my situation- best way to work with what I've got

[my03]

Hey guys, we might have met in this forum when I asked about parental guarentees/equity release a few days ago. Thanks for all the great info I'm really learning so much on this forum I cannot thank you guys enough.

I am 29 yo, single, no dependants, and I have a gross income on 96k

I have very little living expenses, because through the years, I have given my parents a lot of my savings to do their own investments, so my parents let me live in their IP's which I consider my ppor even though I dont technically own it. I also rent a room out in this place for $1500 a month.

So anyway, my situation is I am an only child and I have a very close relationship with my parents. We have a "whats mine is yours and whats yours is mine". Recently we sold our family home and downsized, and had quite some equity. But because of some recent purchases, locally and overseas. I don't think I might leave my parent's affairs alone and try and get on the board with my own property.

Right now I have about 40k cash. It's not much at all, but surley a net income of around $5200 with little expenses will allow me to service my debt for 1-2 investment properties in the 400k mark.

I was just wondering what would be a good way to make the most of what I've got? Surley the 40k would be good for at least a small deposit and stamp duty and other associated costs, maybe even a small reno.

Any tips or advice would be greatly appreciated.

Thanks guys.

 

[Rolf Latham]

Hi MY


40 k can get you a longish way depending on the balance of your resources such as credit score, other liabilities and other subtleties.

Consult a broker or decent banker that can look at 95 % Investment loans

ta
rolf

 

[Redom]

Hey my03,

Should be enough for 1 property and closing costs.

If you buy well and do a reno, you may be able to 'create' equity. You can then draw out the equity you've created and go again. Very common investment strategy and one that suits your borrowing power and deposit level.

Your servicing ability is strong but your building deposits may take time (saving 40k each time takes a while). This strategy, if deployed effectively, will allow your investments to create deposits.

Note, you can go 95% investment loans (Difficult, but not impossible). However the LMI cost tends to increase exponentially after 90%ish, and it ends up being more like 92%+LMI. In addition, it limits your ability to draw out equity (as your working of a 95 LVR base). A broker should be able to set out some numbers for you.

Cheers,
Redom

 

[Michael_X]

Hi my03,

Wow, your situation sounds really similar to mine last year. 29 yo, single, no dependents, very little expenses and to top it off I live in my parent's IP and rent out the extra rooms.

Your gross income is higher so puts you in a better position.

I managed to purchase seven IPs in the past 12 month so you will be surprised what you can achieve in a year.

As Rolf already mentioned, speak to an experienced broker on this forum and work out a game plan.

 

[Jaggannath]

MXia, where did you purchase the 7 different properties, and under what structure? May be helpful to the OP

 

[Michael_X]

2 x Newcastle (reno + equity pull)
1 x Coffs Harbour (reno + equity pull)
4 x Brisbane (buy and hold, cashflow plays)

All under my name, now I have maxed land tax in both NSW & QLD so subsequent purchases in QLD will be under trust structure.

After I purchase IP10 (one more to go) will do a detailed write up on the journey so far.

Hope this helps.

 

[devank]

2 x Newcastle (reno + equity pull)
1 x Coffs Harbour (reno + equity pull)

Did you do any of those renos by yourself (physically)?

 

[Michael_X]

Mostly project managed from Sydney. For the two in Newcastle I would go up on the weekends and do some minor repairs and check on the progress.

 

[Jaggannath]

Nice work MXia, I'm sure we'll all enjoy reading how you achieved it.

 

[IFBF]

Strategic Solution

Thanks my 03 and MXia, I seldom come on here, but you have chosen my pet subject.

I will caution you against following someone else's strategy. As a Financial Strategist (Credit Advisor, Financial Adviser & Investment Coach) it is important to see property for what it is - an investment vehicle. Your destination, capacity and expertise and skill determine the vehicle.

Critical factors such as time and risk appetite, availability of suitable stock and funding play a vital role.

Your $40k can be invested in several ways, you really do need to see the alternatives and work out which one best suits you and what you want to achieve at this point in your life keeping in ind you have a bright future and are probably going to want more out of life in time.

 

[Michael_X]

Thanks my 03 and MXia, I seldom come on here, but you have chosen my pet subject.

I will caution you against following someone else's strategy. As a Financial Strategist (Credit Advisor, Financial Adviser & Investment Coach) it is important to see property for what it is - an investment vehicle. Your destination, capacity and expertise and skill determine the vehicle.

Critical factors such as time and risk appetite, availability of suitable stock and funding play a vital role.

Your $40k can be invested in several ways, you really do need to see the alternatives and work out which one best suits you and what you want to achieve at this point in your life keeping in ind you have a bright future and are probably going to want more out of life in time.

Well said.

Work out your goals first, what you are trying to achieve and why? Then the rest will fall into place.

 

[marty998]

Wow MXia, I would would be keen to hear your story

 

[my03]

Thanks for all the advice and replies guys. Mxia, wow, what an inspiration, I would love to be in your position in 12 months time!! Can't wait to hear your story!

My goal is to get off the board and purchase my first ip, hopefully be able to generate equity to fund deposits for further properties.

My medium term goal is to acumulate a portfolio of properties, I'm not so concerned about negativley geared properties. If they are going to cost be a few hundred a month to keep going, so be it as long as they is some capital growth.

I am very new to investing so I would love to stay local. I'm based in Sydney and Sydney is my comfort zone. But do you think I'm limiting my oppotunities by looking only in Sydney?

I know I'm going slightly off topic here but what would be the best properties that to extract equity?

Houses in western sydney that need renno/touching up? What are some pointers or things to look for to realise a good deal? Look at recent sales in the street and make sure if undervalues to comparable recent sales?

Seems like the western sydney market is so hot right now, every place is on the market for single digit days, half the ads on the net are under offer.

How about villas? seems to be popular in western sydney, maybe a good alternative as capital values are a bit lower.

Thanks guys.

 

[Michael_X]

I am very new to investing so I would love to stay local. I'm based in Sydney and Sydney is my comfort zone. But do you think I'm limiting my oppotunities by looking only in Sydney?

I know I'm going slightly off topic here but what would be the best properties that to extract equity?

On whether to buy in Sydney or not, I would say let the numbers decide for you. Project the purchase cost & returns you will get in Sydney, speak to a broker and ask him how far this will take you in your investment journey. Then do similar numbers for other areas.

Personally, I wouldn't buy in Sydney as the numbers don't stack up.

Comfort zones are meant to be challenged and tested When I first started, I spent all my time in 2770. Even back then, the numbers weren't working out so I expanded my search. First to the central coast, then to Newcastle, then Brisbane.

I recall my first SS meetup and chatting to a fellow investor and being in awe of her that she could buy properties in Brisbane from Sydney. It seemed so hard back then.

On your other question - best properties to extract equity. The simple answer is properties that you can add value to or highest capital growth areas.

 

[devank]

Project the purchase cost & returns you will get in Sydney, speak to a broker and ask him how far this will take you in your investment journey.

Ehh?? What do you expect the broker to do?

 

[Michael_X]

Project how many IPs you can get based on your situation.