If anyone out there can give me some direction or even a good contact to talk to about property investment i would greatly appreciate it.I'm 25 and on about $130'000 pa plus rental income and no outlays or personal debt (except outgoings related to my IP).I bought an IP about 12 months ago on the gold coast and after reading nearly every night about different techniques and strategies to create a portfolio it seems that the more i read the more confused i get.The two options i'm weighing up at the moment is to keep pouring funds into my existing IP and gain a heap of equity or to keep saving up deposits and buying more IP's that way.I'm also pretty confused on the +CF vs CG debate, what do you guys and gals think i should be aiming for?Please hewp me.
Looking for an investment strategy.
- Thread starter gunnamakeit
- Start date
Hi there
Since you're on good money, here's my advice. Please remember this advice is my opinion only, and I'm not a licensed financial planner. Its just what I'd do in your situation:
1. Talk to an accountant, possibly Dale about the structure of your purchases. The decision you need to make is whether to purchase properties in a trust or in your own name. If you're planning on buying quite a few, you may want to consider asset protection as fairly important. There are ways you can get asset protection and the tax advantages. Make sure your accountany fully understands these concepts, and confirm what they say on here.
2. Talk to one of the mortgage brokers on the board. Making sure your loans are structure correctly from the start will be a huge advantage. Otherwise you'll find it difficult to sort out problems later on.
3. Look more towards the negatively geared properties. You'll probably get a better rate of growth, and it looks like you can afford the hit on your cashflow. Here are some suburbs mentioned by John Edwards from Residex last week:
City/Suburb Median Value Predicted Growth 5 years Median Rental Yield
Hobart
South Launceston $207,500 6%+ 6.00%
West Hobart $371,500 5%+ 4.50%
Sydney
Illawong $727,000 15%+ 2.50%
Cherrybrook $611,500 13%+ 3.50%
Brisbane
Hendra $525,500 9%+ 3.50%
Hawthorne $645,500 11%+ 2.50%
Melbourne
Albert Park $768,000 15%+ 2.50%
Brunswick $409,000 13%+ 3.50%
Canberra
Banks $345,500 14%+ 5.00%
Gordon $381,000 12%+ 5.00%
Darwin
Bayview $472,500 14%+ 5.00%
Durack $357,500 14%+ 5.50%
Perth
North Fremantle $724,500 13%+ 2.50%
Iluka $696,000 14%+ 2.50%
Adelaide
St Peters $614,000 6%+ 3.00%
Glenelg $692,000 6%+ 3.50%
Make sure you purchase some reports from Residex to find the best place to invest. There are many listed.
4. Buy houses, not units. The land value is what you're after.
Good luck
Tubs
PS When you talk to accountants/mortgage brokers dont worry if you're not sure of what you want to ask. They'll lead you in the right direction based on the things people have wanted in the past.
Since you're on good money, here's my advice. Please remember this advice is my opinion only, and I'm not a licensed financial planner. Its just what I'd do in your situation:
1. Talk to an accountant, possibly Dale about the structure of your purchases. The decision you need to make is whether to purchase properties in a trust or in your own name. If you're planning on buying quite a few, you may want to consider asset protection as fairly important. There are ways you can get asset protection and the tax advantages. Make sure your accountany fully understands these concepts, and confirm what they say on here.
2. Talk to one of the mortgage brokers on the board. Making sure your loans are structure correctly from the start will be a huge advantage. Otherwise you'll find it difficult to sort out problems later on.
3. Look more towards the negatively geared properties. You'll probably get a better rate of growth, and it looks like you can afford the hit on your cashflow. Here are some suburbs mentioned by John Edwards from Residex last week:
City/Suburb Median Value Predicted Growth 5 years Median Rental Yield
Hobart
South Launceston $207,500 6%+ 6.00%
West Hobart $371,500 5%+ 4.50%
Sydney
Illawong $727,000 15%+ 2.50%
Cherrybrook $611,500 13%+ 3.50%
Brisbane
Hendra $525,500 9%+ 3.50%
Hawthorne $645,500 11%+ 2.50%
Melbourne
Albert Park $768,000 15%+ 2.50%
Brunswick $409,000 13%+ 3.50%
Canberra
Banks $345,500 14%+ 5.00%
Gordon $381,000 12%+ 5.00%
Darwin
Bayview $472,500 14%+ 5.00%
Durack $357,500 14%+ 5.50%
Perth
North Fremantle $724,500 13%+ 2.50%
Iluka $696,000 14%+ 2.50%
Adelaide
St Peters $614,000 6%+ 3.00%
Glenelg $692,000 6%+ 3.50%
Make sure you purchase some reports from Residex to find the best place to invest. There are many listed.
