Investment Strategy - my 1st Property ( Investment )

Hi all,

Have been reading a lot in this forum and have found absolute gems posted in here which opened up my eyes to the possibilities I never would have thought about . @Terry_w - Thankyou for all your contribution ! Really helps a newbie like myself.

So my situation -
1) Never owned a property. No PPOR nor IP.No debt.

2) Am planning to buy my first property ,debating about keeping it as PPOR for 6 months and converting it into an IP after to get all the First home buyers grants OR straight IP

3) Have saved up in the First Home buyer Super Saver Scheme FHBSSS since 2018 and have maxed out in the contribution .
Savings thru FHBSSS- $30k ( minus tax )
Another pro for buying it as a PPOR as cannot use this scheme for an IP is my understanding.

4) Have cash saving exclusive of FHBSSS of $70k . I will engage a BA for purchase and was going to put this cash as deposit but read @Terry_w tip on using a term deposit instead of cash for purchase ,so would like to do this. Obviously can't do it for PPOR so plus for IP.

5) BA would source a property in Sunshine coast / Morteon Bay region in Qld for $350-400k with atleast 600m2 land and I will eventually take out another construction loan to build a granny flat on it.

My Questions-

A) I work FIFO currently in Qld and am a single male, so PPOR isnt important for me. I also read in another of @Terry_w tip about the 6 year CGT rules ,which is where I buy another PPOR in Perth ,WA when my contract ends in QLD.Effectivelly selling without CGT for the first property in Qld. My holding time is ~ 6 yrs ( Phil Anderson - real estate cycle in his book - The secret life of Real estate and banking , he's an Ausie ecomomist who predicted the GFC and famous for his 18.5 yrs real estate cycle theory ) so this might suit.

Obviously none of the interest would be deductable while its PPOR so will only be making it a PPOR for absolute minimum required of 6 months.

B) If i buy the first property as IP ,how do I structure to borrow the BA fees instead of using cash to pay him ?

C) Can I still use a term deposit as security to borrow 100% of the purchase price ? IO with offset ?

Thankyou legends for helping me out ! Am open to all criticism of the above stratergy or if you have a better stratergy than this for a complete noob

 

You've got a very small deposit (no offense, I had less when I started), why on earth would you spend over 20% of that on a BA?

 

Also, granny flats can be problematic in QLD when compared to NSW. Ensure that you know you know the council rules.

 

No offence taken .BA is charging $9k so not excatly 20%.Regardless ,reason to deploy a BA is because I have never done this before and would leverage on their local knowledge and contacts which is far more than I would ever have.

Also ,I was a international student in Australia paying well over $10k per semester . Now I am very fortunate to be earning a 6 figure salary in a recession so I relate that BA fees to my semester fees in uni. It is also deductable when selling the property ( if IP )so all is not lost ,Thankyou for replying to my post

 

Yes ,Brisbane City council prohibits granny flats hence my prefered choice of Sunshine coast / Morteon Bay region where this is still allowed.

 

You can't borrow funds for the purpose of paying the BA fees, you can increase your loan amount to compensate for the lower deposit you'll have due to paying the BA fees from your cash savings.

 

Get taxation advice. If you purchase it as a PPOR, which you're planning on doing, I'm not sure that's true.

 

Yes aware of this not possible for PPOR only for IP ( hence" if IP" in bracet in the original post ) .Cheers .

 

Might want to double check that...as under review see other thread

 

BCC under review or Sunshine coast / Morteon Bay under review ?

 

Best to contact council town planners in MBRC and Sunny Coast for the latest and ask about ability to lease to multiple families on separate leases...

 

Pumped on Property for sure Good on yah!

 

Sorry to hijack your post @Sunny8888!! I’ve been following Pumped on Property on YouTube for a while...was wondering what’s your experience using them as BAs/ dealing with them?

@The.Night.King what are your thoughts on PoP and their BA service?

 

Haven't pulled the trigger yet but they're genuine blokes with passion .When I do use a BA will be them for sure. Also their strategy of house & GF resonates well with me.Hope it helps .

 

Awesome! Have you booked into one of their strategy sessions yet? I’m thinking of using them in the future too but haven’t booked a strategy session yet.

 

Yeah did that. Let me know how you go bro .You in Brissy ?

 

Nah, I’m in Melbourne. Was considering purchasing a PPOR first but now I’m reconsidering and leaning towards an IP in QLD and using their services. Will keep you updated

 

Yeah man keen to follow your journey .I'm in the same boat but not decided about Perth or Brisbane now. Analysis paralysis at its best haha.

 

I think they're alright. Ben seems to be very genuine person. Now in regards to their Dual occupancy strategy I personally think it has merits depending on where you're at with your journey as well as your strategy. What I mean by that is, If you are still able to service your loan + a few months buffer in $$$ I would go buy a CG property/slightly negative to neutrallly geared property.

I probably would at some stage buy a cash flow positive property ie. Dual Occupancy like PoP strategy to allow for some Cash to build up so I can go again.

Essentially my strategy is

1CG property ---> 2 Cas Flow Positive property
Rinse, Repeat ot tweak if needed.

 

Note that if purchased as PPOR, BA fees, stamp duty & holding costs such as interest & council rates will be added to your cost base.
So although not deductible they are reducing your future CGT.
Unless you convert it to an IP (& potentially use 6 year absence rule) as proposed, then the cost base is market value at the time it first earned income. (See Terry’s Tax Tips).
Good luck!