I have just started to set my goals in life and one of them is becoming financially independant through property investment. I dont have much experience in the area and would like some advice.
I am 24 and currently work in the armed forces, even though it is a good job it isn’t something that i want to do for the rest of my life.
I brought a two bedroom for myself to live in, i rushed into it and looking back was not the best thing i should have done as it drains alot of my savings.
The questions I have to ask are what is the best way to get started in todays market? What things should i look out for as a beginner and just any freindly advice that can help me achieve financial independance.First step is to educate your self as much as possible – read up on various investing strategies and decide which is the most relevant to you.
Depending on where you live, you may find that financially it is best to move out of your PPOR and turn it into an IP. Any costs associated with the property will minimise your tax, while tenants also pay off expenses. Of course, this strategy will only work properly if you can gain equal or higher rental returns from your IP than you spend by renting a place for youself to live in. If you convert it to an IP, you are best with an Interest only loan (rather than the P&I loan you probably have as a home owner) for tax minimisation purposes.
If you continue to live in your PPOR, are you able to rent out the second room for additional income? This will help you pay off your home loan (bad debt) faster.
Once you have some decent equity in your PPOR (either through paying off the mortgage, capital growth, or property improvement) you can leverage off this to buy an IP. This means that rather than putting down a cash deposit on a second property, you use your PPOR as security to let you borrow enough for the IP with no cash down. (You will probably still have to cough up some for various legal expenses, taxes etc, but this can be rolled into the loan if you are able to service it).
But the above suggestion is not necessarily the best way for you to invest – you need to determine for yourself the strategy that suits your needs and is relevant to your talents/abilities/lifestyle.
Mate,
I did 17 years in the Army. Feel free to give me a call or an email and we can shoot the breeze together re investment strategies.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Luci’s suggestion sounds like it has merit. Moving out and renting could save you money – even if you rent next door. This money can be used to build equity faster. You should also still be CGT free on your initial property even if you rent it for up to 6 years.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Watch out for that Simon bloke. I think he took a bullet or two to the head. He is a bit loopy!!!!
)))PS: Give us a cuddle!!!
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Linksthe biggest thing about property is its illiquid nature. you need cashflow to fund it and never underestimate the importance of that. Selling property in a hurry is like being a lamb to the slaughter (and the banks will be the first ones to load you onto the truck!)
http://www.megainvestments.com.auJohn Carroll
Hi Doogs81,
I too have spent many years(21) in the RAAF. I resigned in 93.
I remember one great perk, and no doubt they’ve changed, was that they would pick up the tab for all costs when buying and selling when posted to a new location. Also there was the Defence Forces Home loan which was an out dated $25K enouch for a good sized garage.but it was at a very very good rate.
Are there any such Navy entitlements that could help your property investing.
For Terryw,
You caught my attention with this:
You should also still be CGT free on your initial property even if you rent it for up to 6 years.
Terryw
Discover Home Loans
North SydneyCould you please explain this
Thanks Terry
regardsHerb
hrm
Sorry I am not Terry but the CGT thing is in reference to getting a 6 year Capital Gains Tax exmption on your PPOR if you do not buy another one and move into it – ie: you rent during this time.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksTMA,
Thanks.
Does this mean that you could purchase IPs and still claim the 6 year exemption for the PPOR.
regards
Herb
hrm
read Steve McKnight’s book “$1,000,000 in property in one year”, it totaly inspired me and is very easy reading.
Good luck….
Yes Herb. As long as you do not move into one of your own premises and keep renting. The 6 year exemption will continue to apply on your old PPOR.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksTMA,
Thanks again.interesting info.
regards
Herb
hrm
Hi Doogs81. I totally agree with Luci. Before you do anything, do as much research as you can. My husband & I watched the area we were to start investing in for 8 months before taking the plunge not to mention all the money spent on books & seminars. I have seen people start investing during the boom & are now bankrupt. Just because the guy next door did it, does not mean it will work for you. The only other thing I can say is that you will learn a little from each book etc you read. Don’t take all of them for granted & try to apply to your own situation. They won’t all fit.
Kim
)))
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