How to invest 1M
- Thread starter Chilli
- Start date
Not much positive geared property or shares or anything else about. What really are you asking?
See ya's.
See ya's.
A high income, 'low risk' fund eg. Navra Income Fund...
GSJ
OK. Fair enough.
What if a stockmarket bear market starts tomorrow. I bet it wouldn't be positive geared for long? Maybe it would, I don't know much about high income funds, but I can't see how the high income could continue. Much of the high yield comes from capital gain.
See ya's.
You got me all wrong TC! I meant it the other way! I wouldn't actually do this at, all as I don't consider that a low-risk fund (but that's another story all together - I got hammerred on InvestEd for saying this: see http://www.invested.com.au/7/navra-no-longer-income-fund-10214/!) - for several reasons including what you have just mentioned. I just made that post as I was guessing someone here would eventually say it!
GSJ
Yeah, no worries.
The part of the question that worries me is that
.... 'negative geared is not an option'....
That sort of concerns me cause if it's not an option, then how much capacity is there to service the loan?
It would sort of limit the options to bad houses in bad towns, and even those aren't positive geared if problems happen.
Cheers.
Salsa,
What if you could find an investment with a 10% pa income guaranteed ? Would you put your money in here? (ADD: I wouldn't by the way!)
See this thread:
http://www.invested.com.au/79/10-pa-income-guaranteed-10420/
GSJ
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I am assuming you mean $1 mil via LOC ?
GO regional imo.
Use the $1 mil as deposits and buffer account to fund for 12 months, then:
Buy land, build house, and rent out for better yields or sell on completion to reduce/minimise risk, and take profit/equity.
Mining areas in Qld and WA are still under supplied with housing and will remain so for a few yrs yet.
Mining activities are sustainable for a few yrs beyond that ( mostly still going through expansion construction/project phase before taking into account long supply contracts thereafter)
Make the profit going in and not by waiting for CG.
Margin between cost and market value is typically in excess of $100k and quite often closer to $225k to $250k. ( per house)
Its not going to last for ever, but its going to last for awhile.
kp
GO regional imo.
Use the $1 mil as deposits and buffer account to fund for 12 months, then:
Buy land, build house, and rent out for better yields or sell on completion to reduce/minimise risk, and take profit/equity.
Mining areas in Qld and WA are still under supplied with housing and will remain so for a few yrs yet.
Mining activities are sustainable for a few yrs beyond that ( mostly still going through expansion construction/project phase before taking into account long supply contracts thereafter)
Make the profit going in and not by waiting for CG.
Margin between cost and market value is typically in excess of $100k and quite often closer to $225k to $250k. ( per house)
Its not going to last for ever, but its going to last for awhile.
kp
I would invest it into my business of course!
Cheers,
The Y-man
In all seriosuness however, if it was not into my business, I would place it in a mix of income oriented funds and possibly some direct shares/lpt's. Some will cut close to being cf- (even given tax considerations) and hence my need to diversify the types of funds given this scenario in my own case.
Cheers,
The Y-man
kph, yes a 1M + LOC - yes I am currently building but that's another project and it is overseas. You suggestion could be an option in the 20km + ring of Brisbane I think .
topcropper, I am really asking if any ways of investing here without having to -ve geared.
GSJ, I have heard different opinions..... I am quite dumb when it comes to shares trading so I am still uncomfortable going for what I don't understand well.
Y-man, yes , but it needs the skills I haven't got, yet
Any more brillant ideas ?
- yes I am currently building but that's another project and it is overseas. You suggestion could be an option in the 20km + ring of Brisbane I think . topcropper, I am really asking if any ways of investing here without having to -ve geared.
GSJ, I have heard different opinions..... I am quite dumb when it comes to shares trading so I am still uncomfortable going for what I don't understand well.
Y-man, yes , but it needs the skills I haven't got, yet
Any more brillant ideas ?
Y-man, yes , but it needs the skills I haven't got, yet
I'm actually not that crash hot on it myself - I simply leave it to my FP
(shock horror!)..... well, I do know about where my money is going into (after all I need to sign off) but I leave the searching and recommending to the planner. Cheers,
The Y-man
One way to reduce risk in a toppy market with an uncertain future is to reduce holding period. i.e. quick turnover.
I agree with kph's strategy to some extent. Buy land, build houses/duplexes/townhouses, sell off quickly, pay out loan.....then repeat based on economic outlook..
