Hello everyone. Thank you in advance for taking the time to read my post. I'm new to this site and seeking some advise on investing into more property. Currently my partner in crime being the wife and myself have an investment property each. I have a 3 bedroom townhouse in a nice suburb of Ballarat valued at around $300000 with $260000 owing on it. I receive $1280 a month in rent but still have to put in $280 a month from my wage to meet the repayments. The wife has a i bedroom unit in another busy suburb of Ballarat which is valued at around $150000 with $115000 owing on that property. That is rented out for $700 a month. She puts $100 a month to make up the repayments. These are with separate banks. We have $45000 in a savings account and combined gross wages are minimum $150000. At the moment I'm wanting to invest into some more property this time with the idea of making a profit in the short term to put that back into our mortgages or another property adventure to hopefully continue building the funds. One proposal I would like to throw out there to you all is the unit my partner has is in a block of 4. All joined single storey one bedroom units. They all are currently rented out with one of them receiving the lowest of $150 per week as he is a long term tenant. Around 10years. I'm looking at the idea of buying two more of the units as they are for sale. And holding onto them and when the fourth comes up buy it with the hope of building 3 to 4 new 2 storey three bedroom units on the block. Or sell to a developer. It is very close to all amenities. Such as bus stops right out the front. Ten minute walk to shops and schools. And a 5 to 10 minute drive to Ballarat University. Has anyone on here had much to do with developing units and is it a good option to try and make a profit sooner rather than later? By the way I am still in the process of dealing with council to see if I could get the green light for permits. And also very new to to this. Thanks again for taking the time to read and any advise is greatly appreciated.
Hi @Mani, welcome to the forums From a basic finance perspective it looks as though you should be okay to buy more, assuming no kids or other debts. Even with a few more liabilities you should be okay from the rough look of it. However in regard to your plan to buy more units, what if the fourth one never comes up for sale? What if it does and you can't get funding? Would you still want the other 2? Are they good enough investments to buy regardless? If they're not, I'd look for a different purchase.
Hello and thank you for your reply Jess. One of the units has been for sale for quite sometime. The other has only come on the market. We originally were going to sell the one we own. But noticed the other two for sale. The fourth one only sold early last year. So I'd assume it wouldn't come up for sale anytime soon. But into the future I'd like to think it would. The beniefits of acquiring that fourth one I would think would be worth the wait. And in the mean time the ones we own would be getting rented out. But also there maybe other IP we could probably Aquire. Such as a place that needed a Reno, I'm handy with the tools and work month on month off so have the time to put into fixing a place up. That was another option I had running through this mind of mine. I actually have even tossed with the idea of secured storage units. Building and renting them out
If the other unit only just sold, you've got to consider the opportunity cost involved in having your money tied up while you wait for it to come on the market. I'd look at other options, as there's a lot of 'if's' in the unit scenario.
Can you afford to buy all three now? If so, why not offer to buy the fourth one first? Just because its not on the market doesn't mean you can't buy it Would the development plan be worth it? Will it give a good yield once completed? And.. will you be able to finance the dev?
Hi there Mikey, we could afford to buy all three as far as starting the development. That would be a project a little further down the line. As we would most likely need to save some more $$$ But if did aquire all of them they could be rented out until we reached that point. I would like to invest and make some money a little faster. So possible the thought of buying an older place and renovating and reselling. Or build in a developing estate and selling it off later. Not to sure what is a good option to do? I've been put onto a good friend of mines financial advisor who I was hoping to chat with and learn some more. Thanks again for replying I really enjoy this website and all the wealth of information it offers. I also hope to one day be in a great position to offer my own. Thanks Mike
No it's just in a low interest savings account at current. As it's our combined savings and my property I rent out is separate to my partners property. What ever we decide to do we will be combining our accounts in the near future.
If you own 3 of 4 units, you can basically run the place anyway, I would see if the 4th is interested in selling as well. Not sure there, but here if 3/4 decide to sell, the other quarter get no choice, so 3 out of 4 is almost as good as 4, also, you can finance them separate at higher LVR, buying the whole block at once you would be at 70LVR with most lenders. So, if you really like the area and the block, I would go for it, use different lenders.
Maybe consider diversification and buy a property elsewhere. At the moment you are exposed to any potential stagnation or falls in the Ballarat market ( although I am not familiar with it ). Also bear in mind that it is tough to make an adequate margin developing in areas where there is not much value in the land.
Yes, in places where the land is cheap, it can be counter productive to develop or not financially viable. But owning a block of units that is positive income generator is a good thing IMO. PS how are your legs Wombat ?
