2019 Money Magnet Symposium - Discover how to make, and keep, more money and achieve a financially empowered future
Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of DennisLeungDennisLeung
    Participant
    @dennisleung
    Join Date: 2013
    Post Count: 12

    Hi guys,

    I am in my mid 20s and recently became interested in property investment in providing for the retirement of family members and also not having to rely on the job market in the long term. I have a relatively stable job at the moment, as does the family member. We are currently pouring all our money into the existing mortgage(s).

    Currently we own 1 townhouse valued at about 850k with a 20k mortgage left on it. Additionally there exists another 480k apartment with about a 280k mortgage on that. We are renting out a portion of the townhouse (which we live in) for about $550 a week and the apartment for about $480 per week. As an aside from this, we also have some inheritance money coming in overseas which totals about 200k and I'm thinking that this can go straight into the apartment mortgage.

    I am thinking that we need to get into the property market by using all the equity in the house. What would you guys do in my situation if the goal was to increase the size of the portfolio and eventually generate large amounts of passive income?

    Profile photo of Andrew_AAndrew_A
    Participant
    @andrew_a
    Join Date: 2003
    Post Count: 392

    That's a strong equity base to start with, also the cashflow wouldn't be shabby either! I would suggest trying to work out the end points, where do you want to go and what do you want to achieve with your investing? Then it's easier to find a strategy that will suit your goals.

    Profile photo of BigCubezBigCubez
    Participant
    @bigcubez
    Join Date: 2012
    Post Count: 48

    Agree with Andrew, set your end goal and then plan on the best way of achieving it. You mention you want to generate large amounts of passive income, identify exactly how much you want to make per year. What asset base and ROI do you require to achieve this? (eg. asset value of $1.5m with a net return of 7% will generate $105K/year) Also setting timeframes of when you want to achieve certain goals is important. Come up with your short, medium and long term goals.

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Dennis

    When we got into real estate vendor finance our goal was to use it to help accelerate the building of our property portfolio.

    We were in a similar situation to you but we realised we could only buy so many negatively geared properties before we ran out of equity and the ability to service the negative cash flow (serviceability).  As a result we use the following acceleration process:

    a) Buy property and on-sell with vendor finance.  Thereby locking in our capital gain for this property and generating good positive cash flow.

    b) Buy an IP with reasonable capital gain prospects and subsidise the negative cash flow with the positive cash flow from the vendor finance property in (a).  This has allowed us to keep buying in capital cities, as against buying in regional areas for the yield (but often limited capital gain).

    c) Repeat  ;-)

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of EmilEmil
    Member
    @emil
    Join Date: 2012
    Post Count: 26

    Hi,

    Your equity base is strong enough to allow you to easily buy two units for investment purposes. What to consider: location (I suggest boom towns and property hotspots, because the demand for rent is high and the gearing conditions are positive), depreciation and tax deductions, and a mortgage broker who can offer professional service. Time is on your side right now, look at Darwin or Perth for example, they offer you 6% rental yields. The returns of a well-chosen property pay off in the long run.

    Cheers,

    Emil

    Sunbuild Invest

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

    Hi Dennis, adding to what others have already covered, read up on land tax and how it is calculated so you can understand what the likely land tax bill if you buy all your property in the one state versus having property in a mixture of states.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

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