My IP Portfolio Plan
– any advice, ideas or criticism is more than welcome
Hi, i am 22 years old, i recently purchased my first IP in regional victoria. i have put tenants in the house straight away. i purchased the property for $150,000 and the rent covers the loan and few other expenses.
I am new to this game, (loving it) and would love some advice on my plan. My broad plan is to acquire another IP around the same $150,000 – $200,000 mark every 5 years, obviously as houses increase in value i will lift the price set. The reason i am purchasing cheap properties in regional victoria is i am a uni student with limited income to cover the loans so i am looking for properties whereby the rent covers the loan repayments and then some.
As is my understanding i can let the house gain equity over a few years, so say in 5 years time (give or take) i get the house re-evaluated and borrow against the house and use that gained equity for the "deposit" and then purchase another IP, fix it up ready for tenants and let their rent cover the loan.
Rinse and repeat until i wish to purchase my own home, become satisfied with my IPs or run out of the funds to cover all the loans if things go bad.
Any tricks i should be aware of? or pitfalls? or better strategies to accomplish my 5 year per IP goal?
ThanksJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Congrats on your first IP.
My only comment is that I wouldn't wait around for growth to kick in – particularly in regional areas.
If your investing strategy is going to focus on regional Vic, then I'd be inclined to take a more proactive approach and add value to each property via renovations.
If they're just set and forget IP's, you might be waiting a while for them to increase in value. However, by adding value to them – you will be able to access equity sooner and grow the portfolio quicker.
I see, thanks for the reply.
I have cleaned up and slightly improved the kitchen (painted and lino-ed the cupboards).
Installed a brand new oven and added new power-points and lights around the house and fixed up the garden a bit.
As i said funds are scarce for me so big improvements may take a few years.
Do you have any easy and cheap suggestions for adding value?
Thanksfredo_4305Participant@fredo_4305Join Date: 2009Post Count: 336
Paint, floors, light fittings and possibly power points. There are the most simple ones without large costs. Also make sure the house is serviceable and presents well on the outside.
There is some fairly old carpet (in terms of style, not dirty or smelly) with floorboards underneath which i plan on ripping up when i intend to sell.
Other than that i have pretty much ticked all your boxes fredo_4305, thanks for the tips!Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Refaced kitchen, new sink, handles, mixer and splash back can add some value and are reasonably cheap. If the bench top looks old and tired then it’s worth replacing it as well.