All Topics / Help Needed! / Debt free. Now what?

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  • Profile photo of SitbonSitbon
    Participant
    @sitbon
    Join Date: 2017
    Post Count: 3

    Hi all. This is my first post. Apologies in advance for the length.

    I’m in my late 40s and bought my house in inner city Melbourne in 2000. It is my principal place of residence and I have no other investment properties. Suffice to say my property has tripled in price during that time which I guesstimate is around $1m. So by accident, I’ve done very very well like many Melbournians.

    For some time I haven’t had a mortgage and currently have no debt…well..other than a small amount on my credit card I pay off monthly. So I’m wondering what to do next. How do I make my circumstance and $ work better for me?

    All my equity is tied up in my home which I don’t intent to sell for at least another 5 years. I like where I live, but there is no way I could afford to buy here now. Whilst I’d love to upscale to a bigger property I think it would be silly to sell and use that money to buy something else a little bigger. Whilst I have some savings, the amount is certainly not sizeable enough to enable me to live off the interest. I currently work 9-5 in a safe government job which I don’t particularly enjoy and am thinking of a career change.

    So I’ve been educating myself about property investing and thinking of using the equity in my home to invest. Still I’m having trouble finding real non biased information about how this works and especially the risks involved. I do not want to put myself in any position where I could lose my home.

    What do I need to know before going down this path? What are the risks?

    Regarding purchasing a property I’ve spoken to a couple of property ‘advisors’ who have advised different strategies. Generally they support investing for capital growth in blue chip areas only. However, whilst I probably could spend more, my preference would be to spend only around $300k for cashflow. 30% of my egg basket. Why would I want to go into more debt by going higher?

    Advice? Options? Simply save my cash and enjoy my life or can I make my home equity work better? My goal is to have enough $ to travel with my partner and retire at 60 with enough cashflow, around $60k per year. Still I’m along way from this and have only $130k in Superannuation. I do have a financial adviser who favours shares but not property. I think he’s a bit biased.

    Where to from here?

    If this isn’t the right area for this post please let me know.

    No sale pitches please.

    Thanks

    Sitbon

    • This topic was modified 5 years, 3 months ago by Profile photo of Sitbon Sitbon.
    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 284

    Sitbon,

    how are you mate,

    so you have a stack of different options, this is the perfect place to post and the community on here has a wealth of knowledge.
    Firstly I would be happy to chat and give a deeper sense of my advice (no sales pitches or anything in particular, just think I could explain a lot you may not have heard that is as clear and unbias as I am and if I had something you wanted then thats fine to). Jaxon-0431376130

    So to clarify

    PPOR (principle place of Residence is worth 1,000,000)
    no debt (yes credit card)
    and your goal is 60k a year income? so I really believe this is possible to you in lets say 5 years depending on a various amount of things.

    now firstly with selling there are costs I personally wouldnt suggest selling your property instead I think using the equity to get a nice property spread with a safe and calucated spread is ideal.

    for e.g. (over the phone we could go over a stack of other options)

    1 mil ownership

    purchasing 2 houses around Australia (wherever you find best returns that are 250-400k)
    so your changing to lets say 550k-750k debt over 1 mil ownership
    now lets aim for two positive geared properties that are returnign 30-150 each after expenses per week.
    Thats very possible.
    so lets say after all expenses (including the debt we created on your property
    PPOR- ownership; 880,000 Debt; 120,000 Total;1,000,000
    IP 1- ownership; 60,000 Debt; 240,000 Total;300,000
    IP 2- ownership; 60,000 Debt; 240,000 Total;300,000

    lets say over the two IP (investment properties) your getting 200 (could vary a lot) a week thats $10,400 in income the first year, now over the next 4 years we are slowly structuring everything to get you to your goal which is very very possible, in fact I would not be suprised if in 5 years I couldnt get you to closer to 80k a year after expenses.

    so the reason you will/can make money is very simple, your income of your properties is larger than the expenses and thats the profit.

    But I hope that shows you a small glimpse of what is possible, happy to go further and answer anything on here or via phone or private message (I live gold coast)

    All the best in your endevours mate.

    Kind regards

    Jaxon Avery

    • This reply was modified 5 years, 3 months ago by Profile photo of Jaxon Jaxon.

    Jaxon | Jaxon Avery – Financial Adviser
    http://www.jpafinancialservices.com.au
    Email Me | Phone Me

    JPA Financial Services Pty Ltd

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Sitbon

    Feel free to shout me an email and me happy to send you my API interview on how i build a $26M unencumbered property portfolio by the age of 40 generating over $1M / annum rent.

    Since then with a variety of other strategies it is now over $40M.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

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