Next move

[stargazer]

Hi everyone

Looking for ideas of my next move

• Buy another investment property for future capital growth/ rent etc
  
• Sell one property and hold onto cash in offset and invest if opportunity presents.

My situation current:

Single Income....Approx 70,000 gross..(no dependents)

Prop 1 Bank Valuation 539000..mortgage 344000 5.13% I/O variable..rent 495pw
Prop 2 Bank Valuation 375000..mortgage 215000 5.13% I/O variable rent 345pw
(Prop 2 used to be PPOR current lease ends March 2014)

Investment LOC.............limit 88000 used 35,000.....available 53000

Personal LOC.................limit 35000 used 0....(Buffer)

Cash Savings in Offset account 25000.

I rent a property and live in 280pw.

• I am having some thoughts of selling property 2 and using whats left in an offset account against property 1. This appears a reasonably safe option incase market and economic conditions dont improve.
  
  
• Buy another IP and rent out.

Can anyone see what perhaps i cant.

Regards
SG

 

[D.T.]

What were the properties initially purchased for and at what initial LVR?
What city are they in?
What are your goals?

Answers to these will determine where to go next and how much funds you might have in which to go there.

 

[Rixter]

Can anyone see what perhaps i cant.

SG, dtraeger2k is straight onto it, like a seagull onto a sick prawn.

What and where to buy is dependent upon your chosen investment strategy.

You see property is merely the vehicle. The strategy is how you intend driving that vehicle.

Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

Property investing is not about property rather about the strategy and the way you intend to use the vehicle to get to where you are wanting to go. No good buying a small shopping car if you intend driving interstate on a family holiday.

If you dont know where you are going all roads will look the same for taking you there...this being the case, isnt it little wonder why there is so much confusion & frustration on where to turn next.

What strategy/s are best for you is determined by where you are wanting to go, the time frame you want to get there in and how hands on along the way you want to be - all based around your personal risk profile.

I hope this provides some food for thought.

So..what is your chosen investment strategy?

 

[stargazer]

Hi Rixter and Dtraeger2k

Thank you for your responses. Certainly food for thought stuff and questions that need to be answered.

I guess i am undecided whether to reduce the debt or move towards another vehicle to ultimately have some CG and income along the way.

With global conditions and economic state of australia with ongoing job losses reported there appears to be quite a bit of uncertainty.

There are many persons with opinions on which way we are heading

• another recession
• another property boom soon
• another property slump
• stimulus less likely
• more job losses
• china slowing
• australian dollar getting weaker
• etc etc

Alot of varied information is in your face every day it appears.

With each opinion or direction one strategy may be more risky or safer than another. For example deflation would see cash is king and wait for opportunity Inflation would see tangible assets more appealing.

I guess i am trying to weigh up the risk having only about 12 years left to retirement.

Prop1 purchased 240000 refinanced and borrowed to buy shares loan now 344000. This has always been an IP and would attract CGT

Prop2 purchased 200000 was ppor and now IP this would attract very little CGT and if i moved back in for a while would erase the CGT but is neglibible in the scheme of things.

If i sell Prop 2 and off set agains prop 1 i would be in a position to have cash should a downturn reoccur and for opportunity. If interest rates climbed then it would be manageable with or without rent whilst i am working etc.

If i incease debt via another property i would be more vulnerable to interest rate rises, or downturn very little CG etc.

So i guess positive cashflow (INCOME) would be the answer to the strategy if i decided to increase debt by purchasing.

Hope this makes sense.

Regars
Stargazer

 

[Rixter]

Hope this makes sense.

Perfect sense - you appear to be suffering analysis paralysis.

All those 'Opinions' are merely opinions.

By all means we have to weigh of risks but no good letting those things that may or may not ever happen stop you from moving forward.

You cant control things that are out of your control.

You can only control what you think & do.

Success is 80% Mindset x 20% Strategy. In other words how you think is four times more important than how you plan to do it.

Devise 'your' strategy and just keep on 'working it'. Dont listen to the naysayers because if you do you will end up with exactly what they have.

At the end of the day no one can advise you on exactly what you should or shouldnt do because we are different with different personal risk profiles, goals wants & needs.

Sure we can provide you some of our philosophies that guide us but at the end of the day you need to devise your own plan/strategy best for you and filter out all the white noise that surrounds you day by day.

Good Luck.

 

[GreenGoblin]

Two excellents posts, Rixter. Really clear and insightful, and which I've printed off for myself too. They really help cut through the analysis-paralysis that I am so prone to.

Stargazer, you're not the only one with too many options and opinions and uncertainty as to what to do next. This forum and the many helpful people on it are a fantastic resource. Follow sensible advice like that from dtraeger2k and Rixter, develop a plan and keep posting your questions - you will get there.

Cheers,
GreenGoblin

 

[travelbug]

I guess i am trying to weigh up the risk having only about 12 years left to retirement.

ONLY 12 years???

You can do a LOT in 12 years. I only started investing seriously in property in the last 4 years. I've doubled my networth in that time.

I'm now planning my transition to retirement.

 

[stargazer]

Hi All

Thank you again for the replies.

My story is i went to a FA about 12 years ago and stitched me up so to speak with badly structured loans, cross collaterised etc etc its a long story. I finally got rid of those shackles and now want to look to transition to retirement in the future.

I guess i am looking to other people how they achieved or progressed.

Some people take higher risks and others are more prudent.

Life examples are great because they are real and not some advertisement.

Rixter and Draiger2k
I understand what you both are saying and yes we are all different so was not seeking specific advice.

Travelbug
how did you do that in your journey.. I take it renovating as guess.

GreenGoblin
Thanks for the encouraging words.

Thank you to all your replies

Regards
SG

 

[allsuccess]

I'm also at a cross road but looking around to pick up neutral or positively geared property.