Going for the third...

Hi There,


Long-time viewer of this forum first time poster


Just wanted some thoughts/guidance on the next steps of my property journey.


I’m a 28 year old ‘rent vestor’ who is currently holding two properties currently earing circa

80k.


IP1 – Mooroolbark, Melbourne – 1000sqm – 4 bedroom home rent it for 400 a week (sub division potential) purchased for 500k owe 300k –worth about 850k

Ip2 – Frankston North, Melbourne – 750sqm – 4 bedroom home, rent it for 350 a week (sub division potential) purchased for 300k Owe 270 – Worth about 550k


I do want to purchase a third place however I would also like possibly enjoy life more a bit now and travel/ live overseas etc after working hard to buy these.

Any thoughts on whether it would be smart to purchase a third place that’s positively geared and doesn’t cost much to hold or wait a few years and purchase something that will most likely be negatively geared but provide higher CG ?

Cheers B.

 

Well done so far mate..

Although comes down to overall strategy/serviceability but safe to say branching out of Vic is safer option knowing current property market climate and rent yields + diversification..

Some really good buying opportunities in QLD and Adelaide with decent growth/development to be expected down the line and less out of pocket expenses due to much better yields ...

Best sit down with the broker first to make sure serviceability is not an issue but otherwise I honestly will be more inclined to look into interstate market.

 

You are only young once.

Live a little! Travel overseas, go backpacking etc.

You are already way ahead of most your age.
Marg

 

If you have the borrowing capacity do it, you have the equity.
Could easily buy in SA for ~$300-400k w/ ~$300-450p/w rent w/ development potential. Pretty easily to hold.

 

Hi Brendan, welcome to the forum!

What are your plans in terms of buying an owner occupied home in the future? What ever you decide, you'd want to be sure that buying number 3 is not going to make buying a home difficult if that's part of your plan.

You also need to think about how buying more might impact your plans to develop the current properties, if that's something you're thinking to do in the near term.

Servicing is much more difficult these days so planning ahead is really key.

 

Interesting choices. Many correct answers I suspect.

Travelling is awesome and can add to your life skills portfolio, good to do it when the Aussie Dollar is not circa 50c also (I remember how expensive travel used to be!)

It's easier to answer these questions looking backwards, for example someone might tell you it's good to travel young and while you can but you might not fully appreciate that until you have children and travel is now a multiple of times more expensive and challenging even though you are more financially able

Good choices to be choosing from.

 

@Andrew Allen *mic drop*.
It really is only something you can figure out looking back.

I will add, due to the market, next year is a great time to go, use the time to travel, learn, and plan.

I can only talk from my own experience. I recommend one has a rough idea of what they want to accomplish. The time you take off will fly past, and without a rough plan, you'll feel like you wasted it. Also have a budget. Put say $40k aside, and figure it out from there. From experience, my expenses tripled when I was taking time off.

I'm 32. Similar boat to you, I took 2-3 years off, and have been to about 45 countries. Ironically, very little travel was done during that time off.

The bits with purpose, where I worked on learning kite-surfing, spending time with my newly born nieces, laying groundwork for a business, crazy amounts of personal development, were amazing.

The bits that were spent watching netflix, ordering uber eats, and having aimless time off felt like a real waste. I've seen people 'run away' from life, and travel, postpone looking ahead, and freak out a few weeks before their trip ends. Needing another holiday after their holiday.

What do you want to accomplish over your time travelling? I don't mean a to-do list. Work on the person you want to be. Sharpen some skills. Meanwhile, you can learn to salsa in Cuba, or kite-surf in Vietnam, going beach to beach on your cheapo motorbike.

 

I recently crossed a travel bucket list item off, so I gave myself a new one. I'd like to motorcycle across a continent (not Australia, South America bottom to top looks interesting).

I figured this one could wait until retirement until someone pointed out that I'd likely have a lot of trouble doing it at that age, better to do it whilst I'm (a little) younger and fitter.

So now my goal is to figure out how to get my business and life structured so I can take a few weeks off for my dream road trip.

 

Great hearing from someone who did this. Doesn't sound like you regretted it one bit!

I'm also at a crossroads in my career where i would like to do something new so I was thinking this is the perfect time.

I plan to trek around until I can settle in a place that I enjoy most and try learn the local language/ cook the cuisine etc Just try and learn new things and meet new people with different life experiences.

Hopefully I can come back with some more clarity on what I want to do going forward with career/ future investments.

 

Haha that's crazy - I've always talked about doing it.

Tried to convince a friend of mine to do it with me last year, we settled on Vegas & Mexico (Cancun)

Noted that I was looking at starting Top to Bottom

 

Awesome man. Just do it.

It was up and down. Anything more than a month of down-time messes you up.
If you could break it down into 3 month breaks, even better. Otherwise it's tricky getting back into the rhythm of work - took me 6 months to find my groove again.

As I mentioned, draw up a bucket list of those insane things you want to do.
Then do it.

As for career. Again speaking from my personal experience, you figure that out by trying different things. Thinking about 'being a photographer' whilst travelling is not the same as trying to win gigs, and spending every weekend at some randos wedding, and the next 2 weeks editing (my friends example).

You don't know what you like until you try.
A career is crafted, not found. It takes time, and consists mostly of grinding day-to-day.

You'll figure it out. Enjoy the journey.

 

Hiya Brendan off to an awesome start, willing to go interstate for the next one? Going for something within inner or middle ring would help to add a bit of diversification to the portfolio if u want to stick to Melbourne. Perhaps an up and coming area in the west ? You’re young so keep focusing on growth and the income will come in time. Especially given the portfolio stands on its own two feet at the moment.

But then as has been said by others it’s not worth sacrificing doing the things you want to do now because you’re having to fund a severely negative prop , only you can weigh it up and go with your gut, hindsight is 20/20 !!

 

Agree with what you say however as someone who has focused on cg I would focus on cashflow and not growth to be honest. It's income that allows you to live and have choices, growth is great if you want to beat your chest at a bbq however truth be told to realise the growth you need to sell, thus letting a myriad of people take a slice of your pie leading to diminished growth numbers. Also even with equity you still need to meet servicibility so again cashflow hello.
If i had my time again it would be cashflow I,would be hunting.
Good work up to date mate and remember it's your journey so do what makes you happy and let's you sleep at night !
My opinion only

 

I think i have made some decent growth off the first two, that's why I'm leaning towards getting one with better a yield for the next. Best of both worlds

 

Brendan, I know you sought an investment, preferably positive cash flow.

But given your age, and phase of life etc, would you consider rentvesting into a property you will eventually live in?

I meet people every week who rentvest, and who have used up their finance capacity on properties that they will never live in. Then they are sort of stuck with investment properties in woop woop, and no where to live.

Don't get me wrong, rentvesting can be a great strategy, but don't back yourself into a corner. Keep some powder dry for the family home, so perhaps rentvest into the family home now, which would probably be cash flow negative. But it will be a way to future-proof yourself and buy yourself choices in the future.

 

@Brendan.Freeman, like others said, chase your dream/s ( even if you don't know what they are ATM, try things you haven't done before with an open mind, you might well discover you have talents you weren't even aware, and things you think you really passionate might turn out to be different).

re the property investing side of things, @John_BridgeToBricks is very right. rentvesting is awesome when you are young and have no rush to settle anytime soon. at some stage in life when you meet your other half you might want to settle down, and looking for a PPOR, and then realise that you can't borrow any more, you have to sell half or the whole portfolio. might be worth a while to look at properties you could potentially move in as a PPOR.