Forums / Property Investing / Help Needed! / Thoughts on my investing strategy?

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  • Profile photo of ErikErik
    Participant
    @erikhobson
    Join Date: 2019
    Post Count: 0

    Hi all.

    I am new to the property game but I wanted to share my long term (10+ years) investing strategy and get some feedback and tips.

    * Purchase investment grade commercial properties that will replace my annual after tax income after all expenses (roughly 100k a year)
    – Minimum yield 8%
    – Minimum 5 year lease
    – Hubs that have very little or no vacancies
    – Businesses that invested 50-100k minimum in fit out

    * Use cash flow + my earned income to purchase investment grade residential properties to hold for a minimum of 5-10 years.
    – Areas with long term capital growth
    – Below market value
    – Use interest only loans to reduce holding costs (possibly neutral or positive cash flowed)
    – Room to add value through cosmetic renovations

    *Sell residential properties for a profit, pay down commercial property debt, purchase more commercial property (debt free if possible)

    *Use my now larger cash flow to develop property and re invest profits into buying more commercial property (debt free) building my asset base and increasing cash flow with every completed project.

    Thanks for reading, I look forward to hearing your feedback from you all :D

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Where will the deposits come from?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ErikErik
    Participant
    @erikhobson
    Join Date: 2019
    Post Count: 0

    Thanks for the reply Terry.

    For the initial commercial property purchases I have quite a large amount of savings for a deposit and a family member who owns there own home and is happy to be a guarantor for a loan.

    The initial residential properties will be purchased with 10-15% deposits using the cash flow from the commercial properties along with my earned income.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Will be hard to get a loan with a family member providing a security guarantee if they are not benefiting from the property. ideally you would get the family member to borrow and lend to the entity purchasing.

    Commercial generally needs at least 30% deposit plus closing costs so it can eat up a lot of your equity/cash. Also can be harder to borrow against any increase in value compared to residential.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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