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New here, looking for advice on my strategy.

Discussion in 'General Property Chat' started by simonaw, 23rd Jun, 2015.

  1. simonaw

    simonaw New Member

    Joined:
    23rd Jun, 2015
    Posts:
    2
    Location:
    Sydney
    Hi all,

    I am new here, long time lurker on the old forum, sad to see it go!

    I wanted to seek your advice and opinions on my personal scenario, and what my plans are. I am really keen to learn from the expertise on offer here!

    About me
    Professional working in Sydney, currently renting and not looking to buy PPOR (priced out and happy to rent where I want to live).
    $80,000 in savings that I am willing to put towards an investment property.
    Willing to borrow circa $325,000 as this is an amount I am easily able to make repayments for, and in fact pay up to an additional 20% per fortnight towards loan.

    What I am looking for
    Looking for property up to $400,000.
    Looking for a house, would consider a Townhouse, but would prefer a free standing house.
    Minimum 3 bedrooms, 2 bathrooms and 1 car spot.
    I am looking in Brisbane (with everyone else!).

    My strategy
    Buy and hold. I want to get my foot in the door with property investment, and ultimately build a portfolio.
    I am not looking to renovate initially, as I would want to rent any property out asap.
    I want to hold long term, and would hope to see capital growth, ideally accumulating additional property in the medium to long term to provide additional income.

    Question
    Does this strategy and approach make sense, buying at this end of the market (circa 400K), paying off the loan faster (e.g. up to 20% extra per fortnight) and building more equity to enable me to buy
    Do you have any advice or tips, or does anything stand out that makes this strategy look risky, or potential hurdles I may face.
    Really looking forward to some feedback, and engaging with you on here.

    Thanks
    Simon
     
  2. KDP

    KDP Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    246
    Location:
    Singapore
    Yes it makes sense Simon, sensible approach.

    One tip though is to put the extra money in the offset account rather than "paying off the loan", it'll give you easier access to it for the next purchase. I would talk to a broker and get a financing strategy in place, this is one thing which I wished I did initially. Having a below par broker definitely set me back.
     
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  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,758
    Location:
    Perth WA
    Hi Simon,

    In regard to paying off the loan faster, you'd be best to have a chat with a good broker regarding your plans for the future. There are definitely optimal and not-so-optimal ways to structure your lending to make sure you're set up for future in a way that is flexible and tax effective.

    Get it right from the start, and you'll save yourself a lot of money and potential headaches down the track.
     
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  4. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
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    5,726
    Location:
    Sydney
    HI Simon,

    B&H is a strategy most investors employ either by itself or combined with other strategies - so its a great strategy for many. I think your targeting the right area (Brisbane), although I cant give you much feedback on Toowoomba as I don't invest there.

    Just keep in mind that you want to invest in an area that will give you the best chance to extract CG asap so you can build your portfolio and equity asap. Personally, I would also be buying something that has room to add value to down the track, eg cosmetic reno.

    With regards to paying down the loan faster, most investors who want to build a portfolio asap know that its far better to not pay down the debt and rather leverage that money into more ips, which will ultimately yield you more wealth in the future when compared to the interest cost saved on the loan (most likely this is). Let the tenants pay off the mortgage as you concentrate all your excess cash into the next deposit for IP2. This also depends on your risk profile etc but this is the way I would be going to build your wealth asap. You need to speak to a finance broker who understands your goals and situation and who also has a decent portfolio themselves.

    good luck mate!
     
    Last edited: 23rd Jun, 2015
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  5. simonaw

    simonaw New Member

    Joined:
    23rd Jun, 2015
    Posts:
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    Location:
    Sydney
    Wow thanks for the very quick advice! Some really great tips here so thank you again.
    I think my next step is definitely to speak to a broker.
    Does anyone have any good recommendations, or are the 'big name brands' in the market OK to speak to?
    FYI I currently live in South Sydney area, close to the CBD.
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,758
    Location:
    Perth WA
    I'd avoid the franchises - you never know who you're getting, it's very much pot luck. Look in the finance section here, there are plenty of good ones who will set you up correctly.
     
  7. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Location:
    Sydney
    pm me mate, alternatively as Jess said there are good ones on here.
     
    Last edited: 23rd Jun, 2015