My situation, best way forward now....

[Ramos023]

Hi guys, first post here, having been recommended by a friend to join up.

Long story short, my current situation is pretty good. Just wondering what my best move forward would be... I have 2 IPs currently, returning approx $650/wk on top of my job ( Retail management ) I have got my mortgage down to under 150k and have good borrowing capacity. Would it be better to buy a more expensive house this time round instead of the 300k range, or just keep snapping up cheaper houses adding value and so forth.

I'm still living at home, with the parents, really keen on moving out, as any 24yo would be, but paying off my houses ASAP has taken priority. As such I have little living expenses, and have high savings. Just trying to make the most of it while I can, but hate living at home at this age, just makes it hard for the social aspect obviously!

I really like property and would one day hope to make it my main income source, however lately I have just become so frustrated with my property management with late payments, missing payments, and stopped doing research. Need to get back on the horse, and get back into the market.

Based on such info, I'm not sure if I should buy my own PPOR and not invest or perhaps get another one 300 - 350k range suck it up with the parents, and make some more cash.

Thanks for reading. Still a n00b

 

[Scott No Mates]

If your parents are still prepared to put up with you stay there for another couple of years to keep your own overheads/living costs as low as possible.

Have a look at the returns on more expensive properties but you will soon find that between lower rent and higher expenses (possibly land tax, insurance, rates etc) your returns will be lower.

If you are happy with your lot, stick with the cheapies and consider a change of property manager if they're the ones not kicking the goals for you.

 

[westminster]

N00b - not a word we hear here very often

How about you buy a PPOR and rent out a couple of rooms? Or buy something and put yourself in granny flat out the back of a property you rent out. NSW is the granny flat state at the moment. Brazen on here has designed some really nice 2 bedroom granny flats - even 2 story ones.

A good property manager is essential for picking the right tenants who will look after your places. There is nothing wrong with sticking with $300k properties if they are working for you.

 

[matto_]

WOW.

24 - 2 IPs with the loan down to 150k.

What are the values of the current props?

That is a fantastic start. Would have loved to be where you are at by 24.

I have never seen PPOR as being a mandatory. Particularly at 24. I would think trying different areas and determining where you would like to live, and concentrating your earning power on investing. (either that or staying on the current gravy train at the folks).

 

[oneguy]

Yeh agree. Wish I was where you are at when I was 34, let alone 24

Unless you are looking at living with a partner together etc, I'd stick with living at home for now. Getting more properties whilst your overheads are low at the moment will mean a quicker path to meeting your end goal of living off your properties' income.

 

[Ramos023]

Yeah to be entirely fair, I got very lucky to be in this situation, and also worked my *** off with 2 jobs aswell for several years. My dad lead me down the property track, as I had decent savings as a late teenager and wanted a nice suped up car..... I was quite silly

Not sure if you guys are familiar with the Wollongong region, but one is in Albion Park, valued in the low 300's, possibly $320k and the other which I acquired cheap 5 years ago, and did medium scale renovations, is between $350 - $ 400k in the suburb Figtree, approx 5-10mins from the CBD of Wollongong. Great for uni students etc I really like it.

I really appreciate the advice so far. I'm at the crossroads, I love money, and like the idea of investing, it's just the living at home thing. But overall, its a means to a better lifestyle perhaps, and just suck it up. I mean i know people who live at home at my age with nothing to show for it.


Even browsing for a day, I can see there a quite a few really smart people on here!!

I have seen some research on areas that I have never been to, what's the consensus on investing in areas perhaps where you cannot see the properties on a regular basis. I've always just stayed local, but seems like there is some great opportunities in other places. Would need a bloody good property manager hahaha!!

 

[Aaron_C]

Did you actually pay down the mortgages or is your $150,000 loan amount the net amount after an offset account with savings in it?

 

[Sheryn]

Just wondering what my best move forward would be... I have 2 IPs currently, returning approx $650/wk on top of my job ( Retail management ) I have got my mortgage down to under 150k and have good borrowing capacity. Still a n00b

Ramos
IMHO you need some mortgage brokers to reply to your thread as paying off IP's is probably not the best way forward. If no mortgage brokers reply to this thread post under Property Finance.


Regards
Sheryn

 

[Terry_w]

Have you ever lived in any of these houses - so as to get the CGT exemption?

Do you intend to live in one of them in the future?

I think it is generally a good idea not to pay down the loans but to use a 100% offset and a IO loan. Otherwise all your money will be tied up if you ever want to purchase a PPOR.

Also it is a good idea to keep living at your parents as long as possible. Into you 90s ideally.