Focus on becoming an expert on finding dev't sites in a few key suburbs. Talk to owners before they list...make offers.
IMHO, the trick to doing this as I have mentioned to you before Salsa, is to get in thick with a good builder. No builder, no project.
Once you have done one project with a builder, it is advantageous for both parties to replicate on an ongoing basis. You both should have ironed out your communication styles and gained a degree of trust.
Just make sure the builder has some skin in the deal, by ensuring he has adequate incentive to finish the project on time. Otherwise, they can deprioritize completion (while seeking other projects), while you are still paying interest on the land. One way to do this is to grant them a % of profit to cover their carrying of material costs for the nominated construction period.
Yeah sure, there is some specialist development knowledge involved in this, but it is all scalable and reproducible.
___________________________________________________________-
Another quick turnover strategy.
Buy large rural properties within 3 hours of Brissy in shires that don't delay DAs unreasonably. Sub divide and market as weekend retreats. As SE Qld gets more crowded, demand for rural property is growing. And it is a hedge for many against a depression.
Risk is reduced because you have a friendly LGA appreciating the extra rate revenue you are generating for them, you are not relying on builders, you have minimal or no sub division costs (no roads, services, etc).
If you can find a farmer who is prepared to give a long settlement (most do) subject to DA, then all the better. You might even help them find their new home.
I agree with kph's strategy to some extent. Buy land, build houses/duplexes/townhouses, sell off quickly, pay out loan.....then repeat based on economic outlook..
Focus on becoming an expert on finding dev't sites in a few key suburbs. Talk to owners before they list...make offers.
IMHO, the trick to doing this as I have mentioned to you before Salsa, is to get in thick with a good builder. No builder, no project.
Once you have done one project with a builder, it is advantageous for both parties to replicate on an ongoing basis. You both should have ironed out your communication styles and gained a degree of trust.
Just make sure the builder has some skin in the deal, by ensuring he has adequate incentive to finish the project on time. Otherwise, they can deprioritize completion (while seeking other projects), while you are still paying interest on the land. One way to do this is to grant them a % of profit to cover their carrying of material costs for the nominated construction period.
Yeah sure, there is some specialist development knowledge involved in this, but it is all scalable and reproducible.
___________________________________________________________-
Another quick turnover strategy.
Buy large rural properties within 3 hours of Brissy in shires that don't delay DAs unreasonably. Sub divide and market as weekend retreats. As SE Qld gets more crowded, demand for rural property is growing. And it is a hedge for many against a depression.
Risk is reduced because you have a friendly LGA appreciating the extra rate revenue you are generating for them, you are not relying on builders, you have minimal or no sub division costs (no roads, services, etc).
If you can find a farmer who is prepared to give a long settlement (most do) subject to DA, then all the better. You might even help them find their new home.
I heard written calls on self funding instalment warrants were ok.... but have never tried myself, so I reserve judgement....
Cheers,
The Y-man
Salsa,there are two basic ways,maybe spend the time and read this bookI am quite dumb when it comes to shares trading so I am still uncomfortable going for what I don't understand well.
, but it needs the skills I haven't got, yet
http://users.bigpond.net.au/renton/spd.htm then find a broker that you
??work with,but Salsa from what i have read about you,you have done
very well out of property investing stick to what you know, neither
banks nor share holders provide their captial for free, so each method
has a cost,if i had a spare mill i know where it would be at 9.59 in the
morning..good luck willair..IMHO MY UNDERSTANDING OF RISK WOULD
GIVE MOST GREY HAIR IN THE FIRST 20 MINUTES AT 10 IN THE MORNING.
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If I had access to that level of clear funds, I'd go and buy a nice residential vacant block of land and get the title deed from the Seller. Don't build on it, as that would expose you to dreadful tenants.
Walk into the Bank and slap the title deed down as a 30% deposit down on a 3.3 MM industrial spread, earning about 250K p.a. clear nett rents.
This should pay for the bulk of the loan, and you've now got
Adios amigo.
Walk into the Bank and slap the title deed down as a 30% deposit down on a 3.3 MM industrial spread, earning about 250K p.a. clear nett rents.
This should pay for the bulk of the loan, and you've now got
- 4.3 MM worth of dirt growing
- dirt is diversified
- income is indexed and should go positive
Adios amigo.
