First IP in Sydney or Brisbane!

Discussion in 'Where to Buy' started by Amy77, 23rd Jan, 2019.

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  1. Amy77

    Amy77 Member

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    Hi All! I have been reading on this group for ages and thought it was about time I joined and hopefully some of you intelligent members can clear up some confusion for me. I noticed a lot of people don't put many details and the responses are generally along the lines of 'it will depend on your particular circumstances' so I wanted to put my personal circumstances in to get a better opinion. I do have an accountant but I have found that unless I have specific questions it just costs me money and causes more confusion. So I don't know where else to ask.

    About me: Single mother, one child (son) who is 13. Son attends nearby school and fees are around 11k per year
    Debts: almost none, no car debt etc. Own my own home which is worth approximately 1.4m

    Income: around 85k per year before tax plus an additional tax free income of between 5-10k per month for the next 7 years (I gave an interest free loan to my cousins business and he is repaying loan to me). The amount varies due to fluctuations in business income. It probably averages at 7k per month

    Current savings: about 70k
    Future savings: about 5k per month

    Age: 41

    Super: around 150k (not much)

    Goal: to sell family home in 7-10 years and move somewhere cheaper, stop work or move to part time work and relax for a change. I don't mind living in a unit or somewhere cheap in the south of sydney (menai?) to free up the money in my main residence now and put that into an income producing property. I would also like to buy a property before that time so that it is income producing or neutral by the time I stop work.

    Sorry if that was too much information. Basically I just want to stop work. I am burned out and want a more carefree existence. I am not very into material possessions, just want to have enough to travel, go camping et cetera basically for the rest of my life.

    Questions: I am thinking of buying maybe a unit in leichardt/ summer hill for around 700k (save up a bit more and borrow 500-600). I have no idea if i can get a loan or if i need a bigger deposit. I was thinking of a small block with small strata fees, maybe art deco, maybe renovations. The goal being I might move there one day or just keep to earn say 500per week in todays terms. I wouldnt want to buy in sydney now, probably wait 12 months or so until prices have levelled out. Then in 7-10 years sell my home and use the money to buy a cheaper home to live in as well as a second cheap investment of say 400k maybe interstate.

    OR

    Buy a townhouse now (assuming I can get a loan) somewhere like kuraby/runcorn/sunnybank QLD for around $300 which would get about $350 rent minus fees of say 70 per week. Because this wouldnt be as negative as a unit in the inner west I am assuming that in a few more years (if I can save another deposit) then I can still borrow another 600k for the unit in the inner west?

    Can anyone put themselves in my situation and come up with an idea? To summarise I have excess income (by the way I don't want to put it into shares), not too concerned about material possessions just want to get out of rat race ASAP, have no debts?
     
  2. Trainee

    Trainee Well-Known Member

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    How not concerned are you? You could sell today, put the money into a term deposit and retire on 30k a year now. Plus that 500k you have coming from that loan.
     
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  3. Amy77

    Amy77 Member

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    Yes, I have considered that but don't want to until my Son finishes school. He has been through a lot and I don't want to disrupt anything for the time being. Thats why my time frame is 7-10 years depending on how much help he will need and how much income i will need. Also I was hoping to retire on about 50-70k ongoing in todays money (I want to factor in for emergencies, helping my son, a few overseas trips, some 4wd trips). Thank you for your reply!!
     
  4. QldKoolies

    QldKoolies Well-Known Member

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    From a lifestyle perspective maybe eastern suburbs melbourne is where you want to be. Big city, lots to do and explore, lots of good buying in a down turn, heaps of potential, lots of variety and employment, never-ending supply of camping and 4wd trails, surrounded by national parks and the victorian high country.
     
  5. Amy77

    Amy77 Member

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    Sounds awesome, but I don't want to move out of sydney as I have my family and other networks. I was mainly talking about investment properties that would allow me to buy a cheaper house in sydney and then live a more relaxed lifestyle. My question was where and how to invest.

    Perhaps my post can/should be moved to strategy?
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    finish work NOW ? or in the future ?

    ta
    rolf
     
  7. Amy77

    Amy77 Member

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    Goal is In 7-10 Years, sorry if i didnt make that clear. The goal is to stop work and sell my current home which is owned outright to buy a cheaper home and the remainder to buy a second investment property (the first investment I want to buy in sydney in 12-24 months, or brisbane this year)
     
  8. Trainee

    Trainee Well-Known Member

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    How much income do you need to live on? Is this including what your son will need? Will you still need to support your son in 7-10 years?
     
