Hi Everyone,
What would you guys do if you were in my situation – Opinion / advise please on how to accelerate our property investing journey.
Couple with 200K Annual income no plan for kids, early 40’s.
PPOR in Melbourne Value 1M – Loan 265K, brand new house in greenfield estates, no long term growth as small land size
Inv. property – 700K – Loan 485k negatively geared, new house again in greenfield estates with no scope for improvements as small land size
Step1 – Buy and Hold Strategy – Should we start buying more properties in individual trusts which are positively geared (hard to find these days I guess) and sell the existing properties ?
Step 2 – Buy under value properties in other states, renovate them by doing a renovation course ?
Step 3 – Slowly move my career to full time renovating as I will be finishing my IT contract job in 2 years, after which I wanted to switch full time into property as I am so passionate. Doing property renovations as a business – is that successful ?
Step 4 – Then slowly start doing small developments which will accelerate our wealth to achieve financial freedom.
So finally buying properties for now and do renovations/developments in the future to accelerate growth and speed up the process to pay off the properties to achieve passive income.
Kindly let me know if this is achievable ? or should I be looking into small commercial for passive income as I will not be earning after 2 years ? So many courses out there, different strategies people doing in so many different ways, so confusing which way to go.
Sorry about the long post.
Thankyou so much in advance !
Jenny
Hi Jenny,
Wow – quite a post there !! Some good news in it, but also some areas that would depend on other answers to questions asked of you. I’ll have a crack at sharing my thoughts – some may help you to focus more on “where to next” that suits you.
I’ll attack each of the 4 points you mentioned – with comments, and sometimes questions:-
First though, with $200k income, there is obviously a good amount of income left to be able to service approx $750k in loans. How much more is left though to buy more if you WEREN’T to sell one or both properties and reduce debt? One to think on. :)
With both properties being in Greenfield estates, it is often the case that capital gain stays minimal for some years. Is that so in your cases? Are they growing in value or not?
If NOT selling either, at 80% you could borrow $535k against PPOR – could that be deposit/costs for two more? Depends eh? Or maybe allow a reno or two. By selling, you release far more cash, but have a few costs to cover when selling (CGT on the IP – no CGT on the PPOR though). Then, of course, would you rent and invest in several IP’s or a commercial property?
OK, there were a few random thoughts – now for your 4 points :-
1. Trusts have costs, but the right ones also provide protection and some useful options re taxation too. My thoughts would be to only put in Trusts those IPs you wish to keep. If doing a reno/flip, or buy/reno/sell, I wouldn’t.
2. Wouldn’t this be on hold for another 2 years? Or do you have spare time to travel and reno, even while in current contract work?
3. Certainly you could ramp this up while still working – does it work? Hmm – not one I can answer – I’ve done one or two renos but never made a business of it, so can’t add much.
4. I have heard of several developers doing well in the past. But more recently, with costs ballooning, I’m not so sure. Hundreds of companies went bust during and after Covid over higher costs. How is it now? PASS !!
Re commercial, Steve often says “Make your money in Resi, then switch to Commercial for Income.” What could you get for $1.5m ? Again, PASS. Others will know.
Now that I’ve got up to dance, I am hopeful others might join me !! :p
Benny
Note – I am NOT a professional adviser – just a bloke with an opinion, so none of the above is advice of any sort.
Jenny,
You have two approaches: buy assets and get outcomes; or set outcomes and buy assets.
The former means you get whatever the asset provides. The latter is more strategic and ensures you buy assets that will deliver an outcome that is congruent with your goals. I have always preferred the latter, although when I started investing, I did the former.
The questions to answer are this: what’s the plan, where are we now, what’s the gap, how do we bridge it.
All the best,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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