Investment Strategy - Guidance needed..

[dan_89]

Hi all,

I am curious to hear people thoughts on the relevance of having an investment 'strategy'. I have just turned 25 & next week settling on my 2nd investment property. I currently do not have a set in stone strategy as such & currently searching for some guidance from the Somersoft family. I will give a brief description of my situation;

Currently working full time on roughly $70k PA. After saving hard through my apprenticeship I purchased my first investment at age 21 in Boronia. A smallish 5 year old unit which I have had tenants in since. I managed to pay the loan down to the point where my rent was covering monthly interest (Rent: $1290 - Interest: $750ish). I then decided to bite the bullet and jump back into the market. I have redrew funds from my 1st investment to fund my new purchase in Scoresby (Yes both suburbs are basically next door but both areas I?m comfortable/familiar with). On settlement my Boronia unit will be sitting at 80% LVR and house in Scoresby will be at 83% LVR (Choicelend wouldn't wave the 3% unfortunately)..

I am still living at home but moving into Scoresby in around 10 months to take advantage of the 40% stamp duty saving (have to move in within 12 months of settling). The property is currently leased month by month so I plan on keeping them there for 10 months & saving as much as possible to fund renovations when they leave. The house is fairly rough so is in need of new kitchen, bathrooms, flooring, paining etc etc..

Depending on financial situation after renovations (hoping to spend under $30k initially) I may have to rent the property out for a 12 month period to keep my head above water. Being an 855sqm block my long term plan is to renovate front house and eventually subdivide & build townhouse at rear within the next 5 years (subdivision is another can of worms).

Can anyone here give me any advice in regards to moving into an investment property & making it their PPOR for roughly 12 months then changing it back to an investment? Is there anything I should be aware of? Also how many of you are investing without a clear strategy? I?m looking forward to the challenge of renovating and growing my property portfolio in the future & appreciate all the helpful information/advice from this great forum.

 

[tobe]

regarding PPOR, get a bank val or real estate agents appraisal of the value when you move in and out. Keep evidence it was your PPOR, ie letters from the ATO, vicroads and electoral roll showing when it became your address etc. loan, interest only with offset (I think perhaps choice lend doesnt have a true offset?)

 

[Peter_Tersteeg]

ChoiceLend may not be an ideal lender for a strategy where you move into and out of an investment property. My primary concern is that they don't have an offset account which is a very useful money management tool especially in these circumstances.

They're not a bad lender and their rates are competitive, but this does highlight that having a longer term strategy and structuring your investing and your lending to meet that strategy is very important. I may have misinterpreted your plans but this is worth considering.

All of the successful investors I've met have a strategy. For some it's fairly informal, or others it's very well documented, but all of their deals are working towards meeting some sort of objective.

The investors who tend to only get mediocre results are those who simply pick up a property because they can or because it don't tend to get the same results as those who do follow a strategy.

My recommendation is ask yourself what your longer term goals are and work backwards. What kind of figures do you need to achieve those goals? What steps will you need to take to achieve those figures? What do the properties needed to meet these figures and steps look like from a financial perspective? Defining these variables and tasks will give you a strategy to follow.

 

[impala67]

...All of the successful investors I've met have a strategy...

...all of their deals are working towards meeting some sort of objective..

...what your longer term goals are and work backwards...Defining these variables and tasks will give you a strategy to follow.

+1 - totally agree.

...Being an 855sqm block my long term plan is to renovate front house and eventually subdivide & build townhouse at rear within the next 5 years (subdivision is another can of worms)...

I would do a search on the forum for the blogs of some of the SS successes and fails. There are a few ongoing ones, and Melbourne based, with sums and pictures. I think you need to get your sums spot on for these sort of things, and need to know your suburb well for potential gains, and tax implications.

Write down your 1 year, 5 year and 10 years goals etc. (or whatever timeframe) and make decisions based on achieving them in that timeframe. I think you've made a decent start, all the best.