Jumping On The Ladder

[hank]

anybody,

Looking for help.
I am new to the game and have recently aquired a house in Mooloolaba Queensland. It has no mortgage, is worth approx $300,000 and has tennant.
I have a good job in Sydney and would really like to know any tips for jumping onto the property ladder. I do not want to sell the property but would like to use it in some way. I have read numerous magazines and websites and now have information overload.
I see my profile as cautious and would prefer to invest fairly local to myself. I have never brought property/land etc before and feel that I should be able to do something a little creative with my equity.
Not stupid and not looking for a quick buck. Just an original strategy.
Can anybody once in the same situation or a mature property investors point me in the right direction?
All help very much appreciated

 

[WillG]

Hi HPorter,

Great position to be in.

Firstly - Don't sell the place in QLD. Keep the tennant in there.

If you have a mortgage on your PPOR(principal place of residence), put the rental income (from the QLD property) into an offset account to reduce the interest payable on your PPOR.

You will also be in a position to buy another investment property using the QLD property as security (there are various ways of drawing equity from the QLD property to fund a deposit on another investment property. It is preferable NOT to cross colatoralise).

Doing all of the above is low risk (in my humble opinion), shouldn't cost you anything from your own pocket and will help you build a good 'nest egg'.

Hope this helps !

 

[watto]

G'day hporter,

Best place to start would be to seek out a good mortgage broker, one that understands IP's.

There are several excellent brokers that hang around this place.

Ask questions and lots of em.....just remember the only stupid question is the one you don't ask....

Cheers
watto

 

[paulzag]

hporter

Where do you want to end up. $300K of equity can burn a hole in many an investors pocket.

Assume you should be able to borrow $240K against the Qld property. Don't sell it unless it stops growing at your required rate of return.

So if you are not an experienced investor what do you do with the money?

1) under no circumstances allow a financier to cross-collateralise that $240K loan with any other property. Every property must stand alone with its own finance.

2) Get educated. But don't spend more than $300.00 (Three Hundred Dollars) on any course. Personal bias:- you should consider attending Steve Navra's Optimising Investment Structures for a healthy reality check on investing principles. You can read the articles on Steve's site to get an idea of his thinking. Also read Jan Somers books. I really can't recommend any other books at the moment (they exist but aren't required reading).

3) Buy nothing until you know where you want to be in 5 and 10 years time.

4) Do not fly to Qld for a weekend to look at some real estate. Should you find yourself on a plane, SIGN NOTHING until you get back to Sydney and talk to some experienced investors (here and in the chatroom are good places as is the Real World).

Good luck - the journey is worth more than the destination.

Regards

Paulzag
Dreamspinner

 

[bbg2003]

I too am from Sydney and have IP's in QLD.
What I'd do:

1. Never take for granted advice from anybody who stands to make commission on the advice.
2. Always ask questions when your not 100% sure of what is being said.
3. Always check up yourself on what your bing told.

I recommend you read books by Jan Somers books, Terry Ryder, John Fitzgerald(7 steps to wealth), Fred & Brett Johnson (free at www.quartile.com.au).

You will need the help of a good lawyer & accountant. Again make sure you understand what is being said and reasearch it yourself. Don't forget the bank officer will be just as important to your success.

inhm don't try and be creative with your strategies, go striaght down the line.

Give some thought to what legal ownership(structure) you will use.
You can purchase property in your personal name, as a company name or a trust.
Depending on your circumstances it might be beneficial to setup your own self managed super fund (smsf).

I would recommend you explain to your current accountant, who is already familiar with your financial situation, what your thinking of doing and ask how can he can be of help.

best wishes
bbg2003