next move?

[tomlemke]

hey fellow investors looking for some advice on the next move i should make, ill give you a run down on the situation first, 23 plumber from newcastle 70k a year and my partner is nurse on 70k aswell

*ip1 adamstown nsw bought 2011 for $385 3bd house got first home buyers grant did little 10k reno revalued for $440 12 months ago loan owing 340k i.o 410 p/w

*ip2 mayfield nsw bought 2012 $326 plus 10k reno revalued at $385 3 months later loan owing $326 i.o rents 420p/w

*ppor wickham nsw 2013 385k owe $309 p.o doing large renovation at present (partners name to avoid land tax)

As they sit their both rentals are neutrally geared but for some reason the broker i used crossed the loans so first priority is to split them house prices have gone up a fair bit in newcastle over the last 12month so iam sure both places will now be below 80%.

My strategy is buy and hold plus try and find properties that have a decent yield so i can eventually replace my income with the rent in the next 10 years, what I've done so far seems to have worked pretty well and i read a lot of people on hear saying "rinse and repeat "I've got plenty of mates all in the trades so i can do really cheap renovation, but obviously the yields are not enough to supplement income the way I've been going so I've looked at granny flat options but the block sizes are only 400sqm.

So do i look for granny flat sized blocks (450sqm)options in newcastle renovate the house build g/f in the back or should i diversify and start looking in different states my partner can buy one more place without triggering land tax.

iam not afraid to take a risk, and iam keen to release some equity from the rentals to take it from 80 - 90% but buying in a different state relaying soley on g/c i'am bit up in the air about it shouldn't have any trouble getting finance as were on decent money no car loans credit cards only debt is ppor at 400p/w i.p.

id love to hear some feedback and thank you for your time tom

 

[Brady]

1st step would be to get a new broker or banker who knows what they're doing.

2nd step get finances sorted, split so sole security no x-coll. And would be perfect time for equity release. 80-90% pending risk/lender

I would look to repeat. You should be able to find out how many times more you could repeat after speaking with new broker/banker.

GF is good for cash flow but not likely to increase your equity for the same $ spent.


If possible try to find properties on developable blocks being able to retain the existing property, it's not easy because everyone likes these blocks. But because you can do the renovations and possible builds cheaper then others could put you ahead of others. This stategy should get you the CG from the renovation + development. Along with cashflow by having twice the rent.


If you take this path might be worthwhile speaking with a decent accountant/lawyer to plan out your purchasing struture prior.


All the best.

 

[tomlemke]

1st step would be to get a new broker or banker who knows what they're doing.

2nd step get finances sorted, split so sole security no x-coll. And would be perfect time for equity release. 80-90% pending risk/lender

I would look to repeat. You should be able to find out how many times more you could repeat after speaking with new broker/banker.

GF is good for cash flow but not likely to increase your equity for the same $ spent.


If possible try to find properties on developable blocks being able to retain the existing property, it's not easy because everyone likes these blocks. But because you can do the renovations and possible builds cheaper then others could put you ahead of others. This stategy should get you the CG from the renovation + development. Along with cashflow by having twice the rent.


If you take this path might be worthwhile speaking with a decent accountant/lawyer to plan out your purchasing struture prior.


All the best.

Thanks for the fast response Brady I used a new broker for the last purchase he was horrified what the last one had done! really appreciate your input I will be speaking to the accountant and broker to work out a good game plan, the main concern was not being able to move forward with each purchase, I have a lot of people around me telling me it carn't be done

 

[Brady]

Thanks for the fast response Brady I used a new broker for the last purchase he was horrified what the last one had done! really appreciate your input I will be speaking to the accountant and broker to work out a good game plan, the main concern was not being able to move forward with each purchase, I have a lot of people around me telling me it carn't be done

Unless you have alot of unsecured or other debt. credit cards, personal loans hecs, children?

Can't see why you can't keep going, have you run through it with your new broker.

If there isn't any other debt/dependants have you pretty easily being able to do ~4 more purchases.

 

[tomlemke]

Unless you have alot of unsecured or other debt. credit cards, personal loans hecs, children?

Can't see why you can't keep going, have you run through it with your new broker.

If there isn't any other debt/dependants have you pretty easily being able to do ~4 more purchases.

Yeah we have nothing living the 'dinks' dream according to my mum haha! yeah I have spoken to the new broker about it, he's a long time family friend he doesn't have any investments besides he's business and I dont think he really gets the multiple investment strategy would you advice using someone who shares the same passion

 

[Brady]

Yeah we have nothing living the 'dinks' dream according to my mum haha! yeah I have spoken to the new broker about it, he's a long time family friend he doesn't have any investments besides he's business and I dont think he really gets the multiple investment strategy would you advice using someone who shares the same passion

Personally I would be going to who ever you think is going to be the best for you. They don't have to invest personally, but I find it usually helps and can be a good motivator.

I would suggest speaking with the new broker about it and go from there. If you don't like what you hear don't proceed with them. Family friend or not doesn't mean you need to be feeding his business if it's not in your best interest.

Seems odd that haven't gone into that when by the sounds of things it's clearly what you're interested in

 

[tomlemke]

Personally I would be going to who ever you think is going to be the best for you. They don't have to invest personally, but I find it usually helps and can be a good motivator.

I would suggest speaking with the new broker about it and go from there. If you don't like what you hear don't proceed with them. Family friend or not doesn't mean you need to be feeding his business if it's not in your best interest.

Seems odd that haven't gone into that when by the sounds of things it's clearly what you're interested in

Yeah I don't feel pressured by him at all, I personally didn't think it mattered if they invested or not he more said to me that I should wait till newcastle market cools off because everyone paying overs ATM and he was worried I would get caught out overpaying thanks for all your input Brady good to get a second option on it all if I was to go down the g/f route would I buy a house with 5-10 % deposit ? then use the equity that I already have to build the g/f ? Or buy 4 houses with scope to build g/f once they rise in value ?

 

[Brady]

He doesn't invest but he's advising you when to enter the market?

Issue is see with g/f is they're great for cash flow, but not so great for equity. They take a fair chunk of $$ to build ~$100k give you good return in rent. But don't do much for equity.

I think it's better doing the renovation with development, but as stated alot of people are looking to do this. Because you might have the ability to do it cheaper then others might allow you to purchase for higher but still net the same profit.

 

[tomlemke]

He doesn't invest but he's advising you when to enter the market?

Issue is see with g/f is they're great for cash flow, but not so great for equity. They take a fair chunk of $$ to build ~$100k give you good return in rent. But don't do much for equity.

I think it's better doing the renovation with development, but as stated alot of people are looking to do this. Because you might have the ability to do it cheaper then others might allow you to purchase for higher but still net the same profit.

That's a good call Brady didn't think of it like that I guess the only good part of his input is that he's not just after the banks commission! Yeah that makes sense I'll look for renovation with potential to develope down the track wouldn't want to put all my cash into one place just to chase the yield!