What would you do??
- Thread starter m.sewell
- Start date
Hi
what is high growth?
Andrew
what is high growth?
Andrew
$70k deposit gets you a property worth ~$465k @ 90% LVR
$60k deposit gets you a property worth ~$400k @ 90% LVR with $10k in offset
$50k deposit gets you a property worth ~$335k @ 90% LVR with $20k in offset
$40k deposit gets you a property worth ~$270k @ 90% LVR with $30k in offset
You need to think about what sort of property you're going to buy. Is the growth going to happen naturally from CG or are you going to manufacture it with renovations/development.
If it was me I would be looking ~$350-400k with development potential. The continue to grow offset whilst property being rented out and then look to manufacture growth by developing. Even if you don't develop the property I find properties that have the potential to be developed usually have increase capital growth due to there demand.
$60k deposit gets you a property worth ~$400k @ 90% LVR with $10k in offset
$50k deposit gets you a property worth ~$335k @ 90% LVR with $20k in offset
$40k deposit gets you a property worth ~$270k @ 90% LVR with $30k in offset
You need to think about what sort of property you're going to buy. Is the growth going to happen naturally from CG or are you going to manufacture it with renovations/development.
If it was me I would be looking ~$350-400k with development potential. The continue to grow offset whilst property being rented out and then look to manufacture growth by developing. Even if you don't develop the property I find properties that have the potential to be developed usually have increase capital growth due to there demand.
Depends what your exit strategy & time frame is?
Forget about depreciation it's just icing on the cake.
I would be looking for a property that has development potential, doesn't mean you have to develop it. From clients that I've seen who have had the most significant growth has come from properties that have either been purchase with the intent to develop or have inadvertently purchase a property that has development potential. As the area gets developed the value of the property continued to increase.
By the sounds you have come on asking for a suburb without doing too much research of your own. Maybe buying a property right now isn't the best thing for you, and might not be at all. If you want set and forget why not go buy some blue stock shares with some okay dividends plus benefits of franking credits.
A good starting point would be to get one of those property investing books to get familiar with the terms used and the investing strategies.
You'll have hundreds of questions but it wouldn't be productive to get them all answered here when a quick read could answer them most.
Andrew
I understand the concept of living off equity but i do not think the figures add up.
say property double every 10 years. You have 5 properties you refinance one every 2 years and it should double...
so lets do the math
i buy every 2 years for 10 years then hold and unlock the equity equity,
the increase debt every year would add say 6000 to your repayments a year to pay back the debt (100 k a year equity release) - in 4 years your $100k is costing an extra 24k in repayments ( i guess rents go up and the values also)
year 6 you are paying 36K in interest (600k equity unlocked over a 6 year period) eventually you would be in a position where your debt repayments is greater then your equity release.
Am i missing something?
say property double every 10 years. You have 5 properties you refinance one every 2 years and it should double...
so lets do the math
i buy every 2 years for 10 years then hold and unlock the equity equity,
the increase debt every year would add say 6000 to your repayments a year to pay back the debt (100 k a year equity release) - in 4 years your $100k is costing an extra 24k in repayments ( i guess rents go up and the values also)
year 6 you are paying 36K in interest (600k equity unlocked over a 6 year period) eventually you would be in a position where your debt repayments is greater then your equity release.
Am i missing something?
To be frank. You are not asking the right questions.
10 properties... 10x $1,000k properties, 10 $200k properties...
Navid's 'Questions to ask yourself first before you burn through your money by investing when you are still not understanding what you're on and on about' (soon to hit your nearest book store):
Title still needs some work...
1. What lifestyle do I enjoy living
2. Is this the lifestyle I would like to enjoy for a long time to come
3. Will anything happen between now and then to change my lifestyle (eg. family)
4. How much does this lifestyle cost as a per year amount, $50k, $100k, $200k in todays dollars
5. Assuming say, 5% ROI then how much is the unencumbered amount I should have
6. Do I want to work a little or never work again
Once you have that number figured out, work backwards.
7. What am I willing to put into this
8. Is property the best option for me
9. What tools, knowledge, assets do I have to start with
10. Using my preferred option, will my strategy get me where I want to be at the age I want to be at
11. If not, what do I need to change, expectations or strategy
12. What tools, knowledge, assets do I need to attain
13. When I get there what are my options to get out of the (investment) vehicle I was driving in order to enjoy the destination (sell all property, sell half, keep all live off rent, keep all live off equity, etc)
From there you can change variables. 8% ROI vs 3% ROI. Retire at 30, 40 or never. Buy and hold, renovate, subdivide, develop, start business, buy shares, etc.
Get the drift?
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It is good you are thinking ahead. I just turned 28 a few days ago actually, and left a similar type of role to be closer with fam. Income is much lower but I'm much much happier.
It was interesting to see the guys just starting work vs the guys who were there for a decade or more.
The young guys: "I'm doing this to save enough to support my family and buy a house".
The older guys: "****** took my house and my kids, I'm broke".
It's not a healthy industry, too much time away from home usually leads to a high divorce rate, a lot of guys abused various substances and had many a vice they blow that money on.
Get in, make your money, get out. Just like you're creating an exit strategy for work, you need one for investments, otherwise you'll consume yourself not knowing why you're still unhappy after making a few mill.
Yeah their are definitely a lot of unhappy people out at the mines. I have already been out at the mines for 8 years and although I have three properties now I have only just really started to take property investing seriously. If you don't mind sharing i would love to hear a bit about how you started out and what your goals and strategies are. We are both around the same stages in our lives.
Will PM you.
Maybe this is the way for me to go.
