Hi Everybody ... (Hi Dr Nick! 
)
A friend recently opened my eyes to the potential benefits of property investing, so I am trying to sponge up as much knowledge and information as I can before plunging in head first, and came across this forum as what appears to be a great source of information (hmm also Dolf De Roos book was kinda handy)! So I must firstly congratulate you guys for contributing so much information – I’m sure I’ll keep reading and learn a lot more!
Anyways – I’m really just looking for some thoughts from people on my current position and my options in next steps of my strategy. I’m a numbers person, so I figure I’m always going to crunch the options, but one of my weaknesses is a bit of a limited ability to think outside the square – I’m sure I’ll get there one day!
Current details:
I am currently living in my PPOR, however due to a change in personal circumstances it is much bigger than I require, so seems to be a bit of a waste of capital invested (and interest costs that are currently partly non deductible).
A couple agents have said I could sell for around 530k. This is at the top end of the market for my suburb (Oakden in SA), so I suspect it would not make the best investment property given a lot of the posts around here on property selection talk about worst house etc etc!
On the flip side, if I rented it out, it would return approx $400 per week – although I’m not sure on income growth given it would be a higher rent than most properties in the suburb.
When I made the purchase about a year ago I took out an interest only loan for 10 years of $375k. Of that I’ve now turned about 70k into deductible debt (used to buy shares). I’ve also paid down about 50k which would be available as redrawable equity to fund a future purchase.
(I have been in the shares camp for the last 5 or so years as a buy and hold investor, but I’ve found that even at the maximum LVR, it limits me to neutral or slightly positive gearing).
I currently have a spare cash flow of a good 20k per year (conservative estimate), rising most likely to 30k next year (as I’m building a stack of equity in my salary sacrificed vehicle this year for the tax deduction), which can be used to fund future property investments, as well as any capital growth on my shares that could be redrawn against also. (although that could be anywhere from +ve 100k to -ve 50k )
I’m yet to formulate an exact investing strategy for myself – I will keep reading and researching first – ie suburbs, type of property etc, but am firstly considering my options on my current situation and setting up an appropriate investment structure as well. My current options as I see them are:
a) sell my ppor and use the equity to gear up and buy a number of properties, and maybe use a HDT to also hold a new ppor (if that still works?)
b) I could rent my current PPOR and still have access to 50k redrawable equity to purchase a new ppor, plus maybe one additional property, (HDT again but transfer costs?) but I would also have to bear in mind my return on equity of my current property
c) I could stay in the ppor myself and still use the 50k – although non deductible interest is not particularly helpful and I could use some more deductions
I’m in no real rush to do sell or buy and am not particularly attached to my current ppor, but I am sure I can improve my ROE. What do people think?
Oh and sorry for writing such a massive post – I actually drafted it yesterday on my day off after watchin the soccer, so hopefully the lack of sleep and extreme disappointment hasn’t impacted my thought processes too adversely!
)A friend recently opened my eyes to the potential benefits of property investing, so I am trying to sponge up as much knowledge and information as I can before plunging in head first, and came across this forum as what appears to be a great source of information (hmm also Dolf De Roos book was kinda handy)! So I must firstly congratulate you guys for contributing so much information – I’m sure I’ll keep reading and learn a lot more!
Anyways – I’m really just looking for some thoughts from people on my current position and my options in next steps of my strategy. I’m a numbers person, so I figure I’m always going to crunch the options, but one of my weaknesses is a bit of a limited ability to think outside the square – I’m sure I’ll get there one day!
Current details:
I am currently living in my PPOR, however due to a change in personal circumstances it is much bigger than I require, so seems to be a bit of a waste of capital invested (and interest costs that are currently partly non deductible).
A couple agents have said I could sell for around 530k. This is at the top end of the market for my suburb (Oakden in SA), so I suspect it would not make the best investment property given a lot of the posts around here on property selection talk about worst house etc etc!
On the flip side, if I rented it out, it would return approx $400 per week – although I’m not sure on income growth given it would be a higher rent than most properties in the suburb.
When I made the purchase about a year ago I took out an interest only loan for 10 years of $375k. Of that I’ve now turned about 70k into deductible debt (used to buy shares). I’ve also paid down about 50k which would be available as redrawable equity to fund a future purchase.
(I have been in the shares camp for the last 5 or so years as a buy and hold investor, but I’ve found that even at the maximum LVR, it limits me to neutral or slightly positive gearing).
I currently have a spare cash flow of a good 20k per year (conservative estimate), rising most likely to 30k next year (as I’m building a stack of equity in my salary sacrificed vehicle this year for the tax deduction), which can be used to fund future property investments, as well as any capital growth on my shares that could be redrawn against also. (although that could be anywhere from +ve 100k to -ve 50k
)I’m yet to formulate an exact investing strategy for myself – I will keep reading and researching first – ie suburbs, type of property etc, but am firstly considering my options on my current situation and setting up an appropriate investment structure as well. My current options as I see them are:
a) sell my ppor and use the equity to gear up and buy a number of properties, and maybe use a HDT to also hold a new ppor (if that still works?)
b) I could rent my current PPOR and still have access to 50k redrawable equity to purchase a new ppor, plus maybe one additional property, (HDT again but transfer costs?) but I would also have to bear in mind my return on equity of my current property
c) I could stay in the ppor myself and still use the 50k – although non deductible interest is not particularly helpful and I could use some more deductions
I’m in no real rush to do sell or buy and am not particularly attached to my current ppor, but I am sure I can improve my ROE. What do people think?
Oh and sorry for writing such a massive post – I actually drafted it yesterday on my day off after watchin the soccer, so hopefully the lack of sleep and extreme disappointment hasn’t impacted my thought processes too adversely!
