Need some guidance on my situation

[cb85]

Hi guys hope this is the correct area,
Hoping I could get some advice on my situation.

I work construction and have saved about 200g to put towards some investments, but was unsure what my next move should be as my income can vary year to year. Currently gross 180g

Currently have a investment unit which brings in 12g gross a year with complete outgoings of 5g. Covering body corp, rates,real estate fees etc. leaving 7g to pay loan

Current loan which was 150g but paid down to 130g left to pay at 5.22% variable.
Current minimum repayments are $10140 p/a on P and I.

Original plan was to halve the savings over 2 houses valued at 300g each and rent them out but unsure if I should pay more off the unit and put the rest towards one investment house.

Any advice is greatly appreciated

Thanks
Chris

 

[Aaron_C]

First thing you need to do is stop paying P&I on your investment loan and change it to interest only. Second step is to set up an offset account against that IP loan. Then think about how you want to invest, what properties are suitable for you etc.

 

[Terry_w]

I agree with Aaron,

There are many things you are doing which you can improve on. Get some proper advice before going any further.

 

[The Y-man]

Chris,

Yours is an enviable situation of having "too many options" available to you.

My first question to you would be "how much do you need to live on" (basic lifestyle, nothing flash - just "need to haves")?

The Y-man

 

[cb85]

Thanks for replying Aaron.

I will take that on board, I have had the unit for 6 years and it valued the same as when I bought it so was a bit unsure of gaining anything from investment only.
Like both you and Terry mentioned I would need some professional advice.

Y-man- the last 2 years I've gone without most luxuries to get my balance where it is, realistically I can save $1800-2000, but this can change as I'm on wages and work can be affected by weather which can drop down my savings to $1000 with no overtime available.

Thanks for your feedback guys.

 

[The Y-man]

Y-man- the last 2 years I've gone without most luxuries to get my balance where it is, realistically I can save $1800-2000, but this can change as I'm on wages and work can be affected by weather which can drop down my savings to $1000 with no overtime available.
.

I was more trying to get at how much you need to live on at a minimum, so we can gauge how mush rental income you'd need to live off rent etc


The Y-man

 

[cb85]

Sorry Y Man I misunderstood , at the moment I'm living on $700
But I would like to build my passive income to $1500-$2000
Chris

 

[Aaron_C]

I will take that on board, I have had the unit for 6 years and it valued the same as when I bought it so was a bit unsure of gaining anything from investment only.
Like both you and Terry mentioned I would need some professional advice.

You won't gain anything from P&I...it's just putting your money from liquid cash into illiquid real estate.

 

[Deltaberry]

There are many nuances as everyone said.

But it comes down to two things as always:

- Go for massive cashflow (eg 10% yield vs 5% interest rate at 90% gearing would get you 50% return); or

- Go for massive capital growth (buy something for $200k, sell it for $400k, rinse and repeat)

The former is hard because most things with that sort of yield are not secure, may be difficult to lease out if tenant falls away, may fall in capital value etc. But there is usually a sweet spot somewhere.

The latter is also hard because in the absence of a rising market, the only way to do it is to have first mover advantage, know a deal before the market does, be in a position to close it quickly. And also know your market VERY well.

 

[cb85]

Thanks for your advice guys, does anyone know of any good financial advisors.

 

[strongy1986]

Thanks for your advice guys, does anyone know of any good financial advisors.

There's no such thing
dont waste your time with a fin advisor

All they offer is managed funds

If they do reccomend property they will probably be. Taking a commission somewhere

 

[Terry_w]

There's no such thing
dont waste your time with a fin advisor

All they offer is managed funds

If they do reccomend property they will probably be. Taking a commission somewhere

That is a ridiculous statement!

I know many good financial advisors - who recommend property too (and don't take part in the selling so could not receive a commission).

But I think the op doesn't need financial advice but tax related structuring advice.

 

[sanj]

That is a ridiculous statement!

I know many good financial advisors - who recommend property too (and don't take part in the selling so could not receive a commission).

But I think the op doesn't need financial advice but tax related structuring advice.

Definitely agree with this

 

[strongy1986]

Thanks for your advice guys, does anyone know of any good financial advisors.

Yeh fair enough

I probably shouldn't of said there are no good ones!
Unfortunately all I have heard from people who went to see them was they were pushed into managed funds

Even a lecturer at Uni who was a fin advisor said the best way to make money off clients was managed funds

 

[MTR]

Yeh fair enough

I probably shouldn't of said there are no good ones!
Unfortunately all I have heard from people who went to see them was they were pushed into managed funds

Even a lecturer at Uni who was a fin advisor said the best way to make money off clients was managed funds

So he makes more as a lecturer???

 

[Terry_w]

Yeh fair enough

I probably shouldn't of said there are no good ones!
Unfortunately all I have heard from people who went to see them was they were pushed into managed funds

Even a lecturer at Uni who was a fin advisor said the best way to make money off clients was managed funds

Finanacial Planners cannot receive commissions from managed funds etc anymore. In the past they used to but this was prohibited in Jul last year.

 

[cb85]

Hi guys, thanks everyone for posting.

Terry W you mentioned I should work on my tax structure, is that something you could help me with.

Cheers
Chris

 

[Terry_w]

Hi guys, thanks everyone for posting.

Terry W you mentioned I should work on my tax structure, is that something you could help me with.

Cheers
Chris

Yes, possibly.

 

[cb85]

Thanks Terry, sent you an email

Chris B.

 

[DerekEdgar]

Financial Situations

hi Chris,

Im a tradie (. used to be),

i had a similar situation a few years ago , I had worked and saved so hard for the dollars that i didnt want to lose anything.

was making good money but was always a risk from year to year on the exact income.

I went looking for Financial planners and i asked every one of them what they earned and why they were still behind a desk.

I was then scared that they were going to manage MY money.

I looked at everyone who was doing well and the legit ones all came to business and property which I understood bricks and mortar.

i Bought cash flow positive properties and dripped out 100-200/wk from each to get some base revenue.

got 5 properties, fighting through these issues-
-Interest rate shot up and the 1500/wk extra turned to demanding $1500/wk,
-Serviceability tops out and have to roll onto Low-Doc loans.. (20% deposit locked away every purchase)
-Job changed, income dropped, chewed up some savings.

-downturn needed to cash up and had to sell a property cheap - put me back years.

I learned that now, instead of locking my 20% + fees away on a purchase, I use that towards developing.

No more tool belt.. the only hard hat i wear is when inspecting the site construction.
Absolutely love it. Gives me holidays, money and cashflow.

Figures - I started with $150K about 4 years ago.

Ive DOUBLED my money every time in a development (every 12 months).
now employ an inhouse planner to keep my tax bills under control.

Amazing but true.. look into it.

cheers
Derek