All Topics / Help Needed! / Am I in a position to enter the property investment market?

Viewing 20 posts - 1 through 20 (of 28 total)
  • Profile photo of saybalebaysaybalebay
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    @saybalebay
    Join Date: 2010
    Post Count: 6

    Hi all,

    Long story short, I am a (soon to be ex) Police Officer about to be medically discharged. As a result, I will receive a compensation payout. I have also recently separated. At the end of the day I will have about 300k cash, however no PPOR or employment. I will have a small continuing income from insurance. I would like to use this cash to invest in property, hopefully to generate some sort of income. From your experience, will my circumstances allow me to do so?? Any ideas/advice will be most welcome.

    Thanks in advance.

    Profile photo of sdemsdem
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    @sdem
    Join Date: 2007
    Post Count: 14

    Hi Saybalebay. I’m new here and am unable to give you any advice at this stage, but just thought it’d be good to know if you’re planning on only living off this money, or are you planning to get another job somewhere? I’m assuming your compensation will pay for you to be trained up to a high level (Cert III – I know, ridiculous) in something else. Will you take advantage of this?

    Profile photo of saybalebaysaybalebay
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    @saybalebay
    Join Date: 2010
    Post Count: 6

    Hi sdem,

    At this stage I can only return to the workforce when I am cleared to do so by my doctors, which will be some time off, if at all. Hence the need to do something creative with my cash to create an income in order to supplement the small continuing insurance payments. Retraining at this stage is not an option. Thanks for your interest.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Sorry to hear about your current position.

    Realistically if you need any form of gearing this maybe difficult as serviceability as with the exception of rent your income will be fairly limited.

    Whilst some lenders will take into consideration your insurance payment you dont want to overcommit yourself given everything else. Make sure if you do buy something you keep a decent cash buffer in hand to cover the unexpected costs.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of N@than[email protected]
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    @n-than
    Join Date: 2010
    Post Count: 241

    Hi Saybalebay,

    If it is purely an income that you are after maybe check out the link below:

    http://www.ownyourownatm.com.au/

    I am not recommending it as I havent really looked into it much myself however I seen an add in one of my property magazines and it may suit your situation.
    Obviously do your research first though.
    My understanding is it will supply you with a minimum 20% return however I dont think there is any capital growth involved.
    I could be wrong though as I only had a quick look over the website.
    Hope it all works out for you anyway.

    Cheers,

    Nathan

    Profile photo of kong71286kong71286
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    @kong71286
    Join Date: 2009
    Post Count: 261
    saybalebay wrote:
    At the end of the day I will have about 300k cash, however no PPOR or employment. I will have a small continuing income from insurance. I would like to use this cash to invest in property, hopefully to generate some sort of income. From your experience, will my circumstances allow me to do so?? Any ideas/advice will be most welcome.

    Hello Saybalebay,

    Welcome to the forums

    To answer your question, 'Yes' I think it is possible to invest in properties with $300,000 cash, but that it might be difficult to get additional funding from banks without a reliable source of income.

    • How much income would you like to generate?

    Most residential properties these days yield around 5% i.e. $15,000 per annum on a $300,000 property

    If you want higher yield of +10% ($30,000 p.a.) you might have to consider alternative investments such as Commercial properties

    Hope that helps!

    Kong

    Profile photo of xdrewxdrew
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    @xdrew
    Join Date: 2010
    Post Count: 479

    The correct answer is .. at this stage .. any place you'll get will return an avg of less than 5% no matter where you go. Unless you go country in which case you are placed at a higher risk / maintenance level.

    There are two ways of thinking on this. First, you can go for a smaller income and just purchase a property outright. In this case you are probably looking for a property around the 280k mark (leaving room for stamp duty conveyancing and transfers). On that premise the maximum you'll get is close to about 14-15k maximum GROSS return. Might be small .. but its basically indexed. So its a little bit of income.

    However, the more creative way is to wait until you have something solid as far as work goes. I'm guessing that the job you'd be in or getting would be close to 40k (heck you might be more employable than that) So going to the banks after a period you'll be able to borrow about an extra 200-250k (depending on how they feel). That would get you an interest in a 500k property. Which would provide about (working on the 5%) a 25k gross income. Again .. its indexed. But its a lot better than 15k

    There are more creative ways to do things, but they are inherantly more risky. I suggest you do the investigative measures to assess whether this is a risk you are prepared to take .. assuming future work .. at all.

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099

    A catch 22…this 300k is all you have, so if you invest you risk losing some of this because of bad investment, no tenants, dmg to the property etc…but if you don’t invest you be stuck in one place….so you really need to sit down and work out where your “buffer” is…ie how much do you need to “comfortable” live off IF the investment belly flops.

    If you decide to invest into the property market, just remember most high rental property have low growth…but for your purpose if your after rental return only then it may be worth while ( 10%+)
    1. Rural area- Min 14% return… but can have a long vacancy rate and for mining town chances that if the mining company leaves the area your investment will be worthless..
    2. Unique accommodation- student, service apartment – These are usually located in good locations, but be careful of high strata and high management fee….average return of 9-12%

    If you do decide to buy, i would suggest you take out a small loan with the bank ( tax benefit and some protection) ; as Richard mentioned your insurance payment can be considered as income..also if you go for an LVR of 30% and with rental income flowing through the bank will have no problem with this loan…even if your unemployed.

