My 3 year plan - Buy in rising market - Build up cash savings buffer

Yes, maybe.
Didn't you say in another thread that some of your expenses are dropping off now? A few hundred a month will make a substantial difference.

 

It would be nice to have a bit of cash to enjoy life a bit as well. My iPad broke a few months ago and I'd like to just be able to go out and buy another one but I don't want to use my savings as I don't know what expenses might be coming up. I hardly watch tv but I'm always on my iPad. More like a need than a want for me. I've been watching my YouTube on my mobile instead.

Things like a holiday. I haven't had one in years because I worry I'll need the cash as some unexpected expense might come up. Glad I didn't buy my iPad now as I had a $750 unexpected roof bill the other month.

I would feel more comfortable if I cut what feels like noose around my neck. You have to have s balance in life and currently I don't feel balanced.

 

Yeah a few hundred will make a difference. The thing is though I would like to be able to afford the three hundred a month payments. It's quite important to me. I consider it more like a need than a want.

Hmmm yeah so I guess I need to decide what is the most important thing in my life and prioritise. Lots of things to consider. Sometimes other things come first before money.

 

I feel you are very stressed over cashflow. Can you do anything to your properties to make them higher yielding?

 

you sure you can handle property investment at all? Maybe just hold and aim long term.

 

I would be very wary about debt recycling.

... Oz share market lost 60 Billion last week? not sure whether it recovered or what???, but its volatile and are we close to peak???

Seems to be very popular on PC to recycle debt to make money from shares/LIC..... . But no one mentions that when markets turn you are at risk of losing your capital.

This money is borrowed funds, compounding interest is great when markets are rising, not so great when markets fall.

If you feel stress today over your scenario, do you really want to add more stress.

Do you need more debt.



Some questions to ask yourself

Do you have a high marginal tax rate so you can make the most of any tax benefits?
Are you in it for the long haul? Gearing is generally a medium to long term strategy (at least 5 to 10 years).
Is there flexibility in your strategy to allow for changes in your personal circumstances or a reduction in income?
Will you lose sleep at night if your investment performs poorly?

MTR

 

Hi.

Not really. I think I just got caught out when Perth rents dived. I was getting 340 pw for my unit at one point and now just $190 pw. And $400 pw for my villa went down to $290 pw.

Anyhow I hear Perth rents are recovering now. Hopefully I can increase soon.

I could fill out a withholding tax form if I decide to hang on to my unit.

 

Yeah. I do find the whole process stressful at times, the buying and when I'm holding too but I think I'd be far more stressed if I didn't take my future investments into my hands. The alternative when I retire is a lot scarier. If I wasn't investing and I was in the financial position of the average Aussie in I'd be stressed too, having to live pay cheque to pay cheque and then at the end have nothing to show for it. Some at least might have a paid off ppor which is good at least. Glad I've never had to live pay cheque to pay cheque and worry about how I'll find enough for food and rent each week. It's been good. Everyone at work comments about how it's pay day and I just so Ohhh cool I didn't know lol.

I will get $230k in super when I retire at age 65. It's not enough and I don't plan to rely on a pension to top it up. I'm planning for my super to account for 1/4 of my income stream when I retire and 3/4 will come from property. I'd be happy and comfy on $40 k net with my poor fully paid off. I don't even mind working 2 days pw for a while once retired just for another income stream. I like the social aspect and routine too.

Yeah perhaps a buy and hold strategy is the way to go for me. It would be less stressful. But I think I might try to also sell one or two along the way if I feel I need/want some cash handy. Or I've seen good growth and I see an opportunity to pay down some debt and make use of the cash.

 

Yeah sounds a bit stressful and risky to me. I wouldn't want to tie up my cash for 5-10 years either

 

So I've decided I'll give my RE agent 1 more month to try to sell it. I'll lower the asking price by $5k. If I don't get an offer by March 11 I'll advertise to rent.

My tenant moves out on March 1st so I can make it available to rent from March 1

But I'm wondering if I should get the ball rolling and start advertising now. They usually need a good few weeks to find someone. It'll be interesting to see what the unit 2 doors down gets. They advertised for $270pw. Seems a bit high to me. If they get it I'd think about asking $250 pw rather than the $200 I was thinking about asking.

 

Why not advertise now for rent at $260 with 1x week free rent if they sign for 12months or more.

They save $10/week and $270. Plus you get $60/week more than you expect.

Anyone willing to pay $270 will be happier at $260.

(I’m assuming the two are the same/comparable).

Blacky

 

Yet your willing to put it into highly leveraged property?

Doesn’t make sense to me.

 

That's an idea. But I'm thinking Its best to sign them up for a 6 month lease and turn it into periodic if I need to. I'll see how my finances are in 6 months time to determine whether to sell then or hold.

Yeah pretty compatible. Mine is a bit bigger too by 4sqm. Not sure if that makes a difference.

So when I put it on the rental market I'll inform my PM that I'm taking my property off the market on March 11 and it's available to rent March 11. I have a contract with my RE agent till May though, would that put off tenants? I wonder if I can cut the contract short and postpone the sale for 12 months time.

 

You can stop the sale of a property at any time. You don't have to keep it on the market if you don't want to.

 

Problem is some will have to cash in

 

has anyone put an offer on your villa unit so you know for sure what it will sell for?

 

Nope

 

The number one thing to consider is poperty cycle. Every market has its day in the sun and Perth will eventually rise again. The fact that you brought in the last peak at Perth was a mistake in hindsight so don't make that mistake again by chasing markets that has already peaked or close to it. If I were you, I will keep the 50k cash offsetting the two you already have and save up more. In couple years time when the Perth market does eventually starting turn, then you will make a move to grab a bargain before everyone else.

Property is at least 10 years game, Its likely that Perth will have its boom before Melbourne and Sydney next boom since both cities just came of a massive one and Perth didnt have a proper one for 10 years, so be patient with the Perth market and on the look out for good bargains with good protentials.