I finally have a chance at getting back into the market.

Discussion in 'Investment Strategy' started by MikeM, 4th Mar, 2020.

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  1. MikeM

    MikeM New Member

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    Hi folks,

    Can I pick your brains for your learned opinions for a moment?

    I'm 43 and single with grown up kids.

    I have been out of the housing market for 10 years now due to divorce and starting from scratch paying down all those left over debts and building a new career. I'm now at a stage where I really need to start taking some risks to get some assets behind me as I move towards retirement.

    Income - I'm currently in an emergency services job on $80k/annum which increases about $3-4k a year.

    Expenses - Average. I'm currently a renter as the inner city area where I like to live is well out of my purchasing range.

    Assets - I've had bit of a change of fortune recently and I am now the sole trustee and beneficiary of a property investment trust that owns a $750k inner city unit outright. I also have $215k in super but no genuine savings.

    Liabilities - I have a $17k personal loan which I intend to roll into any home loan.

    I've started looking at using some of the 100% equity in my property trust as security against a property loan of around $500k (Maybe even two separate property loans eventually if possible.)

    My conundrum is where is best to then apply this debt funding once approved?

    On one hand there's an absolute heap of online spruikers and professional investor sites telling me to buy things like new build duplexes or granny flatted properties in cheap city fringe areas with lower socio-economic profiles (eg. outer western and southern suburbs.) Basically aiming for properties with higher cash flows and I'm assuming limited capital growth. I'm fairly cynical and wary of all the accompanying marketing that seems to be pushing these "high cash flow" strategies though.

    BTW - I'm realistically limited in my current ability to renovate or value add to any rundown older property due to my full time job.

    The other option is to buy an inner CBD apartment in Brisbane CBD or Southbank and either A) rent it out normally long term or, B) have a crack at setting it up as an AirBnb. I have a friend who has a couple of apartments on the Gold Coast and at Southbank who has 95% occupancy on her units and is telling me to give it a crack.

    If you have a moment, would anyone care to give me their opinion on what they would choose and why?

    Many many thanks for your time!
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    There's going to be some tax deductability issues if you do that for a investment property

    The Y-man
     
  3. MikeM

    MikeM New Member

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    Thanks Y-man - noted
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    What's the goal, cash flow or capital gains?
     
  5. MikeM

    MikeM New Member

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    Hey Lindsay, I would like to focus on building equity as quickly as possible in the first property so as to remove the need to borrow against the pre-existing property trust. So I guess in that instance it's capital gain?
     
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  6. Lindsay_W

    Lindsay_W Well-Known Member

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    In that case the new build stuff is out, so is the apartment idea unless you're talking about small block of units with no lifts or pools and as close the the CBD as possible. Ideally a townhouse or house as close as you can afford to the CBD would have better capital gain potential. (just my opinion) Look for something you could add future value to via reno, subdivision etc if confident in doing so.
    I'm sure others will come along and comment here on what they recommend/would do :)
     
    Last edited: 4th Mar, 2020
  7. Tonibell

    Tonibell Well-Known Member

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    If you want to build equity reasonably quickly - it is not going to be easy and comfortable.

    Everyone's too busy - but you just have to do it. Get a dumper in the best area in Brisbane that you can and live it in while you fix it up - by the time you are finished, you'll be way ahead.
     
  8. Trainee

    Trainee Well-Known Member

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    While you are absorbing information, aim to save and pay off that personal loan.

    if you buy something for cg, its is likely to be cashflow negative. That means you have to put money in. Sure you expect it to go up but thats future cash.

    so you need to save. Going in with no savings and no monthly savings is very risky.
     
  9. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Hey Mike - welcome to the forums :)

    You're in the right place!

    Both those options sound very average to me. You don't want to listen to a spruiker...don't ever take advice from someone selling you property!

    And inner city apartments are not going to grow enough to help you with your retirement.

    Airbnb might work - but it's also a lot of work so be prepared for that! It could take the 'passive' out of passive cashflow, and end up just being another job for you. (Yuck).

    If I were you...

    I would get super clear on my goals, and what I need to achieve and by when.

    Once you know what you're aiming for, it's much easier to figure out a way to achieve it.
     
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