What would you do in my situation?

Hi all,

I have some money saved up and would really like to invest it in property as I am about to do some extended traveling (a year or more) and would like that money to be invested in property rather than just sitting in an interest bearing account while I'm away.

The specifics:

- I'm 25, single, a FHB and live in Brisbane. Currently renting.
- I have 250k after tax sitting in a Pty Ltd. 30% tax is already paid on this amount so I can distribute a dividend to myself of 80k pa without paying any extra tax.
- I have no income. The 250k came from a successful business I started and ran for the last 2 years, but due to market factors outside of my control it is no longer viable and I am exiting the industry. I also want to go traveling after Christmas and so won't have any income which can service a mortgage.
- I have another very minor income which will finance my travels, but there won't be any left over for servicing a mortgage.
- I did get pre-approved for a home loan a couple months ago, up to a total value of 750k, with a 20% deposit.

So essentially I am doing some extended travel, which could last for 1-2 years. I'd feel a lot better doing it knowing I had a piece of land that was mine and something to come back to, instead of just coming back to more expensive property prices in 1-2 years. Also, it seems silly to just leave 250k in an interest account.

What would you do in my situation?

Thanks very much for any advice at all. Any feedback whatsoever would be much appreciated.

Thanks,
Nick
 
Nick, I'd buy a cash flow neutral or cash flow +ve property so none of my own funds were required to run it on a month to month basis. The prospect of RE being worth more in 2 years when you return is a very real one.

Then I'd go travelling and possibly come back home to some equity to suck out and buy another one or travel again.
 
Thanks for the response Propertunity.

Cash flow positive/neutral properties - I was under the impression these didn't really exist in capital cities like Brisbane. I thought it was only very regional areas, am I mistaken?
 
I see :)

Well if there are cash flow positive/neutral houses in Brisbane this would be ideal. Any advice on where to start looking, researching? Can you recommend any resources?

Thanks,
Nick
 
Hi there Nick and welcome.

I have not researched Brisbane, but even so - you don't have to purchase in Brisbane directly.

Buy what you can afford. Research the surrounding areas. You could also rent your purchase out as your IP and be claiming a Tax Deduction for any expenses and Property Management.

I would agree and would stick to as Neutrally/Positively geared as possible. Plenty of time for properties to turn to NG ahead.:)

Regards JO
 
Nick

I'd buy 2 properties with $200K and leave $50K for your traveling.
I assume you'll work while travelling overseas?

$200K means a 2x$80K deposits plus 2x$20K for legals, stamp duties etc.
With your $200K you can buy 2x$400K properties ($320K loan each $640K of loans in total) and with the current interest rates they should be cash flow neutral or positive.

I suggest you get your loan BEFORE you wind up your business
because getting finance when you have no work is not as easy as it used to be.
Has that preapproval expired?
Talk to your mortgage broker asap
 
BV, I don't think placing a 20% deposit on a 400k property will make it cashflow neutral-positive for the OP. If he is going to spend his time traveling overseas he won't have a salary to offset against to gain the negative gearing and depreciation tax benefits required to push it over the line.
 
BV, I don't think placing a 20% deposit on a 400k property will make it cashflow neutral-positive for the OP. If he is going to spend his time traveling overseas he won't have a salary to offset against to gain the negative gearing and depreciation tax benefits required to push it over the line.

It would depend on the type of property and where it is.
That's the sort of thing he has to check and if the figures don't work he can look for something else with higher yields.
 
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