All Topics / Help Needed! / Beginning with cash

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  • Profile photo of JoyJoy
    Join Date: 2014
    Post Count: 2

    A family member has own home no mortgage and around 350k and wants to start in the property market. He is late middle aged, does not want to loan anything from the bank, looking at SMSF or trust, lives in Victoria and is concerned that any investment property would need to be close to where he lived so he could keep an eye on it. Advise on any of the above concerns would be appreciated thank you.

    Profile photo of Jamie MooreJamie Moore
    Join Date: 2010
    Post Count: 5,069


    Welcome aboard :-)

    I’d probably tell them to give property investing a miss. Not wanting to leverage bank funds and unwilling to purchase outside of own suburb really restricts the potential benefits of investing in property so best to look at other avenues of investment.



    Jamie Moore | Pass Go Home Loans Pty Ltd
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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

    OK .. sounds like a hardworker with a self-made ultraconservative scenario.

    Lets delve into why anyone wouldnt approach leverage.

    Lending from the banks is only either warranted or necessary when you cant make the difference by yourself or you want to gear to a level which would provide you with a larger holding or rental income from more property.

    The rank conservative will NEVER borrow and would rather have his hard-earned dollar paid for by his own hard work.

    Thats OK. That just takes time. And depending on how hard you work depends on how much time it will take.

    And it can take a long time.

    As covered by several other threads .. a trust is a specific category of investment and should be treated as such.

    To have the level of property management concern that needs you to be looking over your shoulder on the property on a regular basis suggests you dont have a great deal of trust in your property manager. Treat your third-party access to your property with the same degree of caution and trust as you would any family member. If you cant trust them with looking after your property .. dont employ them to look after it!

    That would be the only reason to have a property so close you need to keep an eye on it. Simple lack of trust.

    The correct approach would be to have a level of borrowing that remains comfortable vs asset value .. a property manager you can trust implicitly and keep the home free of liens because .. heck .. you like it that way.

    Property investment is still all about living within your comfort levels for investment. If you feel that you dont want to borrow .. DONT. But then you may find that you will just have to earn better to get any real long term value out of it.

    Also you might want to go back and look at the possible tax deductible advantages with owning a property at a reasonable amount of leverage. There are reasons why people do this .. and they do make a hell of a difference in their long term wealth plan.

    Explore your options and your timeframe. A person at 45 has a totally different set of concerns to a person at 24 investing. Work to learn a market you are prepared to invest in. Learn your costs structure for entry .. and your costs for sale.

    It really is like any other market .. you choose your level of risk and outlay and profit and outcome.

    But work with something you will feel satisfied with .. regardless of the structure.

    Profile photo of JoyJoy
    Join Date: 2014
    Post Count: 2

    Much thanks for the welcome :) and advice guys .. sounds like more researching and rethinking required. I appreciate your time put in to answer.

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