4. Buy houses, not units. The land value is what you're after.
Good luck
Tubs
PS When you talk to accountants/mortgage brokers dont worry if you're not sure of what you want to ask. They'll lead you in the right direction based on the things people have wanted in the past.
Hi There,
Gunna Make it,
As another alternative you could team up with another investor that needs a money partner (either deposit or servicability-income related).
an example of a deal I had fall through my fingers:
Recently In the paper In Sydney, I located a four bedroom house being sold to settle a divorce. The value was $350,000. I offered $234,500, all cash, in thirty days (I needed at least one month to arrange financing). Another investor bid $210,500 cash immediately.
Because he had cash, his offer was accepted over mine.
The property sold for less than fifty cents on the dollar! What will this lucky investor do with the property? If I were him, I’d obtain a new first mortgage of $280,000. This would return his original investment and leave him with an extra $27,000 cash profit (which, by the way, is completely tax-deferred as long as he does not sell the property).
Even with the new loan, the property will generate a handsome positive cash flow each month. And that’s not considering the $100,000 equity he still has in the property. Think about it: he has his money back, $27,000 cash in the bank and a $100,000 equity. Why?
Because he had cash!
You always run out of money before you run out of good deals!
If I had a money partner involved in this deal .... both them and I would have made very good returns out of it.
You have your high tax issues relieved and you get massive equity in the house instantly due to the old saying of "You make money when you buy .... not when you sell!"
IF you are on a great income and do not have the time to find the real bargains then it can be very, very wise (and profitable) to team up and compound your funds with hungry investor that can find the bargains.... after all 100% of nothing is nothing ..... however if this deal had of come off... 50% of 100K nett... is nothing to get upset about.
Wish you well on all your endeavours and hope you find a strategy that works for you.
Best regards
Kiwi
Gunna Make it,
As another alternative you could team up with another investor that needs a money partner (either deposit or servicability-income related).
an example of a deal I had fall through my fingers:
Recently In the paper In Sydney, I located a four bedroom house being sold to settle a divorce. The value was $350,000. I offered $234,500, all cash, in thirty days (I needed at least one month to arrange financing). Another investor bid $210,500 cash immediately.
Because he had cash, his offer was accepted over mine.
The property sold for less than fifty cents on the dollar! What will this lucky investor do with the property? If I were him, I’d obtain a new first mortgage of $280,000. This would return his original investment and leave him with an extra $27,000 cash profit (which, by the way, is completely tax-deferred as long as he does not sell the property).
Even with the new loan, the property will generate a handsome positive cash flow each month. And that’s not considering the $100,000 equity he still has in the property. Think about it: he has his money back, $27,000 cash in the bank and a $100,000 equity. Why?
Because he had cash!
You always run out of money before you run out of good deals!
If I had a money partner involved in this deal .... both them and I would have made very good returns out of it.
You have your high tax issues relieved and you get massive equity in the house instantly due to the old saying of "You make money when you buy .... not when you sell!"
IF you are on a great income and do not have the time to find the real bargains then it can be very, very wise (and profitable) to team up and compound your funds with hungry investor that can find the bargains.... after all 100% of nothing is nothing ..... however if this deal had of come off... 50% of 100K nett... is nothing to get upset about.
Wish you well on all your endeavours and hope you find a strategy that works for you.
Best regards
Kiwi
Could always just give it to me, and you'll no longer have to worry about what to do with it....
Information overload verging on analysis paralysis.
Personally, I am a share market fan (oooooooo.......should I say that on this forum?
) at the moment - so a diversification into the share market or commercial property trusts? Could help you subsidise any -CF thru distributions. More info to ponder and get confused about.....Not sure how many can hewp you.....whatever that is
Hi Gunnamakeit, what a fantastic start!! I know people who are about to retire not on that type of income - it will be such a help in making things happen for you - especially at your age!
