What would you do in my shoes?

[dickle]

Hi all,

Not so much of a question, but more of a discussion on what you would do in my current situation. I feel like I'm in a rut and am unsure of what my next step to take is. Here's a little about myself...

Age : 27 years old (feeling so old)
Income : Contractor via PAYG earning $134,400 based on 48 weeks of work
Partner's Income : $65,000 base

Property 1
Location : Wentworth Point, NSW - 1b/1b/1p
Type : Apartment
Current valuation : $500,000
Rent : $440 per week
LVR : 90%

Property 2
Location : Biggera Waters, QLD - 2b/2b/1p
Type : Townhouse
Current valuation : $260,000
Rent : $315 per week
LVR : 90%

Property 3 (currently being built and due to complete 2nd half of 2015)
Location : Alexandria, NSW - 1b/1b
Type : Apartment
Current valuation : $550,000 (purchase price)
Rent : $550 (rental appraisal)
LVR : 90%

Property 4 (SMSF)
Location : Waterford West, QLD - 4b/1b/1p
Type : House
Current valuation : $275,000 (purchase price and settles 30th April 2015)
Rent : $350 (seller will be renting for 6 months in the same property)
LVR : 80%

I have recently refinanced all my loans outside of the SMSF within Westpac for a rate of 4.38% and have also raised the Biggera property from 80% to 90% which will provide $26,000 in equity.

My wife and I are expecting to move into the Alexandria property to live in for the initial 6 months in order to receive the FHOG of $15,000 and be exempted from stamp duty.

We have set up a discretionary trust which currently contains no property within it yet, however our strategy was to obtain future cashflow properties using the discretionary trust. That way, when the time comes for us to start a family and my wife goes on maternity leave, then we can distribute income effectively.

So with the $26,000 amount drawn down from the Biggera property, what would be the best way to effectively use this money. Continue to save to add onto this amount and possibly buy a negatively geared house in Sydney? (which goes against our initial strategy) OR continue to chug along and try pick up properties interstate where the numbers stack up.

I'm quite the indecisive person...
As much as I know purchasing high rental yield properties interstate will provide for cashflow properties, capital gains may not always be the case as it it more of a risk bet. However, purchasing in Sydney will prevent our property portfolio to grow due to serviceability but it will provide us a house and land in Sydney which we ultimately would like to live and raise our family.

So as you can see, everything I have mentioned contradicts itself because I want it all but I can't have it all at this very moment.
Any feedback or input would be much appreciated... sometimes having other's opinion helps clear out the fog in the road.

p.s. I wish I had started my property journey sooner and also made wiser decisions I've been burnt due to personal circumstances and has halted my investing.

Thanks all!

 

[windyzz]

Hi all,

Not so much of a question, but more of a discussion on what you would do in my current situation. I feel like I'm in a rut and am unsure of what my next step to take is. Here's a little about myself...

Age : 27 years old (feeling so old)
Income : Contractor via PAYG earning $134,400 based on 48 weeks of work
Partner's Income : $65,000 base

Property 1
Location : Wentworth Point, NSW - 1b/1b/1p
Type : Apartment
Current valuation : $500,000
Rent : $440 per week
LVR : 90%

Property 2
Location : Biggera Waters, QLD - 2b/2b/1p
Type : Townhouse
Current valuation : $260,000
Rent : $315 per week
LVR : 90%

Property 3 (currently being built and due to complete 2nd half of 2015)
Location : Alexandria, NSW - 1b/1b
Type : Apartment
Current valuation : $550,000 (purchase price)
Rent : $550 (rental appraisal)
LVR : 90%

Property 4 (SMSF)
Location : Waterford West, QLD - 4b/1b/1p
Type : House
Current valuation : $275,000 (purchase price and settles 30th April 2015)
Rent : $350 (seller will be renting for 6 months in the same property)
LVR : 80%

I have recently refinanced all my loans outside of the SMSF within Westpac for a rate of 4.38% and have also raised the Biggera property from 80% to 90% which will provide $26,000 in equity.

My wife and I are expecting to move into the Alexandria property to live in for the initial 6 months in order to receive the FHOG of $15,000 and be exempted from stamp duty.

We have set up a discretionary trust which currently contains no property within it yet, however our strategy was to obtain future cashflow properties using the discretionary trust. That way, when the time comes for us to start a family and my wife goes on maternity leave, then we can distribute income effectively.

So with the $26,000 amount drawn down from the Biggera property, what would be the best way to effectively use this money. Continue to save to add onto this amount and possibly buy a negatively geared house in Sydney? (which goes against our initial strategy) OR continue to chug along and try pick up properties interstate where the numbers stack up.

I'm quite the indecisive person...
As much as I know purchasing high rental yield properties interstate will provide for cashflow properties, capital gains may not always be the case as it it more of a risk bet. However, purchasing in Sydney will prevent our property portfolio to grow due to serviceability but it will provide us a house and land in Sydney which we ultimately would like to live and raise our family.

