What is my best strategy?

Hi everyone,

I am new to this forum but I have been lurking and reading advice from you guys about property investment.

I would like to ask what strategy I should employ for early retirement.

My current situation:

I am 28 years old. I live at home at the moment with minimal expenses and am a franchisee in the health industry.

My salary is $120,000pa. I receive dividends from the franchise at around $70,000pa. (All before tax) I have around $130,000 in cash and $15,000 in an ETF fund. There is around $30,000 in my super. I have no loans (except HECS) or credit card debt.

There were a few strategies that have crossed my mind:

Strategy 1
Accumulate property (2BR/3BR Victorian houses) in a inner western suburbs of Melbourne (Yarraville and Seddon or Kensington and Flemington) at around $800,000 to $900,000. Then to hold and wait. This seems too safe and won't give me the returns I'm looking for.

Strategy 2
Accumulate property with larger land sizes (600sqm+) that are further out. (Braybrook, Sunshine, St Albans or even Werribee). Hold for a few years and then develop into townhouses. This is also safer but it gives me bigger potential returns when I choose to develop in a few years time.

Strategy 3
Develop immediately with the purchase of house and larger land size. This seems to be too risky and perhaps I feel uncomfortable with taking on such a project with no experience.

I would like to know if there are any other strategies available to me? If I should go with any of the above strategies, am I looking in the right areas? Or should I look somewhere else?

I understand I will have to do my own due diligence with any advice I receive but I appreciate all the help I can get!

Thanks everyone,
Patrick

 

Great position to be in. Really depends on your risk profile/goals. If your risk profile is moderate then perhaps look at value adding deals where you either add value now or later.

If it were me, i would say Ok, these are my financial goals, this is my level of risk tolerance, this is what i am willing to learn and spend time on, so which strategy will best meet those guidelines.

Let your goals, risk tolerance and amount of time your willing to invest in it guide your strategies employed.

just my 2 cents.

 

I agree with this. Mix of 1 and 2 would be a good strategy

 

Sounds like business is good

Any reason (other that comfort/familiarity) you are looking in your home state?

 

My votes for #2 and possibly #1 pending servicability.

Keep in mind if you go with #2 and then follow up with #1 that could impact your servicing of actual being able to do the developing on #2 later.

 

With the savings you have, is there a good reason for credit card debt?
Marg

 

Strategy 2 and in 6 months when you've done some more reading 3. Buy and hold will only get you so far. Reach for the stars

 

That would be my choice for going hardcore if it suits the OP.

 

Hi everyone,

Wow, thank you all for the great replies.

I am leaning more towards strategy 2 but it's true, why not do both 1 and 2.

If I head down this path, which should I do first?

I thought I would start off in my home state since I have easier access to view properties.

Am I looking in the right spots for my strategies? I am looking for properties with 1 to 1.5km of train stations and hopefully with little work to be done to them.

Furthermore, I have done some research (mainly reading replies on this forum) but is there any resource available to give me a guide on what costs are involved with development? Ie draftspeople, building permits etc?

Loving the atmosphere in this forum!

Cheers,

Patrick

 

I don't think it needs to be seen as hardcore. Just getting say 2 new properties instead of 2-3 old ones. Different dd required and slightly more risk but way better outcome

 

oops I was getting mixed up with option 3

 

Why Melb ? It is reaching its peak....
You could buy at a lower price point elsewhere, thus reducing risk of poor purchase, lessen the impact of "one"being unleased, also spread/lower land tax over various states...

Contact a buyer's agent in Brisbane/Adelaide for a chat, decide whom you like and start with 1 property in your preferred zone/group.

Build from there

 

Hi everyone,

If it's okay, I'm going to keep asking questions!

Does anyone have any recommendations in buyer's agents in VIC, SA or QLD?

On development, are there any break downs on typical costs for building townhouses on a block? Ie: cost/sqm, building permits, land inspections, etc?

Cheers,

Patrick

 

Buyer's agents highly regarded here on PC:
JacM for VIC
DaveM for SA
Karen from Property Zest for QLD

Do a search in the forums and read through the recommendations and client testimonies.

 

I wouldn't go option 3 unless you have experience in property markets... Knowing where to build, what to build and how you can sell for big profits. Sure otion 1 and 2 may be "safe" and even boring but you have the figures all laid out. As for development it requires more than feasibility, you need to k ow profitability and manage the project. Speak to people who develop like @Leo1234 @MTR @Westminster @Bedeveloper

 

While I think good buyers agents are worth the money, I think at this stage in your journey, you'll learn more from doing it yourself with help from the forum.

But, you may be time poor and aren't able to do it yourself. In that case, I'd find a good buyers agent and learn from them.

Keep the questions coming. The forum members are very generous with their knowledge and time and are always happy to help.