Firstly - what type of property did you buy - has it had good Capital Growth, or does it have a great yield - or both - or neither - and how has worked for you?
Secondly - don't be worried by the massive amount of strategies out there - it can be incredibly overwhelming - but you need to find what works for you (or what mix!) - for instance, with your high income, a negatively geared property may be more important, or a newer one with higher depreciation - or both, or neither? You'll may never know - the important thing is that you are purchasing an asset that by looking at all aspects of history will you tell you that it should increase in value over time
I'm slightly confused by this - "pouring funds into my existing IP and gain a heap of equity" - do you mean you're paying extra principle into your loan to gain equity? This may not be the most tax-effective or investment-savy way for you to use your money. For instance, if you choose interest only loans, the payments you make are entirely tax-deductible (principle and extra repayments are not), and then you can use those extra repayments instead to purchase other investments. I consider putting principle into property as "savings" - I personally use an offset account instead, which serves the same purpose of paying principle but you can pull out the funds and use them as you like while the interest will remain tax-deductible (not the same if you redraw funds from the extra principle you pay into the property and use those funds for personal use - not tax-deductible). Others may have a different view - so you need to see what works for you
I personally get equity in my property from the gain in it's value, I pay nothing into the principle - That's a mindset though, and may not be appropriate for you. I'm sure you'll find looking through the forum that there is a multitude of responses to this.....personally for you (because of your high income) - unless you need the extra income now, Capital Growth may be your better option. We personally try for both CG and decent yields (but I'm a very patient buyer
) - and depending on the area you're looking, this may be extremely difficult to do.......or it may not - so the first thing you need to decide is your timeframe in buying your next IP - if you don't have time to look around at every property, you may very well be content with finding one in an area that is expected to have higher Capital Growth, purchase it now and hold onto it (remember that rents also increase over time, which will increase your cashflow)........if you love the art of finding a bargain, you might be able to find both CG and CF....Cheers,
Jen
Before you set an Investment Strategy you really need a good system in place;
Step 1 Set your Goals
Step 2 Prepare a budget
Step 3 Investment Strategy
Step 4 Build your team
Step 5 Research
Step 6 Feasibility Study
Step 7 Negotiate the deal and repeat!!
As part of your investment strategy read several books from both "camps" and perhaps even consider a seminar. Your strategy should include your financial goals, Resources (cash.equity & time), Comfort levels (risk and level of debt) and Market Conditions (falling, rising, flat)
To learn more visit www.propertydivas.com.au
Step 1 Set your Goals
Step 2 Prepare a budget
Step 3 Investment Strategy
Step 4 Build your team
Step 5 Research
Step 6 Feasibility Study
Step 7 Negotiate the deal and repeat!!
As part of your investment strategy read several books from both "camps" and perhaps even consider a seminar. Your strategy should include your financial goals, Resources (cash.equity & time), Comfort levels (risk and level of debt) and Market Conditions (falling, rising, flat)
To learn more visit www.propertydivas.com.au
Hi Amanda
I just had a look at your book list..............not one of Jan's books mentioned
I would definitely see her books as representing one "camp" as such.
hi gunnamakeit
I'll give it a stab.
1. where and what you do being in karratha you are in the mining industry and being on 130k your an electrician etc or above and karratha is screaming for trades I was up there about 8 months ago and they ask people in the pub to change jobs.
so the income is no problem.
I would do a couple of things.
1. have a chat with kph in karratha and he will put you in touch with a couple of investors out of karratha.
2. put a game plan together and work out what your goals are.
3.neg maybe good but an accountant will tell you and they will be in your game plan.
4.structure your investments and thats not just real estate, cash flow is king so use your cash flow,
5. with 130k in income that equates to about 850k in lendability to some one that needs that income so you are if a very good position to some one as kiwi has suggested.
tread very carefull and I will give you a piece of very good advice.
when a rich man meets a wiseman the wiseman gets a little richer and the richman gets a little wiser.
its good to read but its better to meet with other investors and where you are in karratha is a haven for investors and people making money so use it.
or I could say as has been posted give it to me
my .002
I'll give it a stab.