So as you can see, everything I have mentioned contradicts itself because I want it all but I can't have it all at this very moment.
Any feedback or input would be much appreciated... sometimes having other's opinion helps clear out the fog in the road.

p.s. I wish I had started my property journey sooner and also made wiser decisions I've been burnt due to personal circumstances and has halted my investing.

Thanks all!

Dude... You're Well on track.. I'm 28 and have 4 IP too, but not as high income as you.

You're still young and have a high income, so my suggestion is to go with Capital city investment and utilise the depreciation and negative gearing while you can (don't know how long it will last before the government decide to take it off), as they tend to have stronger growth and less volatile.

I will go for like established 2 bed apartment with potential of renovation so you can add value to it. Avoid high rise, and dense suburb like Wentworth point, Zetland, waterloo, rhodes, etc.

You might want to hold off buying for now though... the market is too hot, whatever you buy in Sydney you might be paying over price. I'm just consolidating and paying the debt at the moment, while actively looking for a bargain.

I also regret not investing in the earlier age, as I spent large portion of my income buying and modifying my car....... *Lesson learnt*

 

[dickle]

Dude... You're Well on track.. I'm 28 and have 4 IP too, but not as high income as you.

You're still young and have a high income, so my suggestion is to go with Capital city investment and utilise the depreciation and negative gearing while you can (don't know how long it will last before the government decide to take it off), as they tend to have stronger growth and less volatile.

I will go for like established 2 bed apartment with potential of renovation so you can add value to it. Avoid high rise, and dense suburb like Wentworth point, Zetland, waterloo, rhodes, etc.

You might want to hold off buying for now though... the market is too hot, whatever you buy in Sydney you might be paying over price. I'm just consolidating and paying the debt at the moment, while actively looking for a bargain.

I also regret not investing in the earlier age, as I spent large portion of my income buying and modifying my car....... *Lesson learnt*

HA! I just bought myself a new car this year... Probably not the wisest idea either, but my accountant advised that after all deductions that it would only cost me an extra $2-3000 a year to hold a brand new car. So not bad upgrading from a Honda Jazz to a BMW

Will definitely keep in mind what you have mentioned. Finding a bargain is the hard part I had to resort to using a buyer's agent because I was stuck with finding myself a bargain. *sigh*
But I feel that the buyer's agent helped open my eyes in knowing what to look for in the next purchase, so money wasn't wasted.

I must say, I'm not a big renovator or flipper. I tend to fix up a little but no major work as it can become more costly than expected.

Thanks for your thoughts though!

 

[windyzz]

HA! I just bought myself a new car this year... Probably not the wisest idea either, but my accountant advised that after all deductions that it would only cost me an extra $2-3000 a year to hold a brand new car. So not bad upgrading from a Honda Jazz to a BMW

Will definitely keep in mind what you have mentioned. Finding a bargain is the hard part I had to resort to using a buyer's agent because I was stuck with finding myself a bargain. *sigh*
But I feel that the buyer's agent helped open my eyes in knowing what to look for in the next purchase, so money wasn't wasted.

I must say, I'm not a big renovator or flipper. I tend to fix up a little but no major work as it can become more costly than expected.

Thanks for your thoughts though!

Ha! Bmw just upgraded last year to an Audi too....! Just learned last year that car is Waste of money hahahahah!

Or you can get established apartment around 5-10 years old, both of my apartment at the time i bought is less than 5 years old. The benefit is depreciation claim and capital growth My first IP @ 2010 (2 bed apartment 3 years old) bought it in Sydney for 430k and has been revalued @ 650 last months by the bank. Rent was 450 per week at the time i bought it, and it has gone up to 500p/w.

It cost me around 1000-1500 to hold before tax for this type of property. After tax it equates to around 4k positive per year.

 

[serendip]

Hi all,

Not so much of a question, but more of a discussion on what you would do in my current situation. I feel like I'm in a rut and am unsure of what my next step to take is. Here's a little about myself...

Age : 27 years old (feeling so old)
Income : Contractor via PAYG earning $134,400 based on 48 weeks of work
Partner's Income : $65,000 base

p.s. I wish I had started my property journey sooner and also made wiser decisions I've been burnt due to personal circumstances and has halted my investing.

Thanks all!

Get a grip, you're 27 & have 4 properties, you're doing OK!!

How far away are you from babies? Personally I wouldn't be buying a house in Sydney at the moment and don't see how $26K is going to allow you to do that anyway unless you have a chunk of cash lying around you haven't mentioned. You're also pretty heavily leveraged. Can you cope with all the debt if your wife has a child? Also, you're a contractor, how secure is your employment & how easy to pick up another contract if needs be? At your age and in your position I reckon sit tight for a while, wait till you've accumulated a bigger deposit for your PPOR or if you really want to buy something, buy something positively geared elsewhere.

 

[EN710]

Hi all,

Age : 27 years old (feeling so old)

Welcome to my world. And I only have 3 properties including PPOR, not as high income either

Why sticking to only in Sydney?

 

[dickle]

Get a grip, you're 27 & have 4 properties, you're doing OK!!

