Newbie to IP

Viewing 10 posts - 1 through 10 (of 10 total)

Peter
Participant
@peter001
Join Date: 2015
Post Count: 8
January 10, 2015 - 3:57 pm
Hello all,
I am new to this forum and new to IP.
Introduce myself first:
I m 31 yo in Sydney. I am working full time with approx 70K annual income.
I am currently living in my PPOR (house) which was evaluated at 850K with 293K home loan to pay off (interest only now).
I have an IP (terrace house) which I bought mid 2014 costing 820K and renting at 650pw, and 80% loan to pay off (interest only).
My mortgage broker is helping me get 20% from PPOR towards next IP and get the rest 80% from another bank, aiming at an IP worth upto 750K.
I am not confident with the next IP and not sure where to go, therefore would like some ideas from people on this forum.
My goal is to retire early with my rental income from IPs. Not sure how many IPs will be sufficient to achieve this goal. But I do like Richard Taylor’s idea of having 40 IPs in 10 years.
Looking forward to all you suggestion.
Peter
- This topic was modified 9 years, 3 months ago by Peter.
Jaxon
Participant
@jaxona
Join Date: 2014
Post Count: 284
January 10, 2015 - 6:55 pm
Good afternoon Peter,
Your IP’s sound like they are quite expensive for the return on rent alone, have you looked into IP’s that cost e.g. 300k and return $350pw rent over your 820K that returns 650pw.
you could spread out your portfolio much wider as your proposing
Value of properties = 850k + 820k +750k of rough value = $2.45m
Loans 293k + 656k + 600k = 1.55m = 2.45m-1.55m
900k (yours) to your 1.55m of debt.
I think personally your better off looking at 2 properties that are 300-350k (most likely lower stamp duty dependent on state). or at least looking at more options than simply another basic IP purchase. possibly even non residential.
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone Me
JPA Financial Services Pty Ltd
Peter
Participant
@peter001
Join Date: 2015
Post Count: 8
January 10, 2015 - 8:23 pm
Jaxon wrote:
Good afternoon Peter,
Your IP’s sound like they are quite expensive for the return on rent alone, have you looked into IP’s that cost e.g. 300k and return $350pw rent over your 820K that returns 650pw.
you could spread out your portfolio much wider as your proposing
Value of properties = 850k + 820k +750k of rough value = $2.45m
Loans 293k + 656k + 600k = 1.55m = 2.45m-1.55m
900k (yours) to your 1.55m of debt.
I think personally your better off looking at 2 properties that are 300-350k (most likely lower stamp duty dependent on state). or at least looking at more options than simply another basic IP purchase. possibly even non residential.
Thanks Jackson for your reply.
I didn’t know much about investment when I purchased the ip, it’s purely because I like the terrace house, which I know that being emotional with the ip is definitely no no.
Therefore I m thinking of starting the 2nd right. Hopefully i m not too much off the track in terms of reaching my long term investment goal.
You mentioned “900k (yours) to your 1.55m of debt”, what do you mean by this? I m not sure if I get the idea.
Yes, I have the idea of having one ip worth 700k+, but I guess I need to consider the two cheaper ip options as well.
Thanks again.
BuyersAgent
Participant
@knightm
Join Date: 2005
Post Count: 338
January 10, 2015 - 11:24 pm
Peter wrote:
Hello all,
I am new to this forum and new to IP.
Introduce myself first:
I m 31 yo in Sydney. I am working full time with approx 70K annual income.
I am currently living in my PPOR (house) which was evaluated at 850K with 293K home loan to pay off (interest only now).
I have an IP (terrace house) which I bought mid 2014 costing 820K and renting at 650pw, and 80% loan to pay off (interest only).
My mortgage broker is helping me get 20% from PPOR towards next IP and get the rest 80% from another bank, aiming at an IP worth upto 750K.
I am not confident with the next IP and not sure where to go, therefore would like some ideas from people on this forum.
My goal is to retire early with my rental income from IPs. Not sure how many IPs will be sufficient to achieve this goal. But I do like Richard Taylor’s idea of having 40 IPs in 10 years.
Looking forward to all you suggestion.
Peter
Welcome!
