Strategy To building our portfolio

M

MelbInvester

Hi All,

We need your guidance/Information to achieve our goals.

We are in 40's with two children age 9 and 13. Currently owning a Property and two IP?s in South Eastern Suburb. Both of us are earning 200K (Total) per year and Paying around 45K in Tax in total. Our yearly expenses is around $100K.

Our Goals:

1. Pay off our home mortgage ( 370K)
2. Retired in Age 55
3. $100K plus net passive income

Our Strategy so far:

Invest in two Properties

Every year we have around $14k Tax Claim from both properties. However this 3brm house is in a 763sq block. We can easily subdivide and put another unit . first property is already sub divide and gave to our parents.

So how do we archive our goals? Attached the property details.

Thanks,

MI
 

Attachments

  • IP.pdf
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Sounds like you can save $55k pa. Worse case you could pay off your home loan in 7 years. You could speed this up with a few strategies.
 
Well you probably need to start investing a bit more heavily while you still have strong incomes. If you instead focus on just paying down the PPOR mortgage you will lose valuable time which can be gained from compounding returns and being 40+ I don't think you have that much time for it. Perhaps look for more subdivision opportunities since you obviously have good equity and income?
 
Looks like you are p&I on all three loans as the principal is decreasing according to the attachment?

Would recommend going interest only on all three but definitely the IPs with an offset linked to the PPOR.

Bucket load of equity in PPOR (576k to 80%) so would look at tapping into that to use for future investments.
 
Set up a LOC on the PPOR and use that to pay investment expenses (except interest) - leave your cash for the PPOR and pay it off sooner
 
HI All,

Thank you so much.

Terry:
Code: 
Set up a LOC on the PPOR
- We have setup offset account and credit of 110K inside. All the expenses are going from CC.

:
Code: 
you can save $55k pa
. You mean after the retirement?


FMS:
Code: 
Looks like you are p&I on all three loans
- No only PPOR with P/I

Aaron :
Code: 
look for more subdivision opportunities
- You mean current IP2 or buy a new one and do the sub division?




What type of property i should look for?

How much i should buy for my 3rd IP ?

If it's a Home, look for Positive cash flow?

How do i achieve my end goal 100+ Income?

What are the areas i should concentrate on?

MI
 
Hi MI

You mentioned you collectively earn $200k per annum, of which $45k vanishes in tax, and you spend $100k on living expenses. That leaves $55k per annum "spare money". As has been mentioned, if this were used to pay down debt on your PPOR, you would be able to remove the debt on your home by the time you are 55.

With careful selection of further properties, your $100k goal is certainly within reach. I'd be interested to know where your superannuation is at too....
 
MelbInvester said:
Terry:
Code: 
Set up a LOC on the PPOR
- We have setup offset account and credit of 110K inside. All the expenses are going from CC.

:
Code: 
you can save $55k pa
. You mean after the retirement?
Click to expand...

Be very careful with this as you could easily lose deductibility of interest.

JackM understood what I was getting at with the $55k.
 
MelbInvester said:
What do you think of following unit?

http://www.realestate.com.au/proper...roject-profile-ppp-600003735-to-pdp-115444219


Or Buy the House in around Ringwood area?
Click to expand...

I'm generally not a fan of apartments anywhere much further east than Box Hill. If you are going down that path, try to find something with at least 50sqm.

You'd need to spend a little more to buy a house in Ringwood, compared to the asking price of that apartment. I do like the area from an investment POV though.
 
Hi Aaron,

I like your first idea by subdividing and building the new Property.

I also look your second idea and found following information and need bit more research.

MELBOURNE

Suburb Kms from CBD Median value
Bellfield 9.5 $493,685
Maidstone 7.9 $520,765
Coburg North 9.5 $532,460
West Footscray 8.4 $548,875
Footscray 6.3 $553,211


is there any other suburb in your list?

MI
 
MelbInvester said:
Hi Terry,



No they are our savings.

MI
Click to expand...

That is good to hear. But you may have missed the importance of my point up the top.

If you set up a LOC and borrow to pay investment expenses you will free up cash to keep in your offset and this can save you tax. Ultimately it will only you to pay off your home loan sooner.

You need a LOC in addition and separate to your loan with the offset.
 
You have a property that is sitting there costing you money every week that can he easily subdivided. Dont waste your time on tiny investments like that 1 bedder that might take you years to make decent money on, get started on that subdivision asap.

Bank the profits/refinance at the end and move on to the next thing. Cheap 1 bedders are often (but not always) bought by people who dont have as much spare income as you do, you dont have to play that game.
 
Hi sanj,

The only issue with that is, i may need to demolished that property and build two Units. But not sure i can barrow that much money for that?

MI
 
The problem is all you see is price. I look at asset quality and location.

As for demolishing and building 2 units, of course you can get finance for that.
 
Hi All,

Without considering all factors, what is the 'ball park' estimating for square metre rates in Melbourne?

Is there any recommended builders/draftsmen in this forum?

MI
 
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