Need to do something..

Hi,

Been sitting on sidelines for too long now, I think I've started reading about RE investments back in 2005 (joined Somersoft forums etc.) and guess what, still haven't bought anything! Still kicking my head for not buying in Sydney in 2010-2012, started looking back then, but all the doomsayers talking that world economy will crash etc., scared me again. Well, cost me a lot of money doing nothing in the end.

Long story short, I need to do something with the money/equity we have accumulated, they are not working for us sitting in the bank accounts these days. Currently have ~$500k in cash and PPOR fully paid off, worth ~1 mil., no other debts, saving ~$80k per year from our salaries.

So, what would you do in my case? Buy interstate like Melbourne or Brisbane as Sydney is too hot methinks at the moment? By the way, I'm not that keen on buying in other states as I don't know those areas at all, so big risk of buying in crap areas, plus I would need to take annual leave to go there for a week or so to open houses and so on..

Any help is appreciated.

 

I think a good idea would be to get in touch with the fellas from Sydney who are doing regular trips up to Brisbane.
I'm sure they will share some good free advice with you to help you get on your way with confidence.

 

Hi Pinoob,

From your financial situation you described, your in an amazing place to build wealth, assuming your still relatively young.

1. Buy some books and learn as much as you can say in a 3 month period
2. Sounds like you have a massive mindset problem with moving forward. Do some reading on success mindsets, a book or two, youtube clips, discussing with other successful forum members.
3. If you can, try to build a genuine relationship with 1 or 2 people on here who you can identify with who is willing to point you in the right direction. You'll often hear ppl saying, "OK you need a finance broker ,etc etc.. which is true, but really you need to build on your knowledge, even just the basics can make a huge difference, it will reduce your risk of making silly mistakes and start you off in the right direction in terms of goal setting, plans, strategies etc. Trust me on this, you don't want to discount the power of knowing the basics. And as your knowledge increases, your confidence will too. Just my opinion.

 

Alternatively, piN00b - build a team of qualified professionals to help you on your journey.

Conveyancers (property law is different in every state),
Property Investment Advisor (to give you specific advice around your situation - ie best use of your capital and cash flow),
Buyer's Agents (will know the ins and outs of every location),
Finance Brokers (will be able to get you the best facility for your situation)
Quantity Surveyors (missing out on available depreciation is a DIY property investors biggest and sometimes most costly mistake) and
Property Managers (a good property manager is worth their weight in gold!).

Just to name a few - remember we aren't all experts in every field and often don't have time to become experts in every field!!

Good luck.

 

What is your goal?

 

All the above and get moving, you are afraid something could go wrong but with holding that much money in cash you are barely keeping up with inflation at best after tax so your missing out opportunities everywhere.
Maybe after appropriate research dip your toes in and get wet.
Saving 500k you can obviously budget well, are you close to retirement?

 

If you've been reading the SS forum since 2005, that's 10 years - you already know what to do. Listening to D&G brigade has cost you big time, as you say.

You could have hired a BA buy now, paid their fees and be sitting on several $100K's more equity than you currently have. You don't have to take annual leave to go on a buying trip that you'll come back empty handed from (with your history of inaction). You are a procrastinator - just pay for the help and get it done.

Do something, or roll back over in bed and pull up the covers....it's cold outside.

 

Often taking action is the hardest step of all. I've written before (well in Somersoft anyway) about the danger of becoming an "armchair expert" - all too endemic in our over-stimulated and information-laden world. Talk to a broker, set up your pre-approval, formulate a strategy for your end goal, decide on an area (after research) but give yourself a time limit to get it all done, BEFORE you jump on a plane to start property-searching. Alternatively, as Alan's suggested, hire someone else to do the work for you and stop procrastinating!

 

Thank you everyone for wise words!

Regarding age, I'm ~20 years from retiring, so getting close, but not there yet. As others already mentioned, I've researched quite a bit during those years, hate to admit but you're right about "armchair expert".

My (our) goal is to have 3-4 fully paid off properties by the time we retire and combined with super and shares to have $80-100k annual income stream.

Will start researching Brisbane suburbs ASAP (Sydney is off limits for at least few years I think).

One question which I don't know the answer yet - say we buy something in Brisbane for $600K, if we would use equity in our PPOR for deposit, can we somehow get it organized that there is no cross collateralization with PPOR? Alternatively we can use cash for deposit..

 

Simple. Get a separate loan for 20% deposit + costs, secured by your PPOR. Then get a separate 80% loan for the IP. I would keep your own cash for a rainy day.

 

Plenty of good answers (and a pep talk or two) above which I wont repeat. I will just say two things: 1 If you do your research and/or get good independent help you don't need to be afraid of buying interstate. My first place was interstate. Plenty of others have proved it can be done. 2 There are lots of NSW options that are not Sydney but are well worth your attention.
Best of luck!

 

Yup. I would think of getting a team around you if buying interstate. They can provide you with the knowledge about local markets. Else it might take a while to accumulate that knowledge yourself in research , and you mention that you want to do something sooner rather than latter , so hiring help maybe the way to go, if you are considering interstate.

 

These guys would be @Michael_X who has a ton of experience in Brisbane and a few IPs there too. He can also assist with finance or even just give his opinion. He is very approachable and a very nice guy. @Simon L is someone else you can also speak to. He has about a dozen IPs in Brisbane and knows the market well up there. How's that for a start?