Pay Down or Buy Again?!?!

Afternoon Property Lads and Ladettes,

I'm curious to hear a few opinions on my current situation and hopefully get some advice. Which is actually hard to get, with out signing up to buying their land using their builders -.-

26 yrs old. Looking for long term (20-25 yrs)
Looking for 130-150 k passive income by that time
low to med risk
Income at the moment 95k
Low expenses

Currently got one IP (Brisbane North)
360k 20pct down- 290k loan. (190 vai and 100k fixed)
Currently 180k offset against vai loan
Rent 420 p/w
I know with all the smoke surrounding the housing market at the moment, should I focus on just paying this property off in two years and see where the market has gone? Prices might have dropped closer to Bris city for me to pick up a nice PPR.
Or with being young (knowing it's the time to accumulate) go and buy another property?

Thanks in advance.

 

Who is 'their'. Not many advisors sell land - in fact I would say none do. Many calling themselves advisors might.

Could you live in your IP?

 

Thank you for your reply.

Quite a few that you reach out to, offer land and packages. I wouldn't call them advisors, more sales rep.

Nah, I can't live in it.

 

Where do you live (parents/rent etc)? Is that going to change in the short/medium term?

 

Do you NEED that much?

$150k passive pre or post tax?
I'm assuming in todays dolars.

$150k pre tax requires $3.75M unencumbered in todays dollars.

Is your strategy going to get you there?
I'm a firm believer buy and hold does not work to achieve those results.

Not on an average 6 figure income.
Something to consider.

 

If you ask someone who has reached the “top of the hill” and has been there for some time (in case, we have been retired for 8+ years), our formula is simple:

1. Use property to generate growth, using sensible leverage (while working and especially in retirement).

2. Use shares to generate income (especially in retirement).

3. Maximise your income prior to retirement by taking a second job, owning a business, etc to enable the accumulation of 1. and 2. above.

There are many ways to “skin the retirement cat”; you have to identify which one works best for you, for your talents, your intelligence, your interests, your risk profile, ...

No-one else can do this for you but many can help you along the journey.

One final comment:- the above is simple to understand BUT hard to do.

Out of the billions who start this journey, relatively few reach the “top of their hill”.

 

Hi Ethan

Your not doing to bad $70k down plus $180k in Offset so $250k tax paid at 26. You must have a well paid job and already have the attributes that will allow you to succeed at the investing game.

We are in a property downturn so there is no need to rush your next property.

Work out your strategy as to what property type will work for you commercial/industrial single family homes multi family as in house and granny flat or even blocks of units. Another angle is to find a slitter block and develop or even get into townhouse developments. Will need to do some learning but certainly you are in the sweet spot at 26. Also research Euro (on this site) who does some duplex / granny flat developing. Also might want to dig out the old Somersoft forum and find Dazzling who settled on industrial property and provided great info. Commercial props - our stories

Presently as a result of extremely low interest rates all returns are very low but with banks starting to put up interest rates distressed properties will start hitting the market. These are the opportunities to start looking for and then bargain hard. These are generally not new properties.

Nobody but you knows what your priorities are so we can't answer your questions directly.

 

I guess the question to ask is in 25 years time will 130-150 k be enough?.
But I know a few that retire on a lot less,and as rents land values increase over a period of time ,increasing the final return maybe look for future development blocks ,but only you can do that...

 

Is Dazz still around ?

 

Not as far as I know. People have mentioned that he comes back every so often but certainly I have seen no contributions like he used to make.

Possibly he is still thinking about going into politics and is trying not to create any further controversy.

 

Why was he banned ?

 

He was banned and then came back then finally left when live took over. He tried to stand for politics and was also a company director.

Basically called a spade a spade and that didn't sit well with the PC crowd on this forum.

 

What do you want to do that for? It's not a tax effective strategy and you'll have to pay tax on the rental income with no mortgage interest expenses to be claimed. And.......you're not applying any leverage.

What difference will that make?? You'll either want to invest or look across borders to invest.

PPOR's are OK to have but hardly get you far towards your investment goals.

This is what I'd be doing. You are in accumulation phase - keep focused.

 

Compounding growth is the biggie. So buy as much as you can as early as you can. The vital part is to do it in a manageable fashion

 

Thank you all for your replies and advice. I appreciate it! My next decision is whether to buy something more expensive, close in to the BRIS CBD. I have my eyes on a couple, one in Wavell Heights and one in Boondall. Or should I look cheaper again in D'Bay (Because I know the market) / ask the Logan experts?

 

I have found that the yields in Logan have been great in turning repayment pressure basically off. However, the CG in the area may be very slow and if interest rates were to rise considerably i may be left with a few duds.

 

Logan Logan Logan!

Also, @Propertunity, love the response. This is fantastic advice.