Best way to turn 400k into maximum possible return in 5 years?

Hello, I have 400k now. I live in Brisbane but I am happy to rent whilst my own property makes money elsewhere if necessary.
I need help as I cannot decide what course of action is best for me. I do not have kids. I can live anywhere. I am willing and able to work on a property to develop it. I currently earn a decent wage.
Should I buy a mortgage free property in somewhere like Coomera on the Gold Coast and live in it and just save? Should I buy a doer upper in an area a bit closer to Brisbane (this would require a mortgage), do it up and sell it when finished..... then repeat this process?
Should I buy 2 x 400K properties in area like Coomera and rent out one covering the 200k mortgage and have a 200k mortgage on the other?
Basically I have no ties and enjoy moving so what is the best way to turn my money into more money in the shortest period of time?
Any other suggestions would be much appreciated.

 

Hello.
If you have 400k, you could do quite a bit with that. The thing to consider for property investing is leverage, and at the moment you aren't really looking to do it. But if you have a good income, you use leverage.... Has many tax benefits too. I'd look at spitting it up in a number of deposits and with it buy a house in Hobart, a house in Geelong and a house or 2 in Gold Coast or Brisbane. The Gold Coast/Brisbane ones you can do up yourself. Then if they all go up something like 5-10% in a year, you've made significantly more than if you had only 1 property.

 

Imo this will differ for each individual according to risk profile, serviceability and skills. Generally speaking i believe the quickest way to (potentially) getting the best return on your 400k would be to leverage it in growing areas with a few IPs ( serviceability permitting) or purchasing add value deals and seek to create chunks of equity this way. Both are moderate to higher risk profile strategies.

From a ' potential best return' perspective, worst thing you could do is putting all of it in 1 mortgage.

Me 2 cents.

 

What hasn't been asked:

• How comfortable are you with risk?
• How much income so you have to service loans?
• How comfortable are you with $1m of loans? (provided you can service the debt)
• Are you going to be dead/retired/working/having kids/major life stage change etc?
• Are you comfortable investing interstate?
• How are you going to buy? Direct or buyer's agent?
• Established or OTP?

 

Just checking at to stage of life and intent.

 

Don't buy in Coomera now if you want maximum growth in 4 yrs. Too much supply.

 

Red

(Edit: Black)

 

Thanks for all the replies, a bit more info on me.

I am happy with low to medium risk.... not high.
Income is 170k gross
1 million in loans is a scary thought to be honest..... but do others do this?
Hopefully not going to be dead anytime soon..... its up to Trump! No other big life changes.
Interstate buying is fine with me
No preference with established or OTP

I am quite green when it comes to property investment.

I have owned four homes in my lifetime, all primary residences (i am 40 years old). Made zero profit on 3, made over 100k on fourth.

Thanks

 

If 1mil in debt frightens you then its quite unlikely you will be able to build much wealth with real estate using buy and hold imo unless you perfectly time your purchasing and selling at the top of the market ( unlikely to be able to do this time after time). Most real estate investors I know have many million in loans. Of course that doesn't mean you should do the same thing, you need to invest according to your risk profile. Though with real estate if your not using leverage then its going to be very difficult to build much wealth imho.

 

Properties is not an easy way to get rich unless you bought before the blockbuster boom as you discovered with previous properties.

Any other time Properties required work, time and force saving to make it works
it all up to your risk profile how much debt you want to take up and how you structure your finance
there is no set rule, everyone has their ideas and risk profile and strategy

it is better you do your research and come up with your own ideas/plan/risk profile and implement the plan

 

Are the boom times well and truly over?

 

Different markets are at different parts of cycles, Sydney for example, it just went through a massive catch up and growth phase. Its at the peak now. But you can be certain there will come a time again when it 'booms' and markets soar again. As boring and monotonous as it sounds, if you want to have a decent chance to build some wealth moving forward from 40, I would be educating yourself on real estate investment as much as possible. The forum is a fantastic place to learn but so are a few solid books which will give you the basics and fundamentals.

me two cents.

 

Quickest way also equals the more riskier way.

Want to double your money overnight then take all the money to the casino and put it all on red or black - pretty much a 50/50 chance of doubling your money overnight - if you want greater rewards and okay with the risk put it all on one number.

This is risk/reward - the more you risk the greater the potential reward (well should be).

If you were able to get a property to grow at 7% p.a. over 10 years you would of doubled your money (excluding yield) but at the same time it took you 10 years compared to 1 spin of a wheel (2 mins?).

If you are scared of 1M in debt then you might want to not be as aggressive in leveraging yourself out. We are just over 30 and already have more than 1M in debt but we sleep very well at night, although I think I sleep better than my wife.

A property should return a total return of 10%+ and typically the less a property yields the less the market thinks the property will grow. After all why would someone want to take a yield of 3% and think the growth is 5% (8% total return) when they could buy something that yields 5% and get 5% growth (10% return). That being said people buying in Sydney at 1% yields to me is silly (my own opinion) as they are banking on the property doing 9% growth just to achieve 10%. I like aiming around the 3-4.5% yield as it gives me a balance of yield and growth but I wouldn't consider a 1% yield except in extreme circumstances - unlikely you will be look at these (as in large development blocks).

 

Hi Matt, I also have around $1 mil in mortgages on property investments & I sleep fine at night. This amount & higher is very typical. As long as you can co

Hi Matt, I also have around $1 mil in mortgages on property investments & I sleep fine at night. This amount & higher is very typical. As long as you can comfortably make the loan payments with current income, its fine. Selecting a decent property, however requires time & research. Need a strong understanding of the property market & the suburb u buy into. The last house I sold made a $400k capital gain in 5 years, it was located about 10 km from a capital city CBD (not Melbourne or Sydney btw). Make money in real estate does work if u study & use due diligence.

 

I think education would allow you to become more comfortable with debt so take your time into reading into some of the topics on Sydney, QLD and Melbourne. At your wage and age I'll look into buying as many properties as my borrowing capacity can afford (at your wage I would look at ~$2m debt) and look for good deals. The next important decision you make is choose your wife wisely so you can continue to grow your property portfolio So many people think love conquers all but why not have both? i.e. if you marry a doctor you can have LMI waived on LVR > 80%.

 

If the OP thinks 1M in debt is scary how would approx. 2M make him feel?

 

I understand that and indirectly acknowledging that in my first sentence that I hope that with more experience and education that he becomes more comfortable with debt - I mean if you look at a lot of businesses, a lot them has debt (unless you're Google but I think having no debt is inefficient) so it depends on your min. ROI for that debt. I had no idea how to even buy a house just four or five years ago and felt nervous and scared owing $4k on my credit card!