All Topics / Help Needed! / general investment advice

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of cqblovecqblove
    Participant
    @cqblove
    Join Date: 2007
    Post Count: 2

    Hi all, first time poster

    I was wanting some general thoughts and guidance about my particular situation. I am a 35 year old Professional who is about to purchase a cheap unit in NSW around the 200 k mark in order to get on the property ladder. I have no other investments or debts. Yes, a sad state of affairs for someone who has been working with good income for over 10 years. I plan to pay off the property quickly.

    Here is the crux of my questions. I am about to come into a job with a very high annual income – over $400 000 Aus per year, and this will be a long term job 10yrs +. Now to the questions.

    1. After I have a freehold unit as above, will there be a limit on the number of properties I can accumulate (esp if positively geared), or will the banks/lending institutions cap lending at some nominal point?

    2. Should I purchase say 1 property every 3 months to amass a portfolio, or is there a better formula?

    3. Should I immediately contemplate something of a more commercial nature, e.g. developing /building unit blocks?

    I have read several books on real estate investing, and have scoured the net and this forum, but was hoping one of the gurus could at least point me in the right direction.

    Thankyou in advance

    S.E

    Profile photo of dr housedr house
    Participant
    @dr-house
    Join Date: 2001
    Post Count: 281

    Hi,
    Great, can we have a job like that?
    Why not go for something likely to provide good CG, rather than cash positive.
    Cash pos. is unlikely to produce good capital gain.
    Do you need to be cash positive on that sort of income?
    From my experience, the capital gain out performs the cash positive by a long shot.
    Buy a quality duaL occ. site and get plans/permits and build.
    It's almost like getting a free block of land.

    Profile photo of JONCHUJONCHU
    Member
    @jonchu
    Join Date: 2004
    Post Count: 112

    Hi there, plan, plan and plan some more, I am sure you know this.

    Also I would like to share that as an investor you dont want "a ton" of properites, remember, what you want is THE MONEY that good properties in well researched areas will give you. You only need a few good deals…

    Happy investing

    Profile photo of propertypowerpropertypower
    Member
    @propertypower
    Join Date: 2006
    Post Count: 312

    Hi cqblove,
    Firstly, congratulations on your excellent job.
    You should probably start witth high capital growth investments even if they are negatively geared. With your income and big tax bill, couple of negatively geared properties won't hurt (too much). Then to balance the portfolio buy some couple of cash flow positive properties. You should consider diversification as well. Put some money in other asset classes like shares.
    The lenders look at equity (deposit) and serviceability for lending. As long as you manage both, the lenders should not put a cap on lending.
    Also, a property every quarter is a good acquisition plan. Review your portfolio every year and trade a couple (if required), otherwise hold all your properties.
    Good luck!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Lenders do impose maximum exposure levels – they will only lend a certain amount per client. This varies depending on low doc/No doc or full doc and from Bank to bank. But with the number of lenders out there, you will be able to keep on going as long as you can keep coming up with the deposits and can demonstrate serviceability – which you should be able to do for a long while on that sort of income.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    In your situation I too would recommend you look for more expensive properties that have potential for high growth rather than amasiing a large number of cheapies.

    I would also speak with a professional about setting up a high growth share portfolio to get the investment ball rolling to build a large deposit to secure the first place.

    I am thinking that if you can build a $100K deposit fast then you could be buying Sydney blue chip residential stuff at $600K+

    If you email me I can give you some names and ideas – I am not looking to solicit business from you or to steer you onto someone paying me a fee!

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    I agree with Simon buying second rate property is a waste of your money. Unless you get great returns you are better off buying inner city properties. I would stick to Melbourne Sydney and Brisbane. Melbourne at the moment is doing very well. According to the 2030 review Melbournes population will increase by 1 million people. I would look at inner city areas and even some off the plan deals.Because I believe the market will only increase over the next few years.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of trajiktrajik
    Member
    @trajik
    Join Date: 2005
    Post Count: 102

    Hi cqblove,

    Another important thing to consider before buying anything is the structure that you use to own your investments.  This will be a vital part of your plan, to not only reduce your tax but more importantly to protect your investments.   With the expected tax cuts, again, the tax benefit of negative gearing is continually being eroded, although you will still be in the highest tax bracket, although that is currently 46.5%, and possible down to 40% within 5 years?

    Please consult with your accountant before signing the purchase contract to make sure that your structure is suitable and effective.  Trusts, both discretionary and hybrid, along with bucket companies, will more than likely be suitable for your situation.

    Even though this is a property forum, I would also suggest that you consider a share portfolio as part of your overall investment portfolio.

    Good luck.

    Ross

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    Hi There,
    I think you are about to run on a great journey ahead!!!…. There are a few things that you should perhaps consider before you go to deep down the rabbit hole!

    If you are looking for hte fastest way to get to where you want to go…. then you should consider the following suggestions.
    Here is what I would do.

    1. Sit down and work out what yoau re trying to achieve and why you want to achieve it… if you do not do this cruicial step then the motivation will drop off as you will lose interest.
    2. Get very specific right down to numbers …. eg " I want a minimum of 50 houses within the next 5 years… or I am going to be earning a mimimum of $50,000/month net cashflow per month"
    =The more specific you get …. the better and clearer your vision will be"
    3. set realistic short to medium term goals.
    3.1  = Meet with your advisors (Accountant, Solicitor and Strucure Specialists) Set up your structure based on your goals…. There are a number of people that can assist you at this … the one I use personally is Garth Melville (NZ and International Structure Specialist) http://www.company-solutions.co.nz

    4. Once you have worked out the above you can then begin your plan of attack…. remember leveraged capital growth is the key to rapid net worth growth and success…. however you also need to consider your specific experience and comfort levels….. limit your exposure as much as possible as you gain experience … you will find your niche.

    5. If you are lacking time or skills… then you can consider teaming up with a party that has the experience you need to get ahead without taking on board all the risks of in experience. This will rapidly get you stated while shearing the risks and problems.

    6. Set up a table of growth….. set a target of say 4 properties are all cashflow properties …. and 1 capital growth…. and set up pods of these to get a great long lasting plan of attack moving forward….. don't let a negative gearing portfolio eat into your live style….. if you are paying tax … then you are doing GREAT!.

    7. Set up target set points…. and give yourself rewards as you go …. nothing is worse and more demoralising than going hard on property and then getting bored as you have not given yourself any rewards for your efforts.

    EG:
    Target 1 = Buy 3 properties within 6 months … REWARD = Weekend away with the family to a nice peacefull beach!

    Target = Buy 9 houses withing 9 months….. REWARD = BUY NEW X-box 360 and 3 games….

    Make it up as you go….whatever you want to put in there.

    Target = Get $2,000,000 nett worth within 5 years = Trip to the Behamas for 2 weeks with the family! + Take $120K per annum loan against my portfolio to spend as I wish…

    8. Keep networking…. get involved with your local investing club….. keep learning …. and keep having fun!

    Good Luck with it all…. I am sure I will see you at some education seminar one day!

    Cheers
    Kiwi
    http://www.rent2ownnz.com

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