I would suggest if you main goal is rental income, that you sit down and think about building a portfolio of properties, with some good rental yields. You might want to do some value adding too (such as renovations) which will speed things up and keep the deposit money flowing. If you want to remove the emotion and buy on the numbers you should do some more research and get as much help as you can (just make sure its independent help not a sales pitch for an off the plan development!)
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone Me
South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Peter
Participant
@peter001
Join Date: 2015
Post Count: 8
January 11, 2015 - 7:53 am
Thanks Knightm for your comment.
I m still in the middle of reading all the posts in this section and everyone is saying there is a investment goal and strategies. I m still new to investment and haven’t really thought about this. My initial plan is to retire early and have extra $$ from IPs. My friend asked me if CG or cash flow is more important, I said CF as that’s what my plan is, but she said no, should be CG. I m confused now.
Who is the profession to talk about goals and strategies, how different can they (strategy vs strategy) be?
Jaxon
Participant
@jaxona
Join Date: 2014
Post Count: 284
January 11, 2015 - 6:33 pm
You mentioned “900k (yours) to your 1.55m of debt”, what do you mean by this? I m not sure if I get the idea.
What I mean by this is simply that you owe (based on if you purchased that 3rd property) Owe the bank around 1.55m but based on few variables if you sold everything would walk away with a estimated $900,000.
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone Me
JPA Financial Services Pty Ltd
PHP
Participant
@php
Join Date: 2014
Post Count: 111
January 12, 2015 - 8:14 am
Peter wrote:
Thanks Knightm for your comment.
I m still in the middle of reading all the posts in this section and everyone is saying there is a investment goal and strategies. I m still new to investment and haven’t really thought about this. My initial plan is to retire early and have extra $$ from IPs. My friend asked me if CG or cash flow is more important, I said CF as that’s what my plan is, but she said no, should be CG. I m confused now.
Who is the profession to talk about goals and strategies, how different can they (strategy vs strategy) be?
Looking for properties with strong CG will help accelerate your accumulation phase. Mixing it up with strong CF+ properties will help in your serviceability and assist in your savings. You really need to read a lot more and focus on your research at the moment. Also build a team around you that will help you achieve your goal. (Broker, Tax Accountant, BA etc)
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone Me
Give us a call or send us an email for a free residex report.
Peter
Participant
@peter001
Join Date: 2015
Post Count: 8
January 12, 2015 - 8:41 am
Thanks PHP,
I start looking at some regional property now. Looking back at the sale price, there has not had much growth in the property price but the rental return looks ok.
Ie in Nowra, a house asks 245k but with rental as 290pw.
How do I calulate or what other factors do I need to know in order to know if this is a good investment for good cash flow?
PHP
Participant
@php
Join Date: 2014
Post Count: 111
January 12, 2015 - 8:58 am
There’s a few things to consider:
The rates (water, council, body corp fees (if strata prop))
Property Management Fees
Insurance
Maintenance Costs
And always add a cash buffer to prepare for unexpected expenses (1 or 2 weeks rent)
Etc.
Make sure you add all expected expenses to your calculation and allow for the unexpected costs as well.
PS.
If you are looking at Nowra, get in contact with knightm.
I have no affiliations with him and I have no dealings with him whatsoever but found him to be very knowledgeable in that area.
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone Me
Give us a call or send us an email for a free residex report.
Peter
Participant
@peter001
Join Date: 2015
Post Count: 8
January 14, 2015 - 7:54 am
Thanks PHP and all other comments
Learnt a lot valuable info from the post from this forum.
I have looking at a few suburbs, ie Wollongong and even South.
However still unclear about what strategy I should take:
I have 120k deposit + 120k financed from my current PPOR.
My mortgage broker said I could potentially loan approx 700k if I am not touching my own deposit.
I m not looking at huge renovation in investment properties, or at least in the recent 2-3years due to my current job.
My goal is retire with some good cash flow, but also would like to buy as many properties in the next 10 years.
What my strategies should be?
For next IP, Shall I buy a cash flow+ IP in a regional town or CG property in a bigger city, ie Gong.
Because I would like to keep buying…
I know the ideal is to find a property with both benefits, but guess its a rear gem.
Would any one please advise my strategy? Thanks heaps.