Where to from here

Hi everyone,
First question here for a long time lurker. We currently have 3 IP’s, 2 in Darwin and 1 in QLD near Hervey Bay. We are currently renting in Vic due to job commitments albeit rent is only $440 a fortnight. At a bit of a crossroads now as we wish to continue generating wealth, obviously, however not too sure as to what direction to take now. Our current status is this:

House 1. Qld. M/gage of 45K, owe 37K. Valued at 240K. Rented $230 a week. Equity app 200K. CF+
2. Darwin. M/gage 413K, owe 390K. Valued at 480-500K. Rented at $430 a week Equity app 100K CF-
3. Darwin. M/gage 400K owe 380K Valued at 800-850K. Rented at $800 wk. 55K in 100% offset. Equity approx $450K CF- Just.
Total Equity of approx 750K. Does anyone have any suggestions on where to from here bearing in mind that debts have to be serviced and I am earning 90K. And partner has no job here as yet.

Regards Chanos.
 
Hi everyone,
First question here for a long time lurker. We currently have 3 IP’s, 2 in Darwin and 1 in QLD near Hervey Bay. We are currently renting in Vic due to job commitments albeit rent is only $440 a fortnight. At a bit of a crossroads now as we wish to continue generating wealth, obviously, however not too sure as to what direction to take now. Our current status is this:

House 1. Qld. M/gage of 45K, owe 37K. Valued at 240K. Rented $230 a week. Equity app 200K. CF+
2. Darwin. M/gage 413K, owe 390K. Valued at 480-500K. Rented at $430 a week Equity app 100K CF-
3. Darwin. M/gage 400K owe 380K Valued at 800-850K. Rented at $800 wk. 55K in 100% offset. Equity approx $450K CF- Just.
Total Equity of approx 750K. Does anyone have any suggestions on where to from here bearing in mind that debts have to be serviced and I am earning 90K. And partner has no job here as yet.

Regards Chanos.

Hi Chanos, and welcome to SS.

Based on what you have posted above, you are in an excellent financial position, and you could go on to do a multitude of things with your asset base at it is! :)

Your LVR is very low - 51% which would suggest that, depending on the interest rates you are currently on, you may either be positively geared, neutrally geared, or just very slightly negatively geared.

As you have many possibilities open to you, it may be best to work out what goals you want to achieve from your investing. Eg. Are you investing for the long term - to be able to retire on the rent that your properties give you, or do you have short term goals - wanting to travel, work part time, etc.

Once you have a clear idea of what you want to achieve, it makes finding the appropriate assets to achieve your goals much easier.

As you know, there are many options:

1) Buy and Hold - Keep accumulating, sell down to balance debt when you want to stop work and live off the rent.

2) Speed up the process by developing, renovating, flipping etc.

3) Paying down loans quickly to be able to reach the goal outlined in No. 1 more quickly.

4) Use your equity to buy into other asset classes - shares, businesses, etc.


The possibilities are endless!

In your position I would think that you could buy another IP soon (provided you have the borrowing capacity and it seems you should based on the above) and just hold on for the long term as you have been doing.

Others will have more ideas too - but I thought I would get the ball rolling. Not sure I was any help, but you have many options open to you!

Regards Jason.
 
Does anyone have any suggestions on where to from here bearing in mind that debts have to be serviced and I am earning 90K. And partner has no job here as yet.

Hi Chanos,

You have plenty of equity there to invest further. I'd be diversifying away from NT - and be buying in Melbourne & Sydney next.

If you purchased 2 IPs in SYD and say another 2 in MEL at around the $400K mark ea and using 20% deposits, you'd need around $100K for each IP = $400K. That leaves $350K of your $750K left - I'd buy some shares with that.

The IPs I'd buy would be cash flow neutral / cash flow +ve so you don't contribute anything to their day-to-day running from your $90K PAYG income.
 
The 750 equity assumes you can get 100% LVR loans: not very realistic in this environment. I see an issue especially with that 800k property. To refinance against that to release equity you'll need a sizeable loan that's pretty big relative to your salary.

Refinance as much as you can by all means, but keep some in reserve.
 
Hi everyone,
First question here for a long time lurker. We currently have 3 IP’s, 2 in Darwin and 1 in QLD near Hervey Bay. We are currently renting in Vic due to job commitments albeit rent is only $440 a fortnight. At a bit of a crossroads now as we wish to continue generating wealth, obviously, however not too sure as to what direction to take now. Our current status is this:

House 1. Qld. M/gage of 45K, owe 37K. Valued at 240K. Rented $230 a week. Equity app 200K. CF+
2. Darwin. M/gage 413K, owe 390K. Valued at 480-500K. Rented at $430 a week Equity app 100K CF-
3. Darwin. M/gage 400K owe 380K Valued at 800-850K. Rented at $800 wk. 55K in 100% offset. Equity approx $450K CF- Just.
Total Equity of approx 750K. Does anyone have any suggestions on where to from here bearing in mind that debts have to be serviced and I am earning 90K. And partner has no job here as yet.

Regards Chanos.

Thank you for your replies. Partner has been doing lots of study and has re-worked our equity, using 80%LVR at 430K, so that casts a different light on it all. Here is a scenario.

House 2. 800-850K value was our PPOR until recently. We are thinking, get a LOC on this house which has a 100% m/gage offset. We then use LOC to purchase another IP. All rents received then go into PPOR offset account. LOC is then used to cover payments to all IP'S including ex PPOR.

Costs. House 1 is CF +
House 2 is almost neutral except for rates etc.
House 3 is negative geared.

Goals. To retire to a rural property In Qld as soon as possible:D with a holiday house or shed in Darwin where my fishing boat will be stored. We wish to be self funded and have an income to allow us to travel a bit and see the kids, rellies etc. I also have good super of about 700K and growing with which I can buy a pension at age 55. I contribute the minimum to this at this time.
So really we just want to build a passive income to allow us to do this. Except for the super, we have achieved all this since 2003 when 2 IP'S were purchased and I was in a Defence house. I think we are on track but need advice and fine tuning now as we don't want to keep funding so much out of our own pocket.

Apologies if I am confusing anyone eh.

Regards Chanos
 
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