  9. Amy77

    Amy77 Member

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    Sorry, I am having trouble explaining my rough plan. Let me try again:

    Here is the goal:
    1. Either a. buy IP in Brisbane now (managed townhouse for say 300k) OR b. older apartment in sydney inner west for around 720k in 12-24 months

    2. If option a. then also try to buy IP in sydney in 12-24 months. I don't know if this is possible, it will depend I imagine on having at least a neutral cashflow from brisbane IP.

    3. Sell PPOR in 7-10 years at the same time as reducing/stopping work. Funds from PPOR will be used to buy cheaper PPOR and the remainder to be put into a second (or 3rd) investment property

    4. Live on rental income

    5. Relax
     
  10. Amy77

    Amy77 Member

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    Hoping to live on 50-70k per year (in todays terms). Hoping not to have to support son in 10 years. If he needs further help then I could provide him accommodation, if he turns out ok (looking doubtful) then could put some proceeds from PPOR aside for him to help him out with a deposit for his own home etc.

    Backup is I can work part time anytime I need.
     
  11. JDP1

    JDP1 Well-Known Member

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    Not sure which RE option you should go for..but I do know that Brisbane is exactly what you seek in terms of lifestyle...
     
  12. Eric Wu

    Eric Wu Well-Known Member Business Member

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    welcome to the forum Amy @Amy77

    well done there with your asset position and income stream.

    do you really need to leave your current work now?

    if not, with your current income, you could build a portfolio.
     
  13. Gockie

    Gockie Life is good ☺️ Premium Member

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    Hi @Amy77.
    Congrats on your ownership of your PPOR Outright and the loan money coming in. That's a great achievement to have 1.4mill just sitting there :)

    IPs are tax effective. (Negative gearing if you have an income.) But when you retire perhaps shares are better to own. Less hassle too.
    I'd suggest learning more about shares. And shares vs. Properties for retirees.

    And if you do go down the Brisbane path, i'd suggest buying a house, rather than unit or townhouse. Go for the land.

    And I can suggest for your PPOR consider buying an apartment near the city. See what you can get for the ~600k mark or just rent there? Maybe better area than Menai. Low maintenance.

    Also, what about just changing jobs, sounds like your job is the cause of your stress.

    Apologies this post was a bit of a spew of thoughts. Been a very busy week...
     
    Last edited: 25th Jan, 2019
  14. Amy77

    Amy77 Member

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    Thanks I like Brisbane, but I am not moving outside of Sydney. I am looking at Brisbane IP
     
  15. Amy77

    Amy77 Member

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    Yeah, well thats why I am asking on the particular strategy I suggested. No I am not looking to leave work now. I am hoping to do this in 7-10 years
     
  16. Amy77

    Amy77 Member

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    Yeah but I don't like shares too much. My super is already in shares and I can't borrow to invest. The plan will be to put any additional money into shares after implementing the IP strategy - which is what I am figuring out. Thank you for your suggestion re apartment near the city, but where to live is not such a huge concern because the goal is to just live cheaply somewhere in sydney. My question really pertains to the IP strategy. Thanks heaps for your feedback
     
  17. Jana

    Jana Well-Known Member

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    Amy, well done with your existing property. Yes, considering land and property in Brisbane middle ring would suit you best. I don’t think Brisbane TH or Units work, just land and property. May be Keperra or Arana Hills would suit you for your budget. In current mkt I would avoid Sydney and Melbourne. Need to wait till 2021 possibly with no capital gain till 2025.

    For the income you suggested, I wouldn’t think you have much borrowing capacity left. Say around 500k mark. Having debt free house help heaps just have a quick serviceability check with bank.
     
  18. Amy77

    Amy77 Member

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    Thanks Jana! great reply. That was what I was wondering. I can't use my tax free income (loan repayments) because it isn't really income. If I bought a place in brisbane such as you suggest my understanding is that if it is relatively income neutral then it wouldn't impact my ability to borrow 500k in say 2021 to purchase a sydney inner west unit(?)
     
  19. virgo

    virgo Well-Known Member

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    Hi Amy

    You are classic Asset Rich Cash Poor....

    Have you explored the idea of a granny flat? Search this forum for some great ideas!

    It has been the cornerstone of my own journey...
     
  20. Amy77

    Amy77 Member

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    Great idea! thats exactly what I would do but the block I am on isnt suitable. Got a pool etc and no room :(