Hi all, I am looking for some advice on how to commence my IP portfolio Here are my current details: PPOR: $1.4m current value ($0.9m outstanding P&I) Cash in offset: $300k My partner and I are looking to build an IP portfolio to eventually provide a passive income. We are in our early 30s and we could invest upto $800k at this stage Would appreciate any advice on how to proceed - 1. Do we continue to build our cash in the PPOR offset account OR 2. Look outside Syd for something offering decent yield and where OR 3. Invest for CG in current Syd market and where??
Unfortunately, there's going to be about 153 ways, and they will depend a lot on a whole lot of factors we don't know about you. Personally, I wouldn't be aiming for a residential IP portfolio to provide passive income ~ but that's simply my scope of knowledge in those areas. The Y-man
No one can provide advice, only people qualified can do that. In addition as @The Y-man pointed out we don't know your whole financial situation, risks, etc... We just share our opinions and what works or doesn't work for us. I suggest you read up a bit more on RE investing to understand a bit more OR read some investor success stories how they did it. See then what resonates with both of you...? In addition once you wish to commence the order of business would be: - Establish your team members (broker/financier, accountant knowledgeable in RE, conveyancor/solicitor/lawyer, property manager in the area, etc...) - Establish what your true borrowing capacity would be? $800K may be incorrect as I assume you based this on only one IP? - Establish a clear investment strategy, where, what and when will you buy. What do you wish to achieve, what CG? Will you renovate, etc... many ways to invest into property! If you build up cash in PPOR this is nondeductible money, meaning saved money after tax, while investing into IP allows the interest to be claimed. What knowledge you have to invest outside Sydney, what strategy in which state, will you be using a BA? Where would you invest in SYD? Where you bought you PPOR, is it a good suburb, so you may wish to buy close by (not that this is really a good strategy there may be other more appropriate suburbs with higher CG?). I suggest reading this book, it may help to understand the concept, comparing to owning up two properties one PPOR and one IP, instead of just paying off PPOR first.
The advice we have received thus far is to : Firstly, invest in a property that is CF neutral, if not slightly positive. So Ive started looking interstate as Im personally not seeing great options in Syd right now Then return to Syd market for 2nd purchase (house) maybe out in the western suburbs that has growth potential etc If anyone has any similar experiences when they started off, would like to hear how you went and lessons learnt?
My personal opinion is that it's a great time to invest. You are in a great position to accumulate a large portfolio if your servicebility allows. There are many markets in Australia. You just need to choose the right market. I think Sydney properties are not going to give you good capital growth or cashflow in the next 4-5 years. I would suggest you to look at other cities which offer much better capital gain potential and yields. Most financial planners' advice is around neutral funds, shares and insurance because they can get good commissions if you do purchase the recommended products. If you decide to go down the path of using a financial planner, ask the planner whether he/she own some properties before deciding whether use him/her.
Further to that, don't use a financial planner who doesn't advise direct property. It's a dead giveaway that they are only chasing commissions. Willy
As others have said we can offer perspectives but not specific advice. Lots to like in the current market about +cf investments as long as you aren't compromising on location to get them. Heaps of options outside of Sydney but in NSW if you wish. Have done 3 dual income properties in recent months that are all above 5% and all on own block of land in good coastal location. You can of course develop or build GF's and create your own cash flow. This gives you access to a wide range of housing stock in many locations if you know what to look for to ensure compliance and a successful GF tenancy situation. Interstate of course - there are good options but make sure the underlying fundamentals (employment, supply/demand ratio, demographics etc) are in your favour. Remember there is no point chasing a cheap interstate property if the sole reason is to buy somewhere other than Sydney. You should look at profit and potential first.
But your point is still valid. Not all are able to advise on property because of licence restrictions. Best to avoid those.