What should I do with only $100k in Bank..

[Newbieatlife]

thast the reality of life

older house = more maintennace
lower socio areas = more chances of arrears/damage/
more houses = more risk

some of my properties in worse condition have no maintenance issues, some better houses have maintenance probems one after the other

agree with most of the above

which is why i think its very risky to spend all of $100k to buy 2 or 3 properties without any buffer which, lets be honest, will be older houses in lower socio economic areas

but i dont necessarily agree with more houses = more risk....its always nice to have higher performing properties supporting lower performing properties financially....particularly during vacant/trouble tenant periods

 

[Newbieatlife]

This should of been pulled up in the b and p, so you could of walked away or renegotiated

most purchases have been through banks or court orders which aren't really negotiable...deals that make it across the line are usually severely BMV which absorbs any costs of surprises.....nonetheless, it still takes cash to fix which again, having a buffer is important.

I've done B&P twice in my life and have decided its a waste of money for any purchase under $250k, particularly when you're making unconditional offers every week

 

[Zipper]

bear in mind it doesn't include vacancies, general maintenance, extra fees from PM's/banks, initial "fix up" period, professional tenants that insurance policies don't cover etc etc...

easily adds to $1 - 2k per year...times that by a couple of properties and it becomes significant

some of the 8% logan properties are negatively geared because of this...depreciation helps but largely a huge tax refund at the end of the year balances things out

luckily i have a some heavily +cashflow properties in Sydney that help with the low performers, otherwise i really would struggle to sleep at night!

That's why you buy new properties in good areas and you don't have these issues. Also, dependent on your income the depreciation will pretty much bring a property to neutrally or positively geared.

Make sure the property pays for it self and then it's just a matter of waiting for capital growth to rise and repeat.

This is provided that you are still working full time and can wait 10 - 15 years for this strategy to work.

 

[Joeyv]

This is provided that you are still working full time and can wait 10 - 15 years for this strategy to work.

This is what a lot ppl don't want to do but it will always work

 

[ajpmal]

Wait longer.

If they never double, regret your decisions.

Second That. And in the worst case scenario you will have built some equity in those two properties to buy your own place.

When looking for where to invest, I suggest working out your cash flow in a way that while your properties which be negatively geared (to give your a tax benefit) they are positive cash flow. I.e. buy a property less than 10 years older so you can claim by depreciation from the tax man and a place that has positive rental yield which means it give you a lil extra after you make your mortgage repayments

 

[LeoT]

That's why you buy new properties in good areas and you don't have these issues. Also, dependent on your income the depreciation will pretty much bring a property to neutrally or positively geared.

Make sure the property pays for it self and then it's just a matter of waiting for capital growth to rise and repeat.

This is provided that you are still working full time and can wait 10 - 15 years for this strategy to work.

HI Zipper,

Thats one strategy which suits certain people. It really depends on the individuals goals though.

 

[LeoT]

This is what a lot ppl don't want to do but it will always work

Hi Joey,

I guess a lot of people dont want to follow this strategy becasue its not a good fit for the goals they have for themselves.

Cheers

leo

 

[Rixter]

In today's economic climate, a payg employee can pick up a property without any holdings cost coming out their pocket by applying the 10 second rule - paying no more for it than multiplying achievable weekly rent by 800.

 

[LeoT]

most purchases have been through banks or court orders which aren't really negotiable...deals that make it across the line are usually severely BMV which absorbs any costs of surprises.....nonetheless, it still takes cash to fix which again, having a buffer is important.

I've done B&P twice in my life and have decided its a waste of money for any purchase under $250k, particularly when you're making unconditional offers every week

Newbieateife,

Routinely not doing B&P could be a costly mistake... you sure its a wise decision?

Cheers

Leo

 

[Redom]

In today's economic climate, a payg employee can pick up a property without any holdings cost coming out their pocket by applying the 10 second rule - paying no more for it than multiplying achievable weekly rent by 800.

Thanks Rixter, nicely put. 8% yeild?

If you take tax benefits into account, particularly non cash deductions (depreciation), you can go a fair bit lower (6%+) than that and remain positive c/f.

Cheers,
Redom

 

[Rixter]

Thanks Rixter, nicely put. 8% yeild?

If you take tax benefits into account, particularly non cash deductions (depreciation), you can go a fair bit lower (6%+) than that and remain positive c/f.

Cheers,
Redom

Nope, its not 8% but your 2nd line is close

 

[Redom]

Nope, its not 8% but your 2nd line is close

Haha my quick math was poor there. Nice way to think of a 6.5% yeild!

Great advice and quick way to think about it.

Cheers,
Redom

 

[chunho01]

Wish I 'only' had 100k in the bank.

I second this.. should I be jealous? Or should I be worried? I had less than $60k when I got my first IP..

 

[Zipper]

HI Zipper,

Thats one strategy which suits certain people. It really depends on the individuals goals though.

I appreciate that Leo. The OP was asking for suggestions, so I was just giving one.

Without anymore information it's hard to see what would work best for the OP.

 

[Zipper]

This is what a lot ppl don't want to do but it will always work

I've got over 25 years before I can access my super, so I've got plenty more years of working ahead of me!!

Based on the last 40 years of data, property will double every 10 years or so, so I've got plenty of time to acquire enough to retire comfortably.

 

[LeoT]

I've got over 25 years before I can access my super, so I've got plenty more years of working ahead of me!!

Based on the last 40 years of data, property will double every 10 years or so, so I've got plenty of time to acquire enough to retire comfortably.

HI Zipper,

What if you could retire earlier and not have to wait for another 25 years?

Would that interest you?

 

[Rixter]

HI Zipper,

What if you could retire earlier and not have to wait for another 25 years?

Would that interest you?

Hmmmmmmmm, interesting concept.

 

[Zipper]

HI Zipper,

What if you could retire earlier and not have to wait for another 25 years?

Would that interest you?

I'm sure that would interest everyone, myself included.

Do you have a silver bullet Leo?!

 

[LeoT]

]

I'm sure that would interest everyone, myself included.

Do you have a silver bullet Leo?!

Hi Zipper,

No silver bullet mate, but perhaps you indeed could achieve your goals faster than 25 years time. What makes you think you have to wait 25 years mate?

Cheers

leo

 

[Joeyv]

]

Hi Zipper,

No silver bullet mate, but perhaps you indeed could achieve your goals faster than 25 years time. What makes you think you have to wait 25 years mate?

Cheers

leo

I don't want to wait another 25 years