Strategies for 4th property

Discussion in 'Investment Strategy' started by Matt87, 21st Dec, 2017.

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  1. Matt87

    Matt87 Well-Known Member

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    Hi there,

    I have a question, I have 2 soon to be 3 properties. What you your advice around having the capital for the 4th one? Do people try and have other income streams to boost their capital? Or purely use their equity to accumulate more?

    Matt
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    If you've got access to other income streams, that's always useful but I rarely see it. Most people simply use equity in their existing portfolio, but saving money is always a good thing to do. If you do have savings, then the best way to utilise them depends on individual circumstances.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What is your limiting factor?
    a) deposit, or
    b) income
    c) or both
     
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  4. KinG3o0o

    KinG3o0o Well-Known Member

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    any reason you need to get the 4th property ?
    for capital gains ? tax ? income ?
    also since you have 3 property, consider other assets ?

    equity in the last few years will be easiest because technically you dont have to work for it. income would be next i guess.

    ..
     
  5. Morgs

    Morgs Well-Known Member Business Member

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    Unlocking equity is one thing but have a think ahead around serviceability at this point - this can often be a limiting factor and getting the structure earlier is always better
     
  6. Ross Forrester

    Ross Forrester Well-Known Member

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    Think about a unit trust. It can help with land tax and later on you could consider selling the units to your SMSF.

    You’re getting a good number of properties so a smart tax professional will help your strategy.
     
  7. Matt87

    Matt87 Well-Known Member

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    Thanks for all the comments. Income seems to be problem and getting serviceability up
    To a level to go forward I guess. Wanting to increase my rental income so buying a 4th property I thought might help this. Alternatively I can invest in shares for dividends instead .
     
  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Just a general trend I've observed, increasing rent doesn't have much effect on serviceability. Many people are in the position where the calculators indicate they can't service by over $1,000 per month. Increase rent on three properties by $10/wk will chip away less than $100 per month of this.

    Thus some people might need to increase each property by over $100 per week to get there. That's a lot of rental increases.

    Visit a broker to better understand how far you're falling short. This will help you better understand the scope of the problem and possibly reveal alternative strategies. Chances are it's not rental increases that's going to get you to the next property.
     
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  9. Matt87

    Matt87 Well-Known Member

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    Thanks Peter for the advice.:1)

    Matt
     
  10. L3ha7

    L3ha7 Well-Known Member

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    This seems interesting if one want to go down the path of smsf , thx @Ross Forrester.
     
  11. L3ha7

    L3ha7 Well-Known Member

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    Hi @Matt87

    I think we are sailing in a same boat hence I am considering to use equity from all propertise to buy another one.

    But after reading @Peter_Tersteeg comments-I may have to reconsider.

    We want to move to family friedly subrub with good schools etc. But those subyrbs are not affordable at this stage so considering to invest interstate (SA) or somewhere in NSW where we can afford as per our equity and then with the help of further capital growth and getting higher paying job may increase the serviceability in 2-3 years and will be able to buy in the suburb of our choise ;)

    No crystal ball here hence All planning considering various assumtions. No advice
     
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