What would be your next move?



From: Anonymous

If one good thing comes out of signing up for the Henry Kaye seminars, it is the fact that he recommended this and other similar sites in his reading material.

As a result of reading the various posts and excellent responses from people that have obvious and extensive experience in residential property investing(Henry insists that you should only ever ask the opinions of people with proven success) I felt it would be negligent of me not to ask your opinion before attending the seminar at the end of July 2001.

Fortunately, I can pull out of the course(with full refund of money) by no later than the afternoon tea break of the third day of the four day seminar. I am truly hoping that your responses and ideas on how to make the most of my current financial situation, will eliminate the need to complete Henry's course.

My husband and I are small business owners, with one investment property(2b/r terrace house) in our family trust/company name. It is in Port Melbourne with a value of at least(my conservative estimate)$500K and owing $180K on it. It returns a rental of $15,600 per annum. Having worked briefly as a real estate property manager, we save money on management fees. We bought it in late 1998 for $320K and the rental return has not caught up with the dramatic increase in value, mainly due to outstanding tenant and the fact that it is quite basic accommodation. Our current combined income(including rental income) is approximately $100K. We do not pay rent or own our own home. My generous in-laws let us move into one of their investment properties for free and for however long we like(we would never consider using their equity or asking them to sign it over in our names). We have no other debts and have $70K in savings.

We are ready to invest again but this time we want to get our hands on as many properties as possible as soon as possible, in the inner Melbourne bay side area or any other area that you believe represents good value. We would ultimately like to have a portfolio of positively geared houses, townhouses and maybe apartments.

We considered using our savings to add value ie: more bedrooms, new kitchen and bathroom etc.) to almost double the current rate of rental return(quite likely as it is opposite the beach with off street parking) and also increase the equity(it could be worth $700K plus going by similar sales in the same area. Or, do we use our savings for deposit/s and purchasing costs of new properties using the current equity. Or, do we do both,ie:use current equity to refinance the loan since our LVR is quite low to pay for the renovations and keep the savings for the new acquisitions.

As you can probably tell, our knowledge in this area is quite limited(not for much longer we hope), and we are sure there are many possibilities that we cannot even fathom.

We would be genuinely grateful to anybody that takes the time to read and respond to our post. Feel free to be as creative or conservative as you like, given the above figures and information.

If any of you were in our shoes, what would be your next move?

Thanking you all in anticipation.

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