Hey All, My wife and I are both 31 and have just bought our home and are 100% debt free in Canberra. As my wife and I aren’t looking to stop work anytime soon and have bub 2 on the way so cash flow from work is going to slow for a bit but we are going to be saving towards a deposit on the first rental. My plan is thus; Save 20% buy a property and place a tenant. Not take any cash flow from the property and match the tenant in additional contributions towards the mortgage to build equity. Then borrow against the first for the second and repeat, Totalling 3-4 properties over the next 2 decades and move over to taking cash flow in retirement. love some input from you all as I’m just starting out So much of the info out there is aimed at our American friends..
You could use equity in your ppor as a deposit. But that means taking out a loan on your home. How do you feel about that?
Well done on having a home debt free at age 31. I'd be keen to know how you did that... saved very hard, lived with family while you saved, inheritance? Your aim is pretty much what we aimed for and have done. It's been an enjoyable journey, frustrating at times and we've worked hard doing everything on the houses because we couldn't afford to pay painters, carpenters etc.
Just understand that this will slow down your ability to buy, and if you have trouble repaying the investment loans your home is exposed anyway. one thing you havent mentioned is other asset classes. Instead of keeping property for rental income, it may make sense to sell some and move the money into shares for example. This will also take a few years to develop competence in, so starting early would be good.
The other thing I would add is that on just two Brisbane properties bought 22 and 14 years ago, our land tax has gone from "zero" back then to $12.5k last year and will go to $17k this year due to us reconfiguring two lots into three. So be aware of land tax. It rises each year and the threshold doesn't rise at all it seems. Perhaps buy in different states, but then you have to manage, maintain and repair from afar.
Right you are, we contribute a bit extra to the supers and have our allocations set aggressively and we invest after tax into a few ETFs. I believe I can probably do okay in real estate as I have worked as both a sales agent and a property manager (mostly just to learn the industry) as for the home being exposed I need to speak with a pro in regards to setting up a trust, if applicable.
Indeed, I think I would be better to buy interstate- ACT being quite savage on the land tax and all.. IIRC NSW is much more considerate and my solicitor deals with NSW too so that would work for us
I think your plan is very sensible. I believe the world is going to get much "bumpier" in the future in geopolitical terms. Your plan appears to minimise borrowings and paying down what you do borrow quickly. It will help secure a good life for you and your family without too much risk. I wouldn't be worried that you missed making another million by piling up debt and having sleepless nights.
We got here with a mix of all of the above really. My wife and I met at 16 and are still going strong- saved our butts off, worked hard, lived in uninsulated garages To save money and then my father passed away unexpectedly. That’s basically the why behind us doing this, prioritising family and being able to be flexible.
I’d also love opinions on if it would be prudent to set up a family trust to hold the property assets in to protect the family home, granted my approach seems very conservative but for the cost is it worth setting that up for fewer than 5 properties?
If you are employees and have insurance on the properties, protection from what? There are other things such as tax implications on death, especially if you have kids and grandkids by then. Also land tax, losses trapped in the trust etc
Max super each. Leverage PPOR for deposit. Allows you to buy earlier and better tax. Look at other structures, such as trusts and investing in other asset classes, property, within the trust - personal situation dependent. Canberra casino and bet on black. Double down lol
There is a 8.23 min video and blog by Stuart Weymss from Prosolution on the typical investor life cycle I have found it very useful - I like to point people to it when they are starting out. A typical investment strategy life cycle used by succesful investors obviously as Stuart points out it’s not one size fits all but it’s a great summary of how it can work I have found it summaries quite nicely what im doing
I’ll diversify into the Monday lotto and not just play the powerball- that’s called smart investing mates.
Mate, this is my exact train of thought aswell. Just trying to create a strategy around it is where I'm at. Not risking too much but also not looking to make a fortune off of it
