My strategy, what next?

Discussion in 'Investment Strategy' started by Vick B, 26th Apr, 2020.

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  1. Vick B

    Vick B Active Member

    Joined:
    25th Apr, 2020
    Posts:
    26
    Location:
    Victoria
    Hey guys and girls. Long time stalker, first time poster.

    About
    Couple (Early 20s)
    Combined Salary ($130,000 gross)
    I should add this will rise to over $150k when I complete my apprenticeship next year.

    Properties
    Both purchased within the last 12 months

    IP1 Regional Vic
    Bought
    $350k
    Owe
    $275k
    Rent $360 a week
    Repayments $280 a week P&I Variable

    IP2 Regional Vic
    Bought
    $340k (Bought roughly 15k below MV)
    Owe $304k
    Rent $320 a week (will increase once CV19 is over)
    Repayments $310 a week P&I Variable

    Other
    No CC debt, No Car Repayments etc
    Currently Renting
    One Day down the line would like a PPR but all about accumulating IPs for now.

    Why?
    We chose these properties as we intended to travel for a couple of years (prior to CV19) so we wanted something that had good cash flow and didn't blow all our savings abroad. Would happily live in either IP in the future if need be. As we can't travel the world anytime soon we have decided to go again for IP3.

    Goals
    1st goal - Enough passive income to cover all bills
    2nd goal - 50k passive income to work Part Time
    3rd goal - Ultimate Financial freedom 80k (ish, hard to know with inflation etc but we are not big spenders)

    Position
    Approx 25k Savings. We try to save 1250 a week.
    Mortgage Broker says we can currently borrow up to 600k. We would like to buy towards the end of this year, perhaps if there are some bargains. However we would most likely save a bigger deposit and buy early/ mid next year.

    Your Help
    I understand we cannot keep buying properties in Regional Victoria. We are open to buying interstate however we would go through a Buyers Agency. We have liked the idea of purchasing in Brisbane and then adding a Granny Flat for cash flow. Ultimately I am asking for advice because I don't want to wake up in 10-15 years and realised that I have structured this badly and obviously costed us a bit of coin.

    Thank you.

     
  2. The Y-man

    The Y-man Moderator Staff Member

    Joined:
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    Posts:
    13,436
    Location:
    Melbourne
    I'd say "why not?"

    You're familiar with the market.

    The Y-man
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think there are some issues with this in Brisbane - cannot lease granny flat separately. I may be wrong though.
     
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  4. Vick B

    Vick B Active Member

    Joined:
    25th Apr, 2020
    Posts:
    26
    Location:
    Victoria
    Thanks for the reply. Guess I'm looking at it negatively. Just worried about not diversifying enough along with if anything happened to the area. (Over supply, Stagnant CG etc.)
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
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    Australia wide
    If buying in VIC carefully consider land tax. You will be able to double the threshold by buying in single names rather than jointly
     
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  6. Vick B

    Vick B Active Member

    Joined:
    25th Apr, 2020
    Posts:
    26
    Location:
    Victoria
    Yes. I have been doing a bit of research on that. One of the main reasons we went back to Regional Victoria instead of Brisbane for a GF. Thanks
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
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    6,673
    Location:
    Perth WA + Buderim Qld
    I think you need to speak to your broker - or a new one, if your current one isn’t very strategic - about your plans and current structure. Also saving a big deposit v small.

    From what you’ve said about your current plans and situation, I’d suggest that you’d do better long term with a different financial strategy - particularly if you’re good with money, and having cash in an offset is not going to be huge temptation for you.

    Right now, a lot of cashflow is going toward debt reduction, and if accumulation is the goal right now AND you’re looking to buy a PPOR in the future, debt reduction isn’t really in your best interests.
     
  8. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    341
    Location:
    Vic
    @Vick B something you may want to consider depending on where you live currently is buying a place that has renovation/development potential and using it as a PPOR.
    Use first home buyers, renovate the property (cheaply) then once you live in it for a while you can move out and turn it into a IP hold it for 6 years and no capital gains.

    Being a young tradie (I’m assuming) there is no better time to renovate. Mates and family will likely help you for pizza and beer and make it a whole lot quicker and cheaper than what anyone else could do.
    It’s something I did in my early 20s and now at 30 have just moved back in and will sell in the next 12 months. It’s been a great move to set myself up.
     
  9. ashish1137

    ashish1137 Well-Known Member

    Joined:
    12th Sep, 2015
    Posts:
    931
    Location:
    Sydney
    I agree.

    I made my 6th land purchase (all in vic) in past 5 years. I love the market and have been guided well by the group members. :D

    If you can rinse and repeat, keep going until you find a similar deal elsewhere.

    Cheers
     
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  10. The Y-man

    The Y-man Moderator Staff Member

    Joined:
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    Location:
    Melbourne
    .....or you get totally hacked by Land Tax :oops:

    The Y-man