Looking for suggestion & advise

Hi guys,

I am relatively new to the propertychat forums. I am looking for some advise.

My wife and I have duo income with no children, both in our early 30's.

Our goal:
In 10 years time, to be able to generate 60K after tax passive income so we are financially independent

Our situation:
- Duo income household earning about 120K after tax.
- We have 2 IP's:
> 1 fully paid off @ 259K. Currently rented out for 296/week (all fees already deducted). This was our PPOR and 1st home. We have since moved and so treating it as an IP now
> Another one with 305K homeloan on a 410k IP. Currently rented out for 328/week (all fees already deducted). Currently at 3.99% 2 years fix interest rate - only recently signed

- We are paying 380/week for rental
- Family has a 60K/year expenditure. Basically we will have 60K savings per year
- 170K in our saving account

What we are doing next:
- Purchase our PPOR max. 550K - possibly getting an off-the-plan townhouse to save on stamp-duty
- Commit to another positively geared IP, looking at the Melbourne CBD apartment, possibly 280K homeloan on 350K 2 bedroom apartment. It can be rented out for 350/week (all fees deducted)

I have done some quick calculation and the way we are going, it just doesn't look like we will be able to achieve what we want in 10 years.

Do you think we are doing the right things? What will you do if you are in our situation?

Thanks.
SZ

 

Grats mate, done well overall by paying off investment property and having decent money in savings account!..

In terms of next purchase, don't like the idea at all off buying off the plan or apartment in Melbourne CBD..

I think you need to sit down with your broker and accountant, to reverse engineer this thing..

And reading about type of next purchase you have in mind, I'll strongly suggest either involve good buyers agent or active property investment broker to guide you...

Without even looking, I can assure you, buying "Apartment in Melb CBD or off the plan purchase" is 100% wrong strategy. This is now wearing my property investment hat and talking...

Happy to have quick chat over the phone if it helps!!...

It will also be worth reviewing your existing portfolio with broker/accountant and buyers agent ..

Cheers,

 

Speak with professionals before you proceed further IMO - get some good advise.
- House paid off which is great, might be financially better to sell CGT free and paydown PPOR and reinvest (might not)
- I personally don't like OTP especially in a declining market
- Positive geared investment is great, but not when it's because you have put a large chunk of a deposit down, this can be done much better. Borrow maximum, keep funds paid off against PPOR.

Best thing is overall you look to have your finance/budget sorted. Even if you don't get this right you will likely still do well due to this.
But believe you could do even better if you get it right.

 

Firstly, congratulations on what you've achieved so far.
If it were possible to go back in time, you would have not paid off your 1st PPOR (now an IP), but instead paid IO only and put all the spare cash into an Offset account. That way you'd be able to claim the loan interest as a tax deduction and used the funds in the Offset for a deposit on your next PPOR.
Like the others, I am not a fan of OTP purchases at the best of times, let alone a flat or slightly falling market.

 

My Tips


Work out a plan to get $60k pa

$60,000 / 4% = $1.5mil in unencumbered assets returning 4% after costs.

How could you get $1.5mil worth of property fully paid off?

a) Buy $1.5mil and start paying the loans down, and/or

b) Buy $3mil and gradually sell half

c) etc

CGT is half as painful as income tax………


Don’t buy off the plan just to save stamp duty.

Watch out for CBD apartments

Consider selling the former main residence, potentially tax free, up to 6 years after moving out and using the proceeds to pay off the new main residence.


It seems you may not have an offset account atm, it would be good to get one.

 

Thanks guys. Means a lot for you to read and provide your insight.

I feel that we have several burning things to do for ourselves if we need to achieve our goal, and your advice on OTP and CBD apartments - duly noted! I am very glad that I have asked the question here.

I guess I am a person who have set a goal for us to achieve but fail to identify the right steps, tools and people to achieve it - we should begin building these.

Thanks for the direction!!!

SZ

 

welcome to the forum @Sparkles_zap

I think you have done well so far with your current asset position.

not a fan of OTP apartments here, lots of setbacks.

seeing you are in VIC, with family planning ( ? kids...), it may not be a bad idea to consider purchasing yourselves a home.

rent-invest is excellent for young ppl, but when kids come along, it could become challenging.

 

Definitely considering purchasing ourselves a home!