    End of the day, don’t go overboard…keep a nice healthy safe gap.

    Regards
    Michael

    Mick C | Shape Home Loans
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    Profile photo of Gordie1080Gordie1080
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    @gordie1080
    Join Date: 2011
    Post Count: 23

    Can anyone provide me with in on a company called JDL Strategy in WA. Anyone used them with success? I met with a young guy called Tim recently who said he was the director of the company only to find out he is just a salesman. Guess thats a bad start. Just doing my homework I guess.

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    How much extra income do you require per year? 

    Jacqui Middleton | Middleton Buyers Advocates
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of RenoTeamRenoTeam
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    @renoteam
    Join Date: 2011
    Post Count: 92

    Have you thought of renting and lending the $300K to a private investor or doing a Joint Venture? You would have much higher returns than bank interest, although much higher risk involved. Check with your accountant and mortgage broker to see if they have a suitable client that you could JV with :) Just a thought to ponder :)

    Profile photo of jojo42jojo42
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    @jojo42
    Join Date: 2011
    Post Count: 6

    Hi
    Just thought – you may want to invest some of your 300k in silver bullion as this according to a friend of mine is a booming commodity at the moment- i know this is not about property but it may make money for you to get an investment prop in the near future.
    Wish you well.

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    Jojo i have to admit i did have some silver and gold bullion ( parent’s made me get them 0.o ) …i have to say it’s one of my better performing investment ! close to 35% return when i sold it in Dec 2010 …but it doesn’t have regular income and it’s long term.

    Regards
    Michael;

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Ryan McLeanRyan McLean
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    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    Be careful, you don't want to throw your $300k into one investment deal and then lose it all. Then you will be left with next to nothing.

    Take your time, research your area and your properties and buy right. You aren't going to be able to gear (and if you can only a little bit) so find the right property with minimal potential risks.

    Hope you can find some good (but not too expensive properties) that you can rent out and that have a high rental return. That way you will have more money to 'eat'.

    Ryan McLean | On Property
    http://onproperty.com.au
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    Profile photo of soapstreamsoapstream
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    @soapstream
    Join Date: 2011
    Post Count: 3

    Hi Saybalebay,

    I am new to this forum but have been involved in property market for some 20 years buying renovating and selling.

    No doubt you will be on some sort of government pension or assistance if you cant work so you might be able to survive initially on that income.

    In the meantime I would try and find, maybe on this forum a seasoned investor in your area and do a joint venture to increase your capital base.

    The challenge will be finding someone you can work with and trust. If you can find that person and start to turn over properties by buying renovating and selling quickly with you doing the research then you will be on your way in property development.

    Regards

    Soapstream

    Profile photo of cuteyoungchiccuteyoungchic
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    @cuteyoungchic
    Join Date: 2010
    Post Count: 66

    As you'd be paying rent for yourself regardless of what else you do, is it worth your while erring on the side of caution, and buying a modest house to live in yourself, & taking in share tenants at least temporarily (include a cleaning lady in the tenant's rent, or if you're capable, do the cleaning/gardening yourself for extra profit).     Not sure which state you're in, but Fly In Fly Out tenants work well :)
    Then when you're well & earning a higher income, consider whether you want to continue living in that environment, or rent the same house out as an investment property.

    Profile photo of TCLinvestmentsTCLinvestments
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    @tclinvestments
    Join Date: 2009
    Post Count: 84

    Hi
    Im a simple minded guy, but it if i were in those shoes. I would be very careful to where that money goes. as people have said. you dont want to go into a bad investment and lose it all. Since you are on med leave, i don’t know what your condition is but lets say that you dont want to have all the stress of owning a property. By my very simple calculations, 300k in the bank @ 6% = $18000 @ 7% = $21000 and if you look hard enough 8% = $24000 per year.

    I would really consider doing this for a period of time living off the interest and the insurance income. until such time as you can find a good solid investment. or til a time where you can find some kinda work or something.

    In this situation i dont see any harm in leaving the money in a lazy bank account.

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    http://www.ubank.com.au/ub/web/home

    6.51% – internet account – NAB platform and part of NAB.

    – Paid monthly
    – Can redraw anytime ( not a term deposit)

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of HarmarHarmar
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    @harmar
    Join Date: 2011
    Post Count: 2

    hi,
        i am new in this forum and i think investment in property will depend on the value of that locality .it may be a plus or minus ,
    you have not so much cash to invest in such big investment ,
    my view is that all u need is to invest  your hot cash in a financial supporting bank with a good cash turn monthly .
    otherwise property option is already available to you. 

    Profile photo of ALF1ALF1
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    @alf1
    Join Date: 2011
    Post Count: 237

    Have a look at investing a small portion of your lump sum into the US for income earning potential. With the Aussie $ now at $1.05 to $1US and rental (in the right location) giving returns of 15%+, it's certainly worth a look. And if our dollar starts to weaken against the greenback over the next few years, and your US property(s) haven't had any capital growth you've still made capital growth. i.e. buy 1 US IP today at $50,000 AU. Over the next 5 years you get a return of 15% through rental income but now the Aussie dollars is 50c to $1US. You sell your $50,000 US property and after converting back into Aussie Dollars you have $100,000. Oversimplified I know but have a look. I can help you further if you require further info (at no cost) – just drop me a line.

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