How far away are you from babies? Personally I wouldn't be buying a house in Sydney at the moment and don't see how $26K is going to allow you to do that anyway unless you have a chunk of cash lying around you haven't mentioned. You're also pretty heavily leveraged. Can you cope with all the debt if your wife has a child? Also, you're a contractor, how secure is your employment & how easy to pick up another contract if needs be? At your age and in your position I reckon sit tight for a while, wait till you've accumulated a bigger deposit for your PPOR or if you really want to buy something, buy something positively geared elsewhere.

OK is just okay. I want at least GOOD.
I'm an overachiever and always have been, so putting numbers together on my property portfolio doesn't sit nicely with me. justsayin'
Ideally would like to have our first child before I turn 30, so in the next year or so. I have a side pot of money sitting in my shares worth roughly 600k but would like to keep this separate to my property portfolio. I like to trade from time to time when my mind is switched off from property.
I believe I can cope with the debt if my wife has a child. Money in shares will be my emergency fund, but again, ideally would like to keep this separate from everything. If I don't touch this money, it's like I don't have it, so I don't have the urge to go buy a 1-2mil house and put us in greater jeopardy if that makes any sense?
I understand that I'm heavily leveraged, but I suppose my current income supports it and allows me to be. Gives me the ability to offset my income tax, something that many on this forum are against. I too am against it, which is why I am trying to build a cashflow positive portfolio.
I think I might look interstate and see if there are any bargains out there which will provide good returns and solid growth. Just a matter of what's in my $26k price range and where...

Again, thanks for your input

 

[dickle]

Welcome to my world. And I only have 3 properties including PPOR, not as high income either

Why sticking to only in Sydney?

Sydney for PPOR as I don't see myself living anywhere else but Sydney. It's been home to me all my life.

Would definitely invest interstate though... have been interested in QLD for some time, which is why I have purchased my 2 latest properties there. Just looking at other options now... but with $26k, there's not much option is there... unless it's a QLD apartment which needs some work for about $180-190k and rents out for somewhere between $270-300?

I guess I'll need to do more homework on properties.

 

[dickle]

Ha! Bmw just upgraded last year to an Audi too....! Just learned last year that car is Waste of money hahahahah!

Or you can get established apartment around 5-10 years old, both of my apartment at the time i bought is less than 5 years old. The benefit is depreciation claim and capital growth My first IP @ 2010 (2 bed apartment 3 years old) bought it in Sydney for 430k and has been revalued @ 650 last months by the bank. Rent was 450 per week at the time i bought it, and it has gone up to 500p/w.

It cost me around 1000-1500 to hold before tax for this type of property. After tax it equates to around 4k positive per year.

That's awesome!
I had my very first property which i bought for $300k in 2010 also and would be valued anywhere from $450-500k. Second property was bought for $209k and now valued at $350k.
Both were sold due to personal circumstances... breaks my heart everytime I look at how much it's gone up.
But I've learnt many lessons from those sales and take them with me everytime I buy a new property.
Such is life I suppose... Still hurts though lol

 

[windyzz]

That's awesome!
I had my very first property which i bought for $300k in 2010 also and would be valued anywhere from $450-500k. Second property was bought for $209k and now valued at $350k.
Both were sold due to personal circumstances... breaks my heart everytime I look at how much it's gone up.
But I've learnt many lessons from those sales and take them with me everytime I buy a new property.
Such is life I suppose... Still hurts though lol

hahah I think you're doing very very well mate.... Don't worry too much! start enjoying your life too (you never know what's going to happen tomorrow).

I do like investing in Sydney though (as through my journey of investment it has gave me positive outcome and strong growth), not sure about regional. All my other investments has roughly gone up around 100k each in ~1 year (from ~ 2013-2015)

Most of people i know @ 27 have nothing but credit card debt..

 

[j_p]

You're in a great position! Congratulations on setting yourself up so well so young.

Why do you invest? Do you want to leave your job ASAP? Do you want to travel? I think you need to ask yourself what your goals are, maybe over the next 5, 10 and 20 years.

Once you have an idea of where you want to go maybe things will be clearer. It would also help people give you advice or ideas specific to your situation and goals. You are in a great position to go anywhere you want in the future, best of luck.

 

[Bran]

That, and 600K side pot in shares?

Why don't you tell US what to do!!



I'd sit tight and think about it some more.

 

[nomadic]

Property 2
Location : Biggera Waters, QLD - 2b/2b/1p
Type : Townhouse
Current valuation : $260,000
Rent : $315 per week
LVR : 90%


How much is the body corp on this property and was this a recent purchase? The return looks quite good if your body corp is less than $30pw.

 

[moyjos]

You are doing very well..
I would suggest you contact Terry_W from this forum, make an appointment and have a chat.

http://terryw.com.au

 

[datto]

600K in shares

If I were you I'd be popping the champagne every night lol

If I were in your shoes though, I'd be heading to the supermarket for a set of Odour Eaters. Sorry, had to throw that in.