Jumping in to buy a 2nd IP

[Peppin]

Firstly reading through countless threads, finding all sorts of valuable information, I would like to say thankyou to all of the posters who kindly share their advice, thoughts and time to someone like me new to property investing.

We would like to make the next step and purchase another IP.
We own our own home valued at $350k, we also have an IP which we brought 1 year ago for $150K (valued now at $165K) and we rent out at $200 per week. We owe $80K on this IP.

Our goal is to have 5 IP before my OH retires in about 15 years, with the majority of properties owned. I am not sure if this is unrealistic, but we are comfortable with this goal.

Our first IP was close to home and we manage ourselves, but now we are thinking outside the state and looking at Bendigo and after reading through threads, we are thinking Kangaroo Flat or Golden Square.
I would just like to know others thoughts on should we jump right in and buy another if we are in the position to do so and what price range would you be looking at if you were us.

Another query is when RE have properties advertised eg $350K - $400K what prices are they after (do they expect someone to offer $390K even if they have it as $350K or do you offer say $340K hoping they may take you up on that). Apologies in advance if this is a silly question

 

[alexlee]

Our goal is to have 5 IP before my OH retires in about 15 years, with the majority of properties owned. I am not sure if this is unrealistic, but we are comfortable with this goal.

5 IPs of what value? How are you comfortable with your goal if you don't know whether it's realistic or not? To get comfortable you must have done the numbers, if you've done the numbers you should know whether it's realistic or not.

I would just like to know others thoughts on should we jump right in and buy another if we are in the position to do so and what price range would you be looking at if you were us.

The key would be your income and serviceability, which you haven't mentioned.

 

[Rolf Latham]

Firstly reading through countless threads, finding all sorts of valuable information, I would like to say thankyou to all of the posters who kindly share their advice, thoughts and time to someone like me new to property investing.

We would like to make the next step and purchase another IP.
We own our own home valued at $350k, we also have an IP which we brought 1 year ago for $150K (valued now at $165K) and we rent out at $200 per week. We owe $80K on this IP.

Our goal is to have 5 IP before my OH retires in about 15 years, with the majority of properties owned. I am not sure if this is unrealistic, but we are comfortable with this goal.

Our first IP was close to home and we manage ourselves, but now we are thinking outside the state and looking at Bendigo and after reading through threads, we are thinking Kangaroo Flat or Golden Square.
I would just like to know others thoughts on should we jump right in and buy another if we are in the position to do so and what price range would you be looking at if you were us.

Another query is when RE have properties advertised eg $350K - $400K what prices are they after (do they expect someone to offer $390K even if they have it as $350K or do you offer say $340K hoping they may take you up on that). Apologies in advance if this is a silly question

Hiya

Welcome

With a target of 5 I PS I would assume your banker/broker has walked you though a financing plan using your existing equity? And not just focussed on the current purchase at hand

A
rolf

 

[Peppin]

Thanks alexlee for your quick reply.
Our combined income is approx $120K, my OH works full time and I doing casual work. Other that the $80K on the first IP and our living expenses that is all we have to pay.
I understand your point re being comfortable with our goal if we are not sure if it is realistic or not.
We are pretty new to all of this, and I am sorry if I am not asking the right questions or putting in the right information but I will get there

 

[Peppin]

Hiya

Welcome

With a target of 5 I PS I would assume your banker/broker has walked you though a financing plan using your existing equity? And not just focussed on the current purchase at hand

A
rolf

Umm no Rolf, my OH and I have just sat down and discussed retirement and where we would like to be in 15 to 18 years time. But I will go see our bank and ask for an appointment to see if my thoughts are viable. I guess that is the first step. Thankyou Rolf.

 

[jrc77]

Peppin,

Just remember it might not be in your best interests to finance all your IP's through your existing bank. If using them as a source of advice for loans they are unlikely to point this out.

Regards,

Jason

 

[Aaron_C]

Umm no Rolf, my OH and I have just sat down and discussed retirement and where we would like to be in 15 to 18 years time. But I will go see our bank and ask for an appointment to see if my thoughts are viable. I guess that is the first step. Thankyou Rolf.

I am afraid the bank won't give you a very detailed or beneficial plan as they are limited by their own products and tunnel-vision.

 

[Rolf Latham]

Umm no Rolf, my OH and I have just sat down and discussed retirement and where we would like to be in 15 to 18 years time. But I will go see our bank and ask for an appointment to see if my thoughts are viable. I guess that is the first step. Thank you Rolf.

The bank will be a good start for sure

Please dont make any applications for any form of pre approval though so you dont fry your file before you even get out of the blocks

ta

rolf

 

[spludgey]

We would like to make the next step and purchase another IP.
We own our own home valued at $350k, we also have an IP which we brought 1 year ago for $150K (valued now at $165K) and we rent out at $200 per week. We owe $80K on this IP.

Our goal is to have 5 IP before my OH retires in about 15 years, with the majority of properties owned. I am not sure if this is unrealistic, but we are comfortable with this goal.

Going on just those figures, you could easily buy the remaining 4 IPs right now, using the equity that you have in your PPOR and existing IP.
If you can borrow up to 80% then the amount you can borrow right now is ($350k+$165k)*.8-$80k= $332k.
Now if you calculate a 20% deposit on investment properties plus 5% purchasing fees, you can buy your four investment properties at an average price of $332k.

Just make sure they're cashflow positive.

 

[Peppin]

Thank you all for your replies, you have all given me some great advice and lots of things to think about before taking any more steps.
I will be sure to check back in from time to time to let you know how I am progressing.

 

[Belu]

Hi Peppin,

Out of curiosity why are you looking at Kangaroo Flat and Golden Square? Why not other suburbs of Bendigo.

Not saying one or the other just asking

Ben

 

[Peppin]

Hi Ben,
I was thinking Kangaroo Flat and Golden Square primarily because of it being on the Melbourne side of Bendigo. Although having said that I have been looking at other areas of Bendigo as well in the paper and on Domain, etc. Could you give me any indications of which areas you think are worthwhile investigating, I used to know the area relatively well, as I am originally from Kyneton.
Thanks Ben.

 

[Belu]

Hi Peppin,

Where to invest is a very personal question I find - my preference was for Golden Square as I was looking for relatively close to the CBD but with big blocks (I was buying ~1acre blocks and this was the spot to buy them).

I am currently writing an email to a couple of Buyers Advocates that are talking with me about buying in Bendigo which may be of help if you like? Happy to send it on, just PM me your email address.

Also, in 95%+ of cases in Bendigo a vendors acceptance price will be in the range advertised. The only exception I can think of is BRE who use a "buyers enquiry range".

Ben

 

[Andrew_A]

...
Another query is when RE have properties advertised eg $350K - $400K what prices are they after (do they expect someone to offer $390K even if they have it as $350K or do you offer say $340K hoping they may take you up on that). Apologies in advance if this is a silly question

Vendors are thinking of 400k and buyers are thinking 335k Knowing no other information assume value closer to 375k than either of those two numbers!

Quickest way to get to the bottom of the matter is just to ask the person who should know, the sales agent, if you don't have access to the seller directly. In a friendly and straight forward fashion build some rapport and then just ask something along the lines of..

> So what does 350-400k actually mean?
> What properties did you use as comparables?
> Any recent sales similar to this property? Superior/inferior in your view?
> What are the sellers hoping to achieve? Quick settlement? More money? (gets to the why are they selling motivation but don't ask that clunker directly to jump the scripted replies)

 

[Peppin]

Thanks Ben, I have sent you a pm with my email address - hopefully I have done that correctly.
Also thanks also to Andrew A, your advice was very helpful.