Strategy - 500K - 30y.o Sydney

Discussion in 'Investment Strategy' started by JD1, 30th Jan, 2020.

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  1. JD1

    JD1 Member

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    Hi,

    Love to hear your thoughts

    Single
    Income: 120K
    No kids
    Savings 500K cash
    No rent

    Thoughts on small scale developments (duplex-triplex). It would appear to scale or build a portfolio (in any eastern states) with property or developments is getting trickier than previously, tighter servicing conditions etc

    Would you only purchase positively geared, sacrificing capital growth (you can have both yield and CG..) strategies that have worked for you that can be replicated

    Keen on hearing your ideas!
     
  2. Trainee

    Trainee Well-Known Member

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    Goals and experience with development?
     
  3. JD1

    JD1 Member

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    Only turn key packages, personally, no builders licence.

    Goals, ideally 1) short term: to develop propeties with good yield, CG (+ depreciation to help),

    2) mid term: extract equity and do similar project again, holding the properties built

    3) long term ambition: build until all portfolio (covered in term of repayments) with 50-70K on top passive income
     
  4. Archaon

    Archaon Well-Known Member

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    Have you ran any numbers on potential Development sites, back of envelope to see if they stack up?
     
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  5. David R Sutantyo

    David R Sutantyo Well-Known Member

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    You seem to know where you want to go already, which seems realistic also. Don't think there's anything wrong with turnkey when the research and due diligence is done right. It's just a matter of having a good team behind you.
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    Great position to be in overall, well done.
    The $500K sitting in cash probably not the best use of the funds, have you considered other asset classes, Shares/ETF's etc?
    How much of the $500K would you be comfortable sinking into a property development project? All?
     
  7. JD1

    JD1 Member

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    Indeed I have, however the main issue is determining if the project fits in the parameters of previously stated goals.

    For e.g. Sydney Metro, site 1.1m - build 1mil - Triplex. Each returning 620 p.w (plus depreciation benefits). On those #s alone, I am unsure if the yield + depreciation is sufficient, to meet medium-long term goals. The numbers in this example incl. Stamp, c.c, demo, medium-high quality finishes
     
  8. JD1

    JD1 Member

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    Appreciated, Thank you.

    Yes agreed, a good team would be very much needed
     
  9. JD1

    JD1 Member

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    Thank you kindly,

    I'm very much open to various ideas of most investment forms. I'm not too experienced with taxation and shares for e.g. would very much consider a balanced portfolio if it would meet the med-longer term goals.

    Yes, I am comfortable to give it all a go, as long as the fundamentals are of course relatively there.
     
  10. Sackie

    Sackie Well-known cafe bum of the East Premium Member

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    Why don't you sell some stock, realise the profits, and put it back into the business to do more deals. You dont have to keep everything.
     
  11. JD1

    JD1 Member

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    Thank you, that is also a good option, as the numbers on holding all isn't so great. I.e to move onto the next project.

    I'll do the numbers again on selling part stock, to see if that would allow for more deals i.e finance/broker
     
  12. Sackie

    Sackie Well-known cafe bum of the East Premium Member

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    If the rental yields after developing plus depreciation aren't at least neutral, then I can't imagine how the deal would stack up in the first place .
     
  13. Tofubiscuit

    Tofubiscuit Well-Known Member

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    What net rental yield do you think you will achieve in the next 5 years and annual capital growth.

    Compared that to alternative assets and risk associated. For example, an ASX ETF will return about 5% gross dividend yield and you can take a view on what the annual capital growth may be on that. Buying a portfolio of ETF will have less risk initially (no build risk and generate income straightaway).

    Of course, if you compare different asset classes and your development site / build still comes on top then its a winner.

    TB
     
  14. virgo

    virgo Well-Known Member

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    You have made 500K at 30 years of age and you need advice?:)
    I suggest you should give US advice....

    i'd say keep on doing what you are doing ...(sorry couldn't help it!):p
     
  15. JD1

    JD1 Member

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    Agreed. Based on previous example, numbers are good to come out positive/at least neutral, the hurdle is meeting the mid-long term goals.

    As you've kindly suggested, the sale of some stock , will free up some equity to be unlocked. I'll be needing to sit down with either a broker? To build a form of finance strategy, to see if it'll be possible to meet those goals:)
     
  16. JD1

    JD1 Member

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    Thank you, seems like a wise strategy to weigh up
    I.e. Risk - taxation implications
     
  17. JD1

    JD1 Member

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    Haha me advice?! Too kind. Hopefully this thread assists helps us all in some way :)
     
  18. Sackie

    Sackie Well-known cafe bum of the East Premium Member

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    If you can do strategize with a good broker who also invests then it would be quite beneficial.
     
  19. JD1

    JD1 Member

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    Great!

    I'd love to hear more suggestions and/or recommendations from you all!
     

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