All Topics / Creative Investing / If this is your situation, what would you do?

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of cashflow_investorcashflow_investor
    Join Date: 2013
    Post Count: 3


    I am currently on a one year maternity leave with 6 months old baby. My husband is working full time & the main income provider. I don’t want to go back to work at the end of this year and thinking of becoming a part time investor while looking after my baby in the next few years.

    Below are snapshots of our currently financial situation and our next 3 years goal.

    I would be interested to hear your opinion on how you would go about it to achieve our goals.

    Household income gross $200,000

    Monthly expense $5000 inclusive of rent

    Savings in bank account (earning 4.35% pa) $430,000

    No liability or mortgage

    6-12 months goal

    Investment income of $40,000 so I don’t have to go back to work.

    3 years goal

    Passive income of $100,000 so my husband can scale down work and spend more time with our baby.

    I would love to hear how experience investor would have done in our situation. I don't have much time during the day however usualy can do some work/research after hours when my baby goes to sleep.

    Thanks in advance for your creative input guys :)

    Profile photo of DWolfeDWolfe
    Join Date: 2009
    Post Count: 1,253

    Hi replytokat,

    Plenty of lovely ladies on the forum are on the investment track with kids in tow (some of the guys too ;)).

    You'll need to think about risk. How much are you prepared to play with, and what happens if that goes pear shaped? Are you happy with just cash flow positive properties or do you see yourself carving out a new niche and career for yourself over the next few years while you are home with the kids? What skills do you have so that you can manage the properties, investments, people to make it work, do you need to learn some new ones?

    It's hard for anyone to suggest exactly what you should do, it'll take you a little time to figure it out yourself. You at least have a goal, now you can work backwards from there. eg. completion of Goal, step, step, step, jump in the deep end, overcome fear, feel confidence, strategy, explore all options (cash flow positive, renos, development), no idea start. I'm not sure that makes sense…. ;)

    Ask yourself questions, hard questions. Ask hubby questions, what if he doesn't agree?

    It can be done, sometimes it'll get a little messy, or hard, but stick at it.

    Let us know how you get on, you've made a good start by becoming part of the community.



    DWolfe |
    Email Me

    Profile photo of TheFinanceShopTheFinanceShop
    Join Date: 2012
    Post Count: 1,271

    Best to map out a few scenarios – you have strong cashflow and a decent deposit base. You need to determine whether you go for more of a cashflow play or CG/equity play. Depending on the purchase price – you may consider a high LVR lend or less (80%). Lots of things to consider and think about. Start with a few scenarios and don't forget to do the numbers.

    TheFinanceShop | Elite Property Finance
    Email Me | Phone Me

    Residential and Commercial Brokerage

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

    Wow, thasi a good position. make sure you get some legal advice on tax and asset protection strategies too

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of cashflow_investorcashflow_investor
    Join Date: 2013
    Post Count: 3

    Thanks for your comments so far. I now get a real sense of community! hahaha

    I just want to get an idea how you guys would have done if you were in my position. I do realise that it is a pretty neat situation to be in and that could sometime stop you from doing anything…I remember Steve Mcknight said once that the biggest enemy of a great life is a good life and I think it's so true in our case.

    I have been reading Steve's book & Rick Otton's book because their creative investing strategies and advocate for positive cashflow make sense to me. I do realise that it is a more agressive/active style of investing which will require for time & commitment than buy & hold strategy. However I am time poor at the moment as my baby girl is my top priority, so I am just not sure if I can apply those strategies (wrap & lease option) effectively and of course the steep learning I will have to go through to understand the how to etc.

    Leaving money in the bank now at 4.35% give me $18,705 per year basically risk free which is what my part time 2 days per week would be if I go back to work. So I basically need to at least double that return to meet my 6-12 months goal which is realistic I believe with wrap/lease option. Any thoughts?

    Profile photo of Don NicolussiDon Nicolussi
    Join Date: 2005
    Post Count: 1,086

    replytokat (nice name by the way), 

    Have you considered commercial property? If you could achieve a 10% net yield on your cash with capital growth potential would that do the trick?  Could leapfrog into others and base the future borrowings on your properties income rather than your income.

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of minds-eyeminds-eye
    Join Date: 2013
    Post Count: 45

    I am new to this, but if I had that situation, I would try looking at developing triplex and renting them out. Here are approximate numbers if you built in an area near me:

    land 900sqm – $500K

    building costs $600K

    Deposit: $220K

    Rental yield for each: $450p/w

    Total yearly rental income for 3: $67,500

    Holding cost: $44,000p/a

    Net cash flow after completion: $23,500p/a

    Total value of each property after completion $450K

    I would also diversity.

    – high yielding commercial property 8%+ returns

    – try my hand at a renovating an older house in a nice area and then renting it out

    Profile photo of GrantMckGrantMck
    Join Date: 2013
    Post Count: 36


    I think you will get a number of options to consider around your current Financial Position, I would suggest that you look for a neutral company that is not selling Investment Property, get some education across all aspects of property and I would also suggest Diversification. Property is one thing, there are also a number of other options as well that just may complement your current position as well as your future strategy. If you were a client that I was talking to I would be strongly suggesting a Financial Planning consideration to your strategy, by the way I am not a Financial Planner!

    In saying this, my portfolio is and has been diverse, with this income and your potential lending opportunity, you could look at various strategies from Negative Gearing turning to Positive, or look at areas where there is a little more risk such as Mining where you can get up to 10%+ on Residential.

    I am not endorsing this strategy but I have 2 properties with in my personal strategy where we have had to take a fall back position on rent from $3,000 pw to $2,100 pw due to the downturn in Mining, subject to your gearing and borrowing you may look at something like this as being viable strategy to get a return that you are after, but as I did say I do not endorse this strategy as there is Risk and this should be calculated.

    Bottom line is do the Research, understand the Real Potential, work through the Cash Flow and Tax Implications especially around Ownership Structures, and Diversification and Risk Analysis, and Estate Planning.

    Cheers Grant

    Profile photo of wilko1wilko1
    Join Date: 2010
    Post Count: 510


    wish i started with that much potential.

    Most important think for you to do is learn knowledge about everything to do with property.

    If you gave that start to some of the members on this website some would make a 5% return some would find 10% returns and some could double or triple that equity in a year whilst adding cash flow as well and keeping the assets. Different levels of knowledge.

    If i was you i would be looking to do a Joint Venture with a experienced builder or developer perhaps even hiring a company to walk you through the process. Learn the ropes with someone that knows them, they could save you many mistakes.

    By the way whilst  you desire passive cash flow. Some developments I've found only need 1-2 hours per week in management and can give returns higher then just a passive return. 1-2 hours is passive in my mind.

    Profile photo of cashflow_investorcashflow_investor
    Join Date: 2013
    Post Count: 3

    Once again THANK YOU so much for taking the time to comments, much appreciated.

    I certainly will take all on board and work out a few scenarios to see what works best for our situation. I also like the idea of doing JV so I can learn from experience investor & leverage of their knowledge & time which I lack off at the moment. 

    Nevertheless, I will continue to get more education & do more reading while learning through JV project. Any suggestions on books, website & home study course are most welcomed.

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