Investment Decision - At a crossroad

My situation is very similar to some of the people in the post;
http://somersoft.com/forums/showthr... Thanks in advance for any comments/advise.
 
1. Subdivision takes a long time, a property with subdivision potential has crap yield. Cash outflow is huge - so it better be worth your while. Perhaps reconsider given you are on a single income?

2. Why not get a property with strong rental and potential value-add? They exist.

3. Perhaps this is a good option.

Are you cross collateralised?
 
1. Subdivision takes a long time, a property with subdivision potential has crap yield. Cash outflow is huge - so it better be worth your while. Perhaps reconsider given you are on a single income?

2. Why not get a property with strong rental and potential value-add? They exist.

3. Perhaps this is a good option.

Are you cross collateralised?

1. Yeah, this can be a tricky situation. Especially, I have to rent the existing house while subdivision is going on. I can inform potential tenants about this but might be very difficult to rent it out. I did some ballpark numbers based on what I've seen around the place; 450K house. Subdivision costs 50K (hopefully, worse case scenario). Subdivided land, conservatively, 200K. So, 150K-10K(selling costs)=140K. Of course, I'll have to pay CGT as well :-(

2. So, does this mean rural VIC? I guess this is always the question, where to find them.

No, nothing is cross collaterasised :).
 
How is your current cashflow/serviceability?

Other than that, I will sugggest organise draw down equity/top up LOC from PPOR (CMIIW 80% = another $57k) and use that for next purchase.
 
I'm in somewhat similar situation to yours. Based on my calculations the asset value is enough to generate about 70k per year (npv) in 20 years time. To me this decent enough if your super is healthy.
I would suggest instead of buying another IP load yourself with insurances first - death, trauma, ip + good private health insurance. Protect your eggs first.
Then do a budget. See how much you can afford to invest. I'm slowly getting into shares to spread my risks but not confident at all. I'm happy to share my excel workings if you PM me your email address.
 
How is your current cashflow/serviceability?

Other than that, I will sugggest organise draw down equity/top up LOC from PPOR (CMIIW 80% = another $57k) and use that for next purchase.

Very good point thanks. Also, I've considered paying down some of the PPR loan with cash in the bank and turn that into a LOC.

In terms your serviceability question, at this stage, I've been pre approved for the next IP for 425K loan (considering all my other commitments/income)
 
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I'm in somewhat similar situation to yours. Based on my calculations the asset value is enough to generate about 70k per year (npv) in 20 years time. To me this decent enough if your super is healthy.
I would suggest instead of buying another IP load yourself with insurances first - death, trauma, ip + good private health insurance. Protect your eggs first.
Then do a budget. See how much you can afford to invest. I'm slowly getting into shares to spread my risks but not confident at all. I'm happy to share my excel workings if you PM me your email address.

I do have insurance (death/IP) via super. No trauma. Got private health insurance. So, if I purchase a 500K IP, I would left with 20K cash as my buffer. It's probably not the ideal case having single income and family with kids. At the same time, I just want to take some risks now so that when my wife joins the workforce, we can have a breather. Trick is to find an IP with neutral/positive cash flow. I'm at the moment looking in around Ringwood/Ringwood East/Heathmont area.
 
I was also in a very similar position a few months ago. Kids the same age, missus going back to work in about 6 months, same # IPS, shares instead of cash though. Spooky!

I have all insurances and good level of Super, so not looking at staying still.
You didn't mention your income levels though.

I decided to buy a large-ish property and both sub-divide and develop.

The main goal for me though was to learn and refine the process for both the SD and house / duplex builds. If I liked it / made at least a little, then would look at doing this on a regular basis.

Have purchased another property and am working with RPI on here to get the sub-division going. Slightly negative cash flow, but with an ITWV, not a problem at all!
 
Very good point thanks. Also, I've considered paying down some of the PPR loan with cash in the bank and turn that into a LOC.

In terms your serviceability question, at this stage, I've been pre approved for the next IP for 425K loan (considering all my other commitments/income)
Keep us your progress allsuccess, as you can see your condition is quite similar with others. You can share and learn from each other experience..

Bare in mind contingency plan is important because you have young kids, if you want to pay down PPOR (which is good for reduction non deduct loan).

I was think the other day, you can diversify to another investment vehicle that enable higher return than IP. But you need to know what you're doing..
example : manage funds/share

If you're not have time for learn, better stick to positive IP for couple years. Learn about subdivision and develop is great idea as well. Once the money is ready, the knowledge/skill is there as well.
 
From an estate planning perspective...

have you considered ownership structure for the next one? With a non working spouse there may be some opportunities for some tax savings.

Other lending strategies between spouses entities?

Consider some asset protection strategies.

Do you each have a valid and up to date will in place?
each have a enduring power of attorney and enduring guardianship?

Considered how your insurance is held who beneficiary should be?

Superannuation succession? Binding death benefit nominations in place? Who should be paid - spouse or to the estate?

Spousal sale strategies to increase deductible borrowings and pay down the PPOR?
 
Keep us your progress allsuccess, as you can see your condition is quite similar with others. You can share and learn from each other experience..

Bare in mind contingency plan is important because you have young kids, if you want to pay down PPOR (which is good for reduction non deduct loan).

I was think the other day, you can diversify to another investment vehicle that enable higher return than IP. But you need to know what you're doing..
example : manage funds/share

If you're not have time for learn, better stick to positive IP for couple years. Learn about subdivision and develop is great idea as well. Once the money is ready, the knowledge/skill is there as well.

I did some share trading and got burnt :(. Made some but lost a bit. I'm not really looking into it at the moment.
 
From an estate planning perspective...

have you considered ownership structure for the next one? With a non working spouse there may be some opportunities for some tax savings.

Other lending strategies between spouses entities?

Consider some asset protection strategies.

Do you each have a valid and up to date will in place?
each have a enduring power of attorney and enduring guardianship?

Considered how your insurance is held who beneficiary should be?

Superannuation succession? Binding death benefit nominations in place? Who should be paid - spouse or to the estate?

Spousal sale strategies to increase deductible borrowings and pay down the PPOR?

:eek: haven't really thought of these important points. Looks like I've got some work to do around these areas. Greatly appreciate your comments Terry.
 
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