Fork in the road

Discussion in 'Investment Strategy' started by intern1, 15th Aug, 2019.

Join Australia's most dynamic and respected property investment community
  1. intern1

    intern1 New Member

    Joined:
    15th Aug, 2019
    Posts:
    1
    Location:
    Wareemba, NSW
    Background

    Long time reader first time poster

    We are both in our early 30s, and have 2 IPs which we have purchased together. We have a PPOR with 993K of debt PPOR is valued at approximately 2.8m. Our combined income is 320K, but being young and not trusting the constant changes in super we are looking to develop a portfolio which will support a passive income stream in the future.

    Current Portfolio

    1st: Werribee, Vic - bought in 2017 build completion 2019 4/2/2 - 512m2

    Purchased for 544k, valued at 600K house and land package I understand this a bit of a mistake but we will learn currently rented out for $370 a week

    2nd: Kallangur, QLD - bought in 2019 - 3/1/2

    Purchased 360K, valued at 400K rented for $350

    Fork in the road
    We currently have a decision point should or next property be an investment property or a lifestyle property holiday home? We have 200K for deposit and borrowing capacity of 800-900K.

    Would like to hear peoples experience if its an investment property its all about the numbers locations economics ect and if its a holiday home we are looking at Nelson Bay. I have done some initial searches there but its difficult to gauge what part of the cycle they are at to me its seems its steadily going down due to the vendor discounting in the area.

    cheers

    John
     
  2. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    Holiday homes rarely make good investments. You need to decide if you are done with the "acquisition mode" of gathering a decent number of IPs togther. If you are done and happy with what you have now then go and splash out on an emotional purchase of a holiday home.

    If you are in your early 30's, then if it were me in the same position, I'd get off the distraction of a holiday home and back to the business of buying IPs. Then ask the same question when you have at least 5 IPs under your belt. It's called delayed gratification - a most unpleasant time for the now but pays back in bucket loads down the track.
     
    craigc, Tranquilo, Bunbury and 2 others like this.
  3. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,257
    Location:
    Australia
    While you net asset number looks good, its very heavily tilted to your ppor. Job security is a big risk for you. Holiday homes are rarely good investments.

    You have to make a choice. Focus on non job investment income, or keep the (great) lifestyle, and hope your job continues or gets better? With that income you could buy ungeared shares and do very well in 20 years.
     
    Last edited: 15th Aug, 2019
  4. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
  5. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    IN terms of holiday home - will you be happy holidaying in the same spot all the time? Why not just rent a place when you want to go there?

    I have friends who bought a lifestyle block, and they love it but now it seems less like a holiday when they go there and more like work....especially when all they want is a holiday in Bali, which they can no longer justify.
     
    Cmelderis and The Y-man like this.
  6. NHG

    NHG Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    640
    Location:
    Sydney NSW
    Spot on.
    What's your goal?

    Hard to make a decision if you don't have an idea of your destination.

    Portfolio looks heavily negative geared with minimal to non existent capital growth after sale.

    Any non investment purchases will further the you to your job.
     
  7. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,257
    Location:
    Australia
    Most important number: how much do you need a year for your lifestyle?
     
    Cmelderis likes this.
  8. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,439
    Location:
    Melbourne
    My avatar should say it all..... :D

    I don't really see your situation right now as truly forked though.

    One road up hill and one going down hill...... as per @Jess Peletier
    I admit there were some great times at the family holiday house way back when, but I suspect it just would have been more economically efficient to stay somewhere else.

    The Y-man
     
  9. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,439
    Location:
    Melbourne
    Perhaps a better multi-fork......

    1. Buy another IP
    2. Buy into commercial thru REITs for income
    3. Buy shares
    4. Invest into LICs/ETFs

    The Y-man
     

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia