What now?

Hallo
First, let me apologize for any language mistakes.

I would like some help from people who have some experience with investments.
After 10 years l have paid off PPOR.
The main thing is that I don't know what to do from here.
I am uneducated and I am working low paid job without too much hope for significant improvement.
All this years l have had one dream and now when it's accomplished l am not sure what is best way to go furher.

I' based in Melbourne south east.
At the moment l need to make some plans and I would like to hear from you about some ideas.
I would feel free to take new mortgage, let' say up to 600,000. From here l have 3 options.
1. To buy old unit, not far from beach, Chelsea or Seaford area
2. To buy older house with sizeable land in unpopular area like Hampton Park.
3. To buy 1 or even 2 apartments in dandenong
What is best option? Any other ideas?
What would you do?

 

Well done! You're a winner .
You're already way ahead and in a good area too. 5 stars.

 

Hi @Zixo

Well done on paying off your PPOR - what a great achievement. Must be a great feeling!

As first step - figure out your overall borrowing capacity to see what you can do in terms of affordability, and whether you are able to go buy 1,2,3 properties etc in line with what you are trying to do over the long term

 

What @propertytwins said, however even before looking at borrowing capacity I would set some clear goals in terms of where you want to get out of investing.

If you put pen to paper and set a $ amount for your annual retirement income, you will find the steps to achieve that goal become a lot clearer

 

This.

 

You are to be congratulated on achieving this. However, you are not applying any leverage to your wealth creation. All the equity in your PPOR is going to waste - not smart!

 

It is smart - they've done exactly what most people are brought up to think - pay off your house to be secure in life. It wasn't all spent on grog and smokes.
Thank goodness the internet is about, otherwise I would have followed that mentality too.
Now, they have the equity, and this resource to go further.

 

The public will clue in eventually; this was the headline article on news.com.au a few days ago:

You might be better off not taking mum and dad’s advice on this one

That said I have several friends with masses of releasable equity that don't do this because of either serviceability or conservative risk appetites.

 

I did congratulate the OP on the achievement. However, I seriously question the "pay off you home asap" mentality. For example, while the OP was paying down the debt (over the last 10yrs) on the PPOR, many others (including myself) were making $Million/s on IPs purchased with leveraged (against their PPOR) debt taking advantage of the SYD & MEL property booms.

 

Congrats to the OP.

On a separate note purely from a 'grow your portfolio' perspective, completely paying off a PPOR is rarely the wise choice.

 

I agree, but I would make it the fourth step, the first three are:

1. Educate yourself about property investing
2. Educate yourself some more
3. Keep educating yourself

So joining here and posting is a great first step, but read the forums, especially the contrary views within it (echo chambers are useless and dangerous) and make up your own mind. Books are also good. Jan Somers is one of the favourites on here, but there are many other good ones.

 

The first line of the article posted above:

"WHEN I was growing up, my parents would advise me of the need to get a good job, buy a home and pay it off as quickly as possible. I suspect this advice came from their parents as well."

This is the exact advice I've heard from pretty much everyone in my life, including school.

Had I not thought outside of the square and started researching, as I said, I would have just continued to pay off the mortgage and then keep 'saving'.

You don't know what you don't know. Had I learnt about investing 15 years prior, I'd be leagues ahead, but unfortunately wasn't privy to any help or knowledge of it until I thought outside the box and researched. Lucky you, having the knowledge early.

 

As long as it doesn't turn into 'analysis paralysis' and confused knowledge, and one takes action

 

The real danger with doing that is that it quickly becomes an ingrained habit, and then a limiting belief that there's no better option than paying off the mortgage and save, save, save

The possibility of there being another way was brought up at an extended family dinner once. It ended up with yelling and table slamming That night I learned that people can take so much pride in having carried such a mundane strategy to completion, that suggesting any alternative is ludicrous, irresponsible and rude.

 

Some of my friends are professional researchers

The real lesson often doesn't start until you get your hands dirty.

 

Risk // Reward
To play Devil's advocate here:
Having a fully paid off PPOR and the willingness to work part-time until you're dead is a very safe end game.
Mortgage repayments can now be used to put into Super or LICs/ETFs, and one can then kick back and relax a little.
It all comes down to "how much is enough?".

 

Safe? To play reverse devil's advocate, this sounds like the surest way to fail. You'll have paid off your PPOR but at a massive opportunity cost. You're now too old to enjoy many of the world's gifts, and you haven't even started building a passive income stream yet.

 

That is a question which very few people are genuinely in a position (from much sacrifice and hard work) to ask. For the majority of others, they will most certainly need/want more than they have allowed for.

 

The other devil advocate you start investing and losing money and your house isn't paid off
so you load with debt and haven't got a fully paid off house that is even worse.

I have not seen someone who paid off their PPOR and fear about money but plenty of people has investment gone wrong and they are in real mess.

It all come down to how well you manage your money and your level of competency and stay within your risk profile, there is no one size fit all.

Leverage up is not everyone cup of tea nor paid off PPOR.

People within themselves has to strike that balance NO ONE else can help them

 

Yep it's all about finding the balance, and looking to others for motivation to aim for a certain balance, and information about how to achieve it.

You can't help someone by forcing your idea of the optimal balance onto them, but you can help by showing what's possible.