IP Strategy Advice
- Thread starter Glam888
- Start date
Id buy lots of properties at the median price in good growth/undervalued suburbs by talking with my broker, you've got a good thing going here and if utilised right will make you a wealthy man.
or woman, whichever one you might be
or woman, whichever one you might be
Very much depends on your timeframe and weather you are primarily interested in capital growth or cashflow. For example, if you are nearing retirement, you may focus on cashflow.
You are cashflow positive to the tune of about $10k (assuming 20% expenses against your IP). You could use some of the equity in the IP to fund deposits on median priced IP's. If each are CF neutral of slightly negative geared then you should still be cashflow positive overall. Your current LVR is low and I suspect your serviceability(depending on your day job) is OK so you should have no problems financing 1, 2 or 3 average IPs ($300 to $350k)
You are cashflow positive to the tune of about $10k (assuming 20% expenses against your IP). You could use some of the equity in the IP to fund deposits on median priced IP's. If each are CF neutral of slightly negative geared then you should still be cashflow positive overall. Your current LVR is low and I suspect your serviceability(depending on your day job) is OK so you should have no problems financing 1, 2 or 3 average IPs ($300 to $350k)
Sell this it is too expensive for a PPOR.
Sell this too. Its yield is pathetic and its too expensive for an IP. (Assuming no CGT to pay). This gives $450K (from PPOR) + $500K (from IP) = approx $1M cash. (not allowing for selling costs)
Using 20% deposits buy median priced IPs & PPOR @ say $350K ea. = 13 x IP's you can buy.
Say you buy 10 x IP's @ $350K.
2 in BNE
2 in SYD
2 in MEL
2 in ADL
2 in PER
to spread your IP risk around.
You've put down $700K in deposits. The IPs are neutrally geared at worst and positively geared at best. Lock in 5.x% rates for 10 years. You still have a buffer of $250K. You are sitting on $3.5M of property growing at an average of 8% pa (long term trend) = $280K pa CG
That scenario of course is full of assumptions and you only asked what to do IP-wise for investments.
Yeah, I'd follow the Proportunity strategy. To some extent I did, but not with $1m seed money and all my IP's are in one state, for now.
PPOR? I'm over it. Not having one is a big part of my strategy. All debt tax effective and a chunk of the rent I pay for my residence is for my home office.
Imagine what you could do with that sort of foundation. HUGE potential.
PPOR? I'm over it. Not having one is a big part of my strategy. All debt tax effective and a chunk of the rent I pay for my residence is for my home office.
Imagine what you could do with that sort of foundation. HUGE potential.
Most FP's want to flog managed funds they get paid commissions on. A few will recommend direct property invesment. How do you find the few?
A lot of forum members come up with their own strategy - and if it is IPs - go get a broker to get you the finance. A few good ones on here. I'm sure they'll reply soon enough
Glam
Without being funny but most FP's (did i say that) wouldnt have a clue about how to structure an investment loan portfolio that didnt involve putting the cash into managed funds.
As others have said spread your risk around a mix of capital growth and yield properties as one day interest rates will rise again.
Structure your loan by a line of credit on your own PPOR which you could then split into a series of sub loans for each of the 20% deposits and acqusition costs. Split just makes the identification of each loan easier to work out the interest.
Then take out standalone 80% loans on each new IP.
Not sure i would fix quiet yet and if you do i would stagger the terms so they dont all expire at once.
If you decide to retain the existing IP make sure you have a 100% offset account linked to this.
With the right property and structure all should be sweet.
Without being funny but most FP's (did i say that) wouldnt have a clue about how to structure an investment loan portfolio that didnt involve putting the cash into managed funds.
As others have said spread your risk around a mix of capital growth and yield properties as one day interest rates will rise again.
Structure your loan by a line of credit on your own PPOR which you could then split into a series of sub loans for each of the 20% deposits and acqusition costs. Split just makes the identification of each loan easier to work out the interest.
Then take out standalone 80% loans on each new IP.
Not sure i would fix quiet yet and if you do i would stagger the terms so they dont all expire at once.
If you decide to retain the existing IP make sure you have a 100% offset account linked to this.
With the right property and structure all should be sweet.
Either rent (it is cheap) or buy a lower cost PPOR if the repayments = much the same as rent.
One of the keys to building wealth is to live as cheaply as possible yourself while pumping up the investing side. Then live as lavishly as you want when the investments pay off down the track 10 years from now.
I agree. I'm yet to tget to the "live lavish" part of the program, but I'm looking forward to it.
I think the term often used is "delayed gratification" (in a financial sense, of course
)Sorry Proper but I disagree with you. A $450,000 PPOR is not expensive. It's a little bit of luxury to enjoy today. I believe I can still use the equity i have in this PPOR and IP to buy other IP's and achieve a great passive income when I retire. Why not enjoy a little on the way. When your dead your a long time dead!
And when you get to the future you're to bloody old. I'm not saying go and spend but to enjoy and live in a bit in luxury like you deserve it makes the body mind and soul balanced. At peace. Waiting for the end game is fine but I want to live with dignity, have a place where I love to call home, not a box to live in just so it achieves the means.
I agree...Glam you dont need to sell your PPOR . simply leverage against it and build your portfolio.
We are remebering to live in the present while plamming for the future (like your new words - sounds like you have a cold
)But your Q was: Would love to hear how others presented with this portfolio would invest to buy more IP's.
and this is how we'd do it. You might have another way. Do what's right for you.
