All Topics / Help Needed! / What to do with $450K

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  • Profile photo of JonathanWilliamsJonathanWilliams
    Participant
    @jonathanwilliams
    Join Date: 2020
    Post Count: 0

    Hello all,

    I have recently sold my business due to health and have $450K. I am now a low income earner with one child to support. I would like to secure my family’s future by investing in property.

    My question is would it be better to buy a property outright with good cashflow and use its equity to purchase more?

    OR

    Use the money for deposits for several positive cashflow properties.

    I am also a first home buyer.

    Your comments and knowledge will be much appreciated.

    Jonathan

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

    Hi Jonathan

    One thing to bear in mind is that even being a low rate tax payer interest on your PPOR is not Tax deductible whereas if you use the money for investment the interest becomes deductible.

    If you are also a First home buyer there are a number of Grants and discounts (stamp duty) available so maybe worth considering this route first.

    Then use an investment focused mortgage broker to source funds for your investment purchases. There are a few lenders that price the loan on the security offered rather than what the funds are used so still extremely competitive.

    Cheers

     

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of lukeb8888lukeb8888
    Participant
    @lukeb8888
    Join Date: 2020
    Post Count: 0

    Hi Jonathan, a group of friends and I are working on a platform to help everyday investors find a property fund that meets their needs, an alternative to directly investing in real estate.  So instead of spending hours working across various websites we have tried to aggregate all available funds in Australia onto the one site.  It is free to use for investors.  The link for the site is: http://www.realpropertyfunds.com

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

    Of course with every investment you need to ensure the firm you are dealing with are fully licensed.

    With a retail mortgage fund like http://www.ascf.com.au you get exposure to a pooled mortgage fund which is ASIC regulated and approved and has a fully Retail AFSL, ACL and insured. Also members of AFCA.

    Many Wholesale Funds do not carry the same consumer protection so you need to compare apples with apples when investing.

    Shout out if you need any further information.

    Cheers

     

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hey mate,

    This isn’t advice in any way, but some things to think about.

    I’d start with thinking about whether you want to use the money for a home (lifestyle asset), or for return (investment asset). Seems to me that maybe you are looking for some stability given your circumstances? If so, maybe a home first?

    If you want to invest, then you need a plan for where you’ll rent to live. If you have low income, then maybe some of that capital needs to be set aside as ’emergency money’, as once it is invested it may not be easy to get in a hurry. If so, how much of the money is for ‘at risk’ assets, and how much for ‘risk-free’?

    Then you need to consider your borrowing ability. Without much income, you are probably going to struggle to borrow. That means you will need to invest using your capital, which won’t allow you to take advantage of leverage and hence you cash-on-cash return will be quite low.

    Maybe a better option is some kind of listed REIT – one that offers return, diversification and internal leverage, that matches your risk profile. Do your homework. There are a few around.

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

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