Hi there,
I hope someone can give me some advice here:
I own with my wife the apartment we live in. We both work full time (around 100k each) and don’t have kids.
Our loan repayment are around 4k per month. Our flat recently got valued at 750k and we have 600k left on the loan that we just refinanced.
We have 10k cash but other than that no assets and no other loans.
We want to get into investment and we heard about the positive gearing strategy and we feel aligned with it.
What would be the best move for us:
Option 1: sell the appartement to an investor under condition to lease it for 3 years as we dont want to move. And free up 150k to invest.Option 2: rent out our appartement and find another place to rent.
Option 3: wait.
Hi there,
You’re in a solid starting position but before jumping to a strategy, the key is to define your investment objective. What outcome are you aiming for: more cash flow, early retirement, long-term wealth building?
As I teach, “the clarity of your outcome determines the clarity of your input.” Right now, you’re mixing lifestyle and investment goals, which can muddy your thinking. Your apartment is a lifestyle asset—you’re living in it—but you’re trying to treat it like an investment. The key is to separate emotion from economics.
Option 1—selling and leasing back—may give you capital and borrowing power, but you may find the capital you receive is compromised by the lease terms you require. That is, perhaps an owner-occupier would pay more than an investor?
Option 2—renting it out and living elsewhere—I worry about the impact on your borrowing ability, and if the cashflow is negative, the impact on your ability to scale. The goal is to reduce risk and increase serviceability which this seems to contradict.
Option 3—waiting—may feel safer, but opportunity cost can be real. Procrastination is not a great destination.
Your next step? Do the numbers. Start with your end goal, work backwards, and look for investments that are profitable from day one. Focus on income-producing assets—not just capital growth. Don’t invest to impress—invest to succeed.
If you can make it to Melbourne on the 16th August, I will be running a 1-day seminar which would be beneficial for you to attend. Details will be released soon.
Bye,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Fooko,
Great words from Steve – and I wanted to throw out a couple of other thoughts.
First, you mentioned you had recently refinanced – was that a Fixed Interest loan at all? ‘cos if it was, BEWARE. Find out just how much it would cost to break that agreement and close the loan. Fixed loans can have VERY nasty consequences.
Second, do go to the seminar in August – you will learn so much, and the experience may well provide answers to questions you didn’t know you had !!
Third, I tended to stay clear of apartments – why? Lack of control, less land value, higher costs (Body Corp), less chance to add value (your apartment is only worth what other apartments in the same complex are worth). Limited appeal – OK for a couple with one or two kids, but families don’t typically purchase apartments – i.e. over half your buyer base gone right there.
Anyway, that will add a little more, but Steve’s words are most important. Which road are you planning to go down?
Benny
Hi Steve and Benny,
Thanks for your response. I’ve read your first book, Steve, and I’m planning to partner with a friend to join forces and invest together. We are planning to create a partnership first to protect each other legally.
Our main focus is to replace our incomes and be financially free as quickly as possible.
It’s just about this first step, as I know that having an apartment isn’t the best option, as we don’t have land, and that renting can give us the first kick to get into the property market!
I will certainly attend your seminar in August, looking forward to it!
Very good point for the Fixed interest loan, I will make sure we have flexibility in this situation! Thank you!
Fooko
Hi Fooko,
A further point – re ” the experience may well provide answers to questions you didn’t know you had !!”
Another tool that will likely provide you with the same, is to read that “Big Picture” topic that I messaged you earlier. There is a wealth of “nuts and bolts” info hidden in there. It can help to prepare you for the seminar by filling a lot of the early info that is so necessary.
In case you hadn’t kept the message, here’s the link:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
Benny
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