100k - what would you buy?

Totally new to this investment strategy.
PPOR has some 70k in equity right now and we have 50k savings - 2 incomes - both 130k pa gross

What's the best way to set foot in this game ?
option 1: 400k IP with no LMI
option 2: 700k IP with LMI
option 3: 2 350k IPs with LMI
is there an option 4 ?

Goal - create a portfolio and passive income after 10 yrs and retire early.

 

Is 10 years achievable?

(3) The issue with 2 properties is twice the cost. 2 insurance, rates, bank fees etc. On cheaper property that often rent for less it is a bigger percentage of the income

 

Pick an option after you do the pros and cons of each, however, 1-2 properties (mid-range) wouldn't generate passive income to retire comfortably.

 

Option 4

Purchase price isn't the only consideration.

 

10 years is very ambitious, but anything is possible if someone is focused enough and buys the 'right' properties, and government don't meddle. My preference is multiple cheaper properties over fewer expensive properties, but then I have a lot in lower socio areas, where the yield is often higher than other areas. I like the flexibility of selling over multiple financial years to keep CGT manageable.

 

Yes I think 10 yrs might be very ambitious

 

So many variables, but I think Option 2: buy a better property rather than two cheapies, and it should deliver better returns over long periods of time.

Also, it's okay to start with LMI: I did, lots of people did. It's a cost of doing business.

 

Your income is about 15k after tax a month.
Your stated net assets is 120k.
Assuming you need about the same income for retirement, you need at least 3.5m net assets on top of ppor.
10 years?

 

On top of that the question about LMI indicates a extensive loan which also must be repaid in that timeframe to achieve +ve income

 

Ok I love this backward approach , still not sure how did you get that number, any handy links to calculators?

 

We paid LMI in 2017 on PPOR , so I feel okay with it on the whole, but with IP, is it a wise choice?

 

More "necessary evil" than "wise choice". I don't regret my choice, because I could get into the market and build from there.

 

I disagree with that one. I've got many loans and have retired. I do, however, have a decent sum in offsets, but by no means are all of them covered with offsets.

 

Roughly 30% tax, so 130k x 0.7 x 2 / 12 months is about 15k a month.
Assume 5% income on assets. To make about 180k income (and it's probably more, since this doesnt include tax) is about 3.5m.
But PPOR would be separate.

You have 70k equity in the PPOR and 50k savings now.

No idea how you can achieve this.

 

It's neither a necessary evil or a wise choice. It all depends on how quick you wish to do this, what your risk profile is and how quickly the properties in your portfolio increase in value to enable to do a top up.

When we started we were broke. Never heard of LMI and wouldn't have been approved for the first IP loan if we needed it anyway. Used equity from the PPOR for the first. By the time we were ready for the next, there was heaps of equity in the first IP to buy the next ones. We never went down the LMI path. At one stage we could have to build quicker, but decided not to. As we were holding in more than one state, growth was kind of steady & it really didn't hinder us at all.

 

In the current market, that's very generous.

 

true. Wouldnt be term deposits. Index funds and reits probably. So have to consider a buffer and allow for periodic corrections.

 

Wouldn't even be rental yields either in many markets.

 

Hi

I’m curious to know how you’re going in your investment property accumulation?

I’ve got 205k of usable equity in my ppor to use as deposits to start my ip accumulation

The modelling my broker has given me based on our borrowing capacity is to go for 400k ish loans so I can get 2 ip’s in the next 12 months hopefully and then revalued in 6-12 months after purchase for which we need about another 100k for the 3rd property.

which route did you end up going with your purchases?

I’d also love to achieve around $1500 - $2000 net a week from a portfolio to slow up work earlier

I’ve just turned 40 and would love to at least have our ppor paid out and at that $ goal or past half way if possible in 10 years ish with future purchases but realise too that it might be a bit ambitious

I am willing to be a bit more aggressive whatever that may look for both my wife and myself to achieve it