What move next?

[LarryC]

Hi Everyone,

Let me give a background about myself. I started working full-time in January 2011 and saved most of what i earned until saving a deposit of 130K in January 2014.

Using 91K as a 20% deposit and the remaining amount for stamp duty + other expenses. I bought a house in Boronia for $457K in January 2014. The house is on a 720m2 land. Initially I made the mistake of getting a Principal + Interest Loan and splitting my loan to one-third being on variable and two thirds being on fixed. Both on a principle + interest payment.

After listening to someones advice two months ago, I got a mortgage broker to send a valuer from ANZ to come value the house in boronia. That person from ANZ valued the house in boronia for $550K.

Listening to this individual, I ended up accessing $75K in equity from my boronia property to buy a second house way out in wallan (yes in the exurbs as they call it) for $340K, last month.
It's a 4 bed, 2 bath, 2 car house on a 400m2 land. Looking back on it now, I can see this has been a blunder from my end and will probably take a decade before i see any growth in that area. On a good note, tenants have moved in and for the moment, the rent pays the interest part of the new loan.

One thing I have fixed is, I have changed my loan structure with ANZ to a Interest Only loan for 5 years on the variable portion of my loan. The fixed portion hasn't been changed and is still a principle + interest loan for another 2 years. Also because the house in wallan was built in 2014, i am benefiting from maximum building depreciation. The house in boronia was also renovated a few years back, so I am claiming building depreciation there as well.

My living conditions remain unchanged. I still live with my parents and still continue to save the same amount of money on a monthly basis.

What should be my next move now? Can anyone with more experience, let me know what I should do next? Should I just keep on saving?
I really want to subdivide the house in boronia and build a 4 bedroom townhouse out the back. Should this be my next move? How much money will I need to perform a mammoth task like this? I'm not forgetting the cost for the DA application as well. How much will that cost?

 

[Blacky]

What's your strategy?

 

[LeoT]

Assuming your serious about building wealth, you need to start reading, reading and more reading. The sticky list thread has really good books to start with. You need to start learning the basics or dos and donts. then build on that. In terms of development.. IMHO I think your no where near ready. Read about investment property info and then move into development. You already havent made the best choices and if you did more reading prior to buying, most likely you would have made sounder decisions.

Work out your goals, and be as clear as possible and then time frames. Also work out your strategy. IMHO you cant do most of this until you have read much, much more.

 

[Rolf Latham]

What's done is done and u are learning along the way.

Define your end game, and you will be playing a lot less games and ending up with bigger or more personal results.

Once you can define what you want financially in life, you will find it much easier to chart the course

Have a read of The Slight Edge by Jeff Olsen, and combine that with any book on passion by The gifted Keith Abraham and you will see what I mean

Ta
Rolf

 

[LeoT]

Have a read of The Slight Edge by Jeff Olsen, and combine that with any book on passion by The gifted Keith Abraham and you will see what I mean

Ta
Rolf

Hi Rolf,

I just read some of The Slight Edge on pdf from google and as soon as its 9am im heading over to dymocks to get me a copy!!

 

[LeoT]

Just ordered Keith Abrahams "Living your passion". I love reading and adding these absolute 'treasures' to my library.

Larry listen to Rolf and get them!

 

[DexV2]

I can't seem to find the sticky thread on recommended books, can anyone help? I'm gonna have a read of the slight edge tomorrow.

 

[LeoT]

I can't seem to find the sticky thread on recommended books, can anyone help? I'm gonna have a read of the slight edge tomorrow.

http://somersoft.com/forums/showthread.php?t=9652

 

[Singo]

I can't seem to find the sticky thread on recommended books, can anyone help? I'm gonna have a read of the slight edge tomorrow.

A newer thread on books
http://somersoft.com/forums/showthread.php?t=97188

 

[LarryC]

Hi all. Thanks for replying to my thread. I made the thread and went to bed. Didn't get a chance to look back at the thread until now after work.

What's your strategy?

Work out your goals, and be as clear as possible and then time frames. Also work out your strategy. IMHO you cant do most of this until you have read much, much more.

That's my problem at the moment. I don't have a clearly defined strategy. I'm hoping the books I am reading will eventually help me formulate one.

Assuming your serious about building wealth, you need to start reading, reading and more reading. The sticky list thread has really good books to start with. You need to start learning the basics or dos and donts. then build on that. In terms of development.. IMHO I think your no where near ready. Read about investment property info and then move into development.

I finished reading Cam Mclellan's "My 4 year Old, the property investor". I read this book after buying the second house and realised the mistake I made. I am currently reading "20 Must Ask Questions for every property investor" by Margaret Lomas. I also have a copy of "Investing in the right property now" by Margaret Lomas that I will read next. I don't want to repeat the mistake of buying another bad property. Thanks for your input about the property development. I will wait until i understand the game clearer.

What's done is done and u are learning along the way.

