal, and the asset protection ( strutcure and insurances etc) and tax management ?

Sounds like you have some of that down pat at least

ta
rolf
 
Rolf Latham said:
my primary comment from my side of the fence is that you have a specific end goal with a time line which is good !

have you mapped the finance /credit side of the goal, and the asset protection ( strutcure and insurances etc) and tax management ?

Sounds like you have some of that down pat at least

ta
rolf
Click to expand...

Hey Rolf,

Yep - got a finance team and accountancy team on board. The base of my portfolio was all in personal names, going forward I'll be operaring in trusts!

That team is now looking after my protection and finance which is great! Fully reccomend to others!

Thanks!
 
If this isn't speculation then I don't know what is...

12 properties over 6 years in that price bracket must mean you have significant assets or are on a really high income, circa $300k+.

You mention diversify yet you are basing all your purchases in Melbourne. The CBD over supply will crush a lot of equity mate purchasers who live in the burbs.

Over 30% of properties bought on the fringe are having their contracts crashed on house and land development.

If you want to get serious capital growth you should not be buying in Victoria.

If you plan to use 90% leverage for the purchases I would seriously reconsider your aggressive acquisition plans if it is high leverage debt finance.
 
I think money can still be made in Melbourne on the right property. I think it's fairly unreasonable to completely dismiss the prospect of an entire city.

The OP seems to have a good list of criterias as to which properties to target, it's not like he's looking at any old OTP apartment.
 
I take the point on geographical diversification. I look at VIC as a bunch of different markets however. I will definitely look at moving interstate next year. Vic just is more comfortable for me as I change my strategy.

I am not sure I get your point on the speculation? I have bought 8 properties that are cashflow neutral, enabling me to build up an asset base quickly over the past 5 years. They are leveraged at circa 84%. They've all shown capital growth, slow and steady.

I'm hoping to add more and be more active over the next few years, so capital growth is a priority, where previously i have been buying below median homes, which I can cosmetically rennovate, and that will achieve a net cashflow position of close to neutral.

My personal position - A little bit of cloumn A and B to the grumpy guys statement.
 
ChasingSugar said:
Hi there,

I am about to add to my portfolio (see my Target 2020 thread). I am looking for capital growth so I can move into an active ramp up phase. I basically need to add 2 properties per year for the next 6 years, to my portfolio of 8 investments already. I am looking for 20 properties in the year 2020, hopefully with net equity position circa $3-4 Million. Then I get to do what I want to do!

I am in Victoria, and all my properties are located here too. They are all houses either in major regional or south eastern suburb areas. I need some serious capital growth, and I don't think it would hurt to diversify.

I'm thinking apartments/units in an inner location. I've got circa $450K to buy one now, and will have circa $450K to buy another one mid year. This is actually the most I have ever spent on a single property!

Doing research, I really like South Yarra, Hawthorn and Elwood as a location, and as possible capital growth spots going forward through 2020. I was interested what you might do with the above goals, and the above budget?

So, I would look to spend on 2 apartments, 2 bedrooms, 1 bath + car park, in either of South Yarra, Hawthorn or Elwood. They would need to be boutique (less than 18 apartments), on a quiet street, have a car park, have some form of outdoor space, be under the median price for that suburb on purchase and be in a building of character preferably (not a pooh brown box!).

Your thoughts would be appreciated!
Click to expand...

If you want some serious capital growth now you should be playing in the Perth market at the moment as the market is rising. I purchased a number of properties and they have all had growth of 20% and that has been in a 6 month period and still rising. I am still buying but it has become increasingly difficult in particular to secure development properties which is what I am trying to source.

We are now experiencing multiple offers on properties and investors paying above sale price.

I suggest you locate a buyers agent in Perth asap and buy at least 2 or more if yo can.

Cheers, MTR
 
MTR said:
If you want some serious capital growth now you should be playing in the Perth market at the moment as the market is rising. I purchased a number of properties and they have all had growth of 20% and that has been in a 6 month period and still rising. I am still buying but it has become increasingly difficult in particular to secure development properties which is what I am trying to source.

We are now experiencing multiple offers on properties and investors paying above sale price.

I suggest you locate a buyers agent in Perth asap and buy at least 2 or more if yo can.

Cheers, MTR
Click to expand...

Awesome - thanks, will check it out.
 
ChasingSugar said:
I take the point on geographical diversification. I look at VIC as a bunch of different markets however. I will definitely look at moving interstate next year. Vic just is more comfortable for me as I change my strategy.

I am not sure I get your point on the speculation? I have bought 8 properties that are cashflow neutral, enabling me to build up an asset base quickly over the past 5 years. They are leveraged at circa 84%. They've all shown capital growth, slow and steady.

I'm hoping to add more and be more active over the next few years, so capital growth is a priority, where previously i have been buying below median homes, which I can cosmetically rennovate, and that will achieve a net cashflow position of close to neutral.

My personal position - A little bit of cloumn A and B to the grumpy guys statement.
Click to expand...

Your strategy is one of the past. You have most likely read into books about how the writer owns 100 properties over a small time frame using leverage. They always base their assumption on property doubling every 7 years.

You are using a prehistoric strategy that won't work in a stagnating market. All you need is for the market to slow and your position of 84% leverage can turn into 94% leverage in a blink of an eye.

Going into debt as you have is extremely risky. However it could all be fine if you are earning $300k+. (I doubt you earn this as people earning $300k don't plow every dollar into residential property).

Don't get into so much debt in uncertain times, your returns are not compensating you for the risk you are taking.
 
Well I can tell you you haven't read any 'positive' real estate books......

So tell me McFly, what does the future hold and how did you get so rich, positive and carefree?
 
TheOnlineAgent said:
The only thing the future holds is uncertainty.

As for being rich and carefree? I dropped the consumerism lifestyle.
Click to expand...

Rich or wealthy isnt only a function of money.

I know many peops with much dough that are miserable for various reasons.

when we do goal setting sessions with folks their number one "wish" is to be financially independent.

I suggest to them one needs to be careful and to be specific with their goals, since most can be financially free by selling all their assets , moving to a country town and drawing gov support.

Most get it then, that they need to have some specific end goals to work backwards from

ta
rolf
 
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