1. where and what you do being in karratha you are in the mining industry and being on 130k your an electrician etc or above and karratha is screaming for trades I was up there about 8 months ago and they ask people in the pub to change jobs.
so the income is no problem.
I would do a couple of things.
1. have a chat with kph in karratha and he will put you in touch with a couple of investors out of karratha.
2. put a game plan together and work out what your goals are.
3.neg maybe good but an accountant will tell you and they will be in your game plan.
4.structure your investments and thats not just real estate, cash flow is king so use your cash flow,
5. with 130k in income that equates to about 850k in lendability to some one that needs that income so you are if a very good position to some one as kiwi has suggested.
tread very carefull and I will give you a piece of very good advice.
when a rich man meets a wiseman the wiseman gets a little richer and the richman gets a little wiser.
its good to read but its better to meet with other investors and where you are in karratha is a haven for investors and people making money so use it.
or I could say as has been posted give it to me
my .002
Hiya
One thing, NOW, today, yes right now :O)
STOP ........... paying money into that IP loan.
Trun it into an IO loan and get an offset acct quick smart.
Thence tip you tax paid cash into your offset acct.
I know its been mentioned above, but in all the other good info, this basic thing may get overlooked
ta
rolf
One thing, NOW, today, yes right now :O)
STOP ........... paying money into that IP loan.
Trun it into an IO loan and get an offset acct quick smart.
Thence tip you tax paid cash into your offset acct.
I know its been mentioned above, but in all the other good info, this basic thing may get overlooked
ta
rolf
Hi Amanda
Thats a bit...welll................silly isnt it ?
Jumping onto a forum thats graciously provided by one of the best selling authors (biggest selling on buy and hold) in property investment and not having their books on THE List, tends to suggest we may not have done all our research..................on a couple of fronts
ta
rolf
Thats a bit...welll................silly isnt it ?
Jumping onto a forum thats graciously provided by one of the best selling authors (biggest selling on buy and hold) in property investment and not having their books on THE List, tends to suggest we may not have done all our research..................on a couple of fronts
ta
rolf
What do you do for a job? I'm just curious
Hi Suparex and Glebe,
Judging by location, my guess is he works in the mines.
Mark
Hi Gunnamakeit,
From what you described, it seems like you know a lot about what to do, therefore, I feel more instructions from external sources won't help you much.
What you may need to do is to find out from *within* yourself, who the person you want to be in life. Once knowing this, you will know how to get there.
As Stephen Covey said "Begin with the end in mind".
There are a few books to discuss about purpose in life and how to get over the procrastination, of which "Think and Grow Rich" is one of the best. Also networking with the right people and choosing mentors will help you fast-track the progress.
From what you described, it seems like you know a lot about what to do, therefore, I feel more instructions from external sources won't help you much.
What you may need to do is to find out from *within* yourself, who the person you want to be in life. Once knowing this, you will know how to get there.
As Stephen Covey said "Begin with the end in mind".
There are a few books to discuss about purpose in life and how to get over the procrastination, of which "Think and Grow Rich" is one of the best. Also networking with the right people and choosing mentors will help you fast-track the progress.
Hi Gunnamakeit
I remember reading an article which compared two people with the same incomes and circumstances. One of the people invested in positive cashflow property and the other in capital growth property. When they retired, guess what? They were both well off.
When it comes to investing I think that there are a lot of different strategies but at the end of the day perhaps the most important ingredient is ACTION. If you pick a strategy that looks good now and take action, you will more than likely refine your strategy along the way and perfect it as you go. It is mach easier to perfect you're strategy as you go and as your gaining experience than in the beginning when you have little experience.
Good luck mate.
I remember reading an article which compared two people with the same incomes and circumstances. One of the people invested in positive cashflow property and the other in capital growth property. When they retired, guess what? They were both well off.
When it comes to investing I think that there are a lot of different strategies but at the end of the day perhaps the most important ingredient is ACTION. If you pick a strategy that looks good now and take action, you will more than likely refine your strategy along the way and perfect it as you go. It is mach easier to perfect you're strategy as you go and as your gaining experience than in the beginning when you have little experience.
Good luck mate.
