Investment goals

Discussion in 'Investment Strategy' started by 2jzzzz, 15th Jan, 2019.

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  1. 2jzzzz

    2jzzzz Member

    Joined:
    5th Aug, 2015
    Posts:
    16
    Location:
    Melbourne
    Hi all,

    this forum has become a big use of my spare time. I'm loving it, I've always pictured myself getting into the property portofolio game.

    First of all, some background. I'm 31, (recently) single and about to sell the house me and my ex wife bought and lived in for 5 years (south west Melbourne). Basically, after the sale we'll both have around $200,000 free and clear. I want it to start using this money constructivly from the minute I get it (to avoid buying cars). Right now it is being rented until we sell it, rent covers mortgage and expenses almost 100%.

    We have sent letters to neighbours inviting an offer if they wish. If we don't get a response we'll approach agents to list.

    First of all, I would like get into some locked away, don't think about stocks for long term (call it $25,000 maybe).

    Currently, I am living and working in Tropical North Queensalnd. For the next 2.5 years work pays my rent, I have no other debts, no large expenses and earn around $100,000/year.

    I ideally would like to buy a property I would live in and renovate for 12 months+, keep it listed as my PPOR and rent it out for 5 years, then sell to avoid capital gains tax.

    At the same time, I'd like to buy some cashflow positive properties that I will forever keep as IPs, but not expect them to go up in capital value much (pretty reasonable assumption for Tropical North Queensland).

    Any pointers for the start of my journey? Any holes in my strategy? Should I invest elsewhere in the country and not where I live?
     
  2. Trainee

    Trainee Well-Known Member

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    24th May, 2017
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    1,496
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    Australia
    The 6 year rule is fine but thats only one property. The portfolio part means think more than one.

    You dont have enough capital for cf properties to support you. Youll run out of borrowing capacity before you get enough cashflow.

    25k shares is fine to start with. You need to add to it.

    Generally, you have no specific goal. So your plans dont make sense. Start with a goal, x dollars by 60 or something, then work backwards. Most likely you need growth not cashflow assets.
     
  3. 2jzzzz

    2jzzzz Member

    Joined:
    5th Aug, 2015
    Posts:
    16
    Location:
    Melbourne
    Hi,

    within the Cairns market, I believe cashflow positive properties are available. Take one for $120,000 and rented for $240/week, the aim with a couple of these would be to use some of my cash to act as deposit, then have rent pay down the mortgage over a period of time.

    I still aim to keep working while doing all of this, so I don't need the property to be so cashflow positive as to support me ongoing.

    The larger house purchase would have me live in it while value adding then if plans work out, vacate and rent it out but keep it listed as PPOR.

    Alternatively, I could go the Barefoot Investors blueprint and buy one PPOR and put resources into stocks. I'm just starting out my research and what appeals to me.
     
    Last edited: 15th Jan, 2019
  4. jazzsidana

    jazzsidana Mortgage Brokers - Investment Savvy Business Member

    Joined:
    27th Jan, 2018
    Posts:
    350
    Location:
    Melbourne
    Don't know many/any ppl who invest in residential real estate for cashflow purposes ...

    I get it people buying cashflow properties to balance the overall portfolio. But main aim of investing in resi has always been capital gains...

    I'll invest in gaining knowledge first before investing and surround yourself with strong team (Investment savvy - Broker, Accountant, BA e.t.c).
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    18th Jun, 2015
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    Location:
    Perth WA
    Bear in mind that cashflow can quickly get eaten with insurance premiums in FNQ - they can be super expensive.
     
  6. David Shih

    David Shih Mortgage Broker Business Member

    Joined:
    21st Jun, 2015
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    794
    Location:
    Sydney
    Like what others have pointed out, work out what your end game is first - what's your end financial goal. Then sit down with a broker to work out borrowing capacity and balancing out the cash you'll have, how to maximize your acquisition from there.

    Not sure about the growth prospects of FNQ but I would look at acquiring a property in areas that will give you best potential capital growth first over a cashflow IP. If you believe FNQ will be able to give you that growth prospect then you can look at deploying the buy-reno-rent strategy.

    You're still young and have a steady job which means you can take on some risk to acquire properties that can give you decent growth over long term. What you could also do is potentially balance out 1 CG asset with 2 cashflow assets to offset the negative cashflow if concerned.

    Cheers,
    David
     
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