 

[jclegg]

Hi, Just to answer your question about not being able to see the properties easily, we are in Melb and have one in Sydney. There are definately challenges but you just need to have a much more hands off approach and rely on the property managers for everything - plus make lots of phone calls when things aren't going smoothly. But the benefits are to diversify your investments and to reduce land tax.
If you are serious about buying more properties you should really talk to a good accountant and mortgage broker and develop your preferred strategy

 

[Terry_w]

Ramos

Do you mean to say you only have $150,000 owing on 2 properties and they are bring in $650 per week? That is an excellent position to be in if that is the case.

 

[Ramos023]

OK, not sure how to reply to multiple quotes on here

So,
Aaron C - yes I paid it down so the total owing is under 150K now. Which I can now see may have seemed super great but I understand more about offsets and IO.

Cashflow is fine though, so it hasnt been a problem, regardless if it was the best move or not!

Thanks, Sheryn! Thanks jclegg

Terry - yes, total owing under 150k. Rental income is $330, and $320, but I have been hounded to put it up several times, but just keeping tennants happy atm, could throw 10-20 on each quite easily however.

As for living in one, yes Figtree I did for awhile, as it was purchased cheap and had the biggest gain, being worth more than my other.

I understand you can keep doing this, the "6 year rule" to keep resetting it if you will? Might do this sometime soon perhaps

 

[Terry_w]

Wow, at this rate you could probably pay that loan off in 2 to 3 years. Good work on living in one too.

 

[Ramos023]

Thanks Terry, i've been approved for upto 500k but not sure what the next move should be. My sister has a 900sq block, that has been approved for a villa. Really want to knock that up for around 200-220 after all the bloody council costs/fees/restrictions. It would be half half ownership...

Ideally, i'd like to build that, move in with a girlfriend, and get something else. Just dont wanna go in too deep

 

[Terry_w]

Many things to consider there. How will you get on title, or will you remain off? stamp duty, loans and joint and several liability. Disputes from family law claims - yours and or hers. death. insolvency.

 

[7smurfs]

Also it is a good idea to keep living at your parents as long as possible. Into you 90s ideally.

I lol'd!

I wish I had some guidance as you did before spending 10's of thousands of my hard earned cash on 'souping up' my depreciatable car
However the car has been my hobby for a long time and I have thoroughly enjoyed it despite the amount of time/money spent modifying it... So not so many regrets

Back to the OP, best bet would be to stay with the parentals whilst continuing further investments through cash savings. I would make a goal on how many properties or cashflow income you would like acheive before rewarding yourself with a PPOR.

Personally, I prefer a lifestyle whilst funding my investments (typical gen Y mentality here). And to do so, I plan to rent after my 6 month period is up on my first IP. That is also an option that you can take as it will be more cashflow effective.

Btw you are in an envious position though I can understand the sacrifices you have made to get there. Good work

 

[Ramos023]

Absolutely agree, Terry. It's abit complicated, really wanted to buy my sisters house and develop it myself....naturally she was having none of it! haha

Thanks, smurfs, yeah it has had its ups and downs. The thing was I was always happy with the lifestyle, work hard play hard mentality. Great bunch of close friends etc. It is only now I want the car again, the nicer things...

Im single too....so this has always helped my personal goals. However now I would love to have a steady partner, also a second income could mean great things. I never tell any girls I meet about my investments or financial standpoint, maybe I bloody should, might snag me a gold digger hahaha

 

[Ramos023]

Bump

WOW!! IT's been so long since I have come on here!!

Re reading all the advice that you guys provided was great. In the end I did snap up my 3rd IP end of 2012, start of 2013 and did some major/minor works depending how you see it......

There was an inground pool, and the fibre glass was cracked and totally unusable worthless, so we used that as a negotiating point and it worked, I purchased in Horsley, near Wollongong NSW for 273k and got to work.

Filled the pool in and made that area an entertaining area/play space, approximately 3k instead of 30k to fix the pool, only so cheap as I did the labour myself... Shovelling and wheeling 90 tonne of the metal dust filler whatever it was.. was not fun! Still got the scars to prove it HAHA

New carpets, verticals, oven, dishwasher etc, and my old boy throwing on some paint, and it was all ready to go!

Currently rents at $360 per week so was more than happy with the outcome, and I sold some parts of the pool electronics, motors filters etc I don't know to my electrician so that was a minor bonus!


Just got my latest OSR land tax assessment though! HAHA guess that's the price you pay with land ownership!!



CURRENT DILEMMA with my next one id like to avoid said tax and go interstate. But this might not be for a while, research, etc etc

Personally I moved out of home to work in Sydney with a promotion, but hate it, and hate the job, so I moved home with parents, still working in Sydney. The commute is killing me, and I think its time to throw it in with retail!!

guess what im thinking about going into...... Real estate. Any job in real estate seems more appealing to me and I think im going to pursue it, whats the best way forward? Uni? tafe? Cert of registration via correspondence.....
It seems I have a passion for this so why not make a career out of it!