Define your end game, and you will be playing a lot less games and ending up with bigger or more personal results.

Once you can define what you want financially in life, you will find it much easier to chart the course

Have a read of The Slight Edge by Jeff Olsen, and combine that with any book on passion by The gifted Keith Abraham and you will see what I mean

Rolf

Hi Rolf

I would like to retire at the age between 50-60 (I'm currently 26) with a decent passive income of 70-80Ka year. That is the main goal I am trying to achieve. I'm confident given my age, that it is possible for me. Thank you for the two book suggestions. I will add this into the list of books to read.

I will also look into the books suggested in the thread linked by Singo.

Just a quick question. Are there any books that specifically tell you how to be on the hunt for the right property? Or how to do the right research for a property?

Thanks again everyone.

 

[ZachAnSel]

Rolf also can give you advise about how to structure your finance properly. Just wondering how do you setup both investment loan? Are they collateral?

 

[LarryC]

Rolf also can give you advise about how to structure your finance properly. Just wondering how do you setup both investment loan? Are they collateral?

I pulled $75K from the first house, increasing my first loan with ANZ from $360K to $425K. The $75K was used to cover as a 10% deposit on the second house + stamp duty and other expenses. A new loan was taken with NAB for the remaining 90%. NAB valued the second house at $320K, even though i paid $340K for it.
The first loan is with ANZ. The second loan is with NAB.
Did i Cross-Collateralise my loans?

 

[TMNT]

how on earth did you save $130k from 3-4 years of working full time at 21/22!!!!!! thats amazing

 

[LeoT]

I would like to retire at the age between 50-60 (I'm currently 26) with a decent passive income of 70-80Ka year. That is the main goal I am trying to achieve. I'm confident given my age, that it is possible for me.
Thanks again everyone.

Easy peezy! You can achieve that with minimal effort really.

I predict you'll smash those goals if you continue on the path of learning, applying, improving and never giving up.

You will absolutely smash that!

 

[LarryC]

how on earth did you save $130k from 3-4 years of working full time at 21/22!!!!!! thats amazing

Nah nothing special mate. Again I live with my parents. I don't really pay for any expenses, besides about $300 every 3-4 months to my folks.
And my first goal out of uni, was not saving up for a car or a holiday. I saved up for the sole purpose of buying a house. So it didn't upset me when I saw my friends going on overseas trips or buying a new car. I didn't spend my savings on anything but the house.

I can save up $130K again in 4 years time from now, assuming I am still living with my parents.

Easy peezy! You can achieve that with minimal effort really.

I predict you'll smash those goals if you continue on the path of learning, applying, improving and never giving up.

You will absolutely smash that!

Anything more would always be welcomed by me

 

[BestInvest]

Nah nothing special mate. Again I live with my parents. I don't really pay for any expenses, besides about $300 every 3-4 months to my folks.
And my first goal out of uni, was not saving up for a car or a holiday. I saved up for the sole purpose of buying a house. So it didn't upset me when I saw my friends going on overseas trips or buying a new car. I didn't spend my savings on anything but the house.

I can save up $130K again in 4 years time from now, assuming I am still living with my parents.




Anything more would always be welcomed by me

Hi LarryC...

Was reading your posts... Im 34yo and we have arguably eerily similar investments, including in Wallan.

I built in 2006.... and i too have felt, and continue to feel it was a bad (innocent decision as i was young and guided by another for their personal gain) decision to buy in Wallan as an IP. I was born and still live in Sydney.

Im still tossing between still holding onto Wallan in the hope that it will go up and redeem itself with me, or cutting my losses, and the opportunity costs of holding it, and buying elsewhere, this time more smartly......

 

[Terry_w]

I pulled $75K from the first house, increasing my first loan with ANZ from $360K to $425K. The $75K was used to cover as a 10% deposit on the second house + stamp duty and other expenses. A new loan was taken with NAB for the remaining 90%. NAB valued the second house at $320K, even though i paid $340K for it.
The first loan is with ANZ. The second loan is with NAB.
Did i Cross-Collateralise my loans?

Probably not, but you may have mixed the loans. Did you set up a new split with ANZ for the $75k and was this an equity manager product? If not then how did you pay the $75k?

 

[travelbug]

I live with my parents. I don't really pay for any expenses, besides about $300 every 3-4 months to my folks.

No wonder you can save so much.

Are your parents extremely rich? Why are they supporting you?

That wouldn't even cover your food, I'm guessing.

 

[serendip]

You've been given some great advice by people far wiser than me so I won't bother going there....what I do want to say is that you're 26, you have 2 properties, you're aware that you've made mistakes & your mind is open to learning more. You're doing fabulously!

 

[Rolf Latham]

Hi Rolf,

I just read some of The Slight Edge on pdf from google and as soon as its 9am im heading over to dymocks to get me a copy!!

how did u go ?

ta
rolf