All Topics / Help Needed! / What would you do?

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  • jnaumovski
    Participant
    @jnaumovski
    Join Date: 2012
    Post Count: 5

    Hi everyone

    Just finished reading Steve’s book after receiving it as a xmas gift – loved it and am excited about the wealth of advice and knowledge I’ve got my hot hands on.

    With all of this in mind, I wonder what your thoughts are – here is my scenario.

    I am 27 years old. Working full-time earning about $95k.

    I co-own an investment property in Surry HIlls worth $700,000 (purchased in 2006 for $400,000) positively geared.

    I just sold a studio property in Surry Hills and made a tidy profit of about $40k, which I’ve used to pay a 10% deposit on an off-the-plan apartment in Waterloo (due for completion in 2014).

    I have access to about $70,000 in equity finance from the property I co-own and wanted to spend the next year making the most of it. Some of my thoughts are:

    – Establish a trust structure with a colleague (who is like minded regarding property) and go into a partnership venture in property investing. Possibly with an initial focus on the mining towns like Dysart etc.

    – Focus on further cash-flow positive opportunities by myself within $100k-$200k in rural areas.

    My question is – if you were in my positon, what would you do? Love hearing the discussion and views so any thoughts or comments would be greatly appreciated!

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    First I’d locate and engage a very property investing savvy accountant and ask them the same questions.
    Then bring a short listod options and scenarios to the forum and refine it.
    My 2c worth.
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
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    Profile photo of DHCPDHCP
    Member
    @dhcp
    Join Date: 2010
    Post Count: 190

    Hi jnaumovski,

    I read that book 15 months ago and his other book also…now Steve puchased 200+ properties in the US, so I follow him and bought 3 properties (..after attending few seminars from his.)  but that's another story.

    You have a plan BUT my problem with it is you don't have a goal.

    Before, you start implementing your plan, you have to be CRYSTAL clear what you wanted to achieve through investing in real estate?    Again, I ask you this question what is your GOAL in mind? Once you have defined your goal, everything else will be easy.

    My advise is to start with the END in mind…see in your mind's eye your finished goal, then it will be down hill from there.

    Only you can answer that question. Get back to us and post your goal here and we can start leading you to the right direction.

    Cheers

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

    Co owning properties and co guaranteeing trust loans can really hurt serviceablity and there are numerous issues involved such as accessing equity etc.

    I have seen many people join up to buy property, but none of them have worked. Doesn't mean your situation won't work, but just needs extra careful planning and consideration before jumping in.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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

    I agree with Terry apart from a couple of lenders you will be seen as jointly and severally liable for the entire $700K existing loan  and on your income serviceability could be a real issue.

    Even assuming your partner doesnt have any existing borrowings he may wish to buy something else in the future.

    Careful consideration and structuring needs to take place to ensure you dont hit a very quick speed bump on your investing journey.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
    Join Date: 2010
    Post Count: 618

    I also agree with Terry. I have invested in rural property in NSW and VIC and done well so far. There are also good deals in the bread butter areas of Sydney (Mount Druitt, Liverpool, Blacktown, etc…).

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    jnaumovski
    Participant
    @jnaumovski
    Join Date: 2012
    Post Count: 5

    Thanks everyone for your comments and feedback – it is all very useful to me.

    I should clarify though that the property I co-own in Surry Hills which is valued at $700,000 has only $350,000 borrowed against it with my co-owner. I already have access to a $70,000 equity loan through this property which my property partner co-signed with me.

    However, going forward the ultimate goal is to achieve a portfolio of cash-flow positive properties. I do not see flipping/renovating properties as my key strengths based on the time/resources I have access to, and I consider the risk to be too high in terms of the potential return.

    I have been undertaking research into purchasing units in small coastal towns such as Old Bar (about 15mins from Taree) – access will soon be enhanced by the completion of the bypass of Buladelah on the Pacific Highway.

    I also have seen evidence about Nowra being a worthwhile investment too. In any respect, my key goals are purchase low-cost/affordable properties up to $250,000 each in high growth potential areas that will provide positive cash-flow for the long term.

    Look forward to hearing everyone’s thoughts now that my goal is clearer (I hope!)

    Have a great day

    Profile photo of DHCPDHCP
    Member
    @dhcp
    Join Date: 2010
    Post Count: 190
    jnaumovski wrote:
    my key goals are purchase low-cost/affordable properties up to $250,000 each in high growth potential areas that will provide positive cash-flow for the long term.

    Traditionally, high capital growth IP are mainly located in metro area and regional areas provides positive cash flow returns…to achieve both would be a gold mine.  But, having said that i've seen some properties recently in some areas of NSW whereby this can be achieved..

    A balance portfolio would be a good idea to consider also (e.g., 50% positive cash flow,  50% high CG).

    Profile photo of EngeloRumoraEngeloRumora
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    @engelorumora
    Join Date: 2010
    Post Count: 618

    Did you look into Taree? You can pick up the housing commision homes for around $80,000 – $90,000 and will rent for $160 – $180pw making then slightly positive after all expenses.

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    jnaumovski
    Participant
    @jnaumovski
    Join Date: 2012
    Post Count: 5
    engelo10 wrote:
    Did you look into Taree? You can pick up the housing commision homes for around $80,000 – $90,000 and will rent for $160 – $180pw making then slightly positive after all expenses.

    Hi engelo10 – I had a look in Taree (my partner's has family and grew up there so I know the area relatively well) and could not identify any properties in the range you refer to. Old Bar looks like it has some good deals. A sleepy coastal town 15mins away, which recently had a supermarket chain open. Lots of properties on the market at the moment though….could be a buyers market?

    Profile photo of EngeloRumoraEngeloRumora
    Participant
    @engelorumora
    Join Date: 2010
    Post Count: 618
    jnaumovski wrote:
    engelo10 wrote:
    Did you look into Taree? You can pick up the housing commision homes for around $80,000 – $90,000 and will rent for $160 – $180pw making then slightly positive after all expenses.

    Hi engelo10 – I had a look in Taree (my partner's has family and grew up there so I know the area relatively well) and could not identify any properties in the range you refer to. Old Bar looks like it has some good deals. A sleepy coastal town 15mins away, which recently had a supermarket chain open. Lots of properties on the market at the moment though….could be a buyers market?

    Wait for the housing batch to come again. I know someone who bought 4 for $75,000 each.

    Engelo

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of mattstamattsta
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    @mattsta
    Join Date: 2011
    Post Count: 604

    From your options, I would do this: Focus on further cash-flow positive opportunities by myself within $100k-$200k in rural areas.

    My goal is Cf+. As mentioned above, it depends on your personal goals

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