With this $'s and this timeframe what would you do?

If you had $230k cash and a capacity to service a $400k loan, and wanted to buy something to hold for 10 years and then sell, what would you buy and where?

I don't know if it is relevant to your thoughts, but I have an existing investment unit in Revesby valued at $550k (owned outright) and about 600k in shares and managed funds, but a relatively modest income that will not go up more than inflation over that time.

 

Whats the goal and by when?

 

Assuming you're after long term CG. A house with at least 600sqm land as close to the Brisbane cbd with add value potential in the future. A solid renter which appeals to OOs, renters and will allow you to hold for 10 plus years, as that's your time frame indicated.

But it really depends on your overall goals.

 

I want to retire in a decade (when I will be 55) and need somewhere to live with my wife and an income (aiming for $60,000pa). The plan would be to sell the two investment properties to buy a place (probably in Sydney, possibly in QLD) and use the shares/managed funds to live on. Will also be able to access Super at 60. Currently we have a little more than a combined 500k in super (and my employer adds $11,500 pa)

We live pretty frugally and currently save $4000 per month, which I invest in ETFs (mostly). We also reinvest all dividends/distributions from our shares and managed funds.

I'm thinking that I need to access the leverage available with property to get me all the way there, but I have not had any debt since we borrowed to buy that Revesby unit in 1999 (when it cost $189,500!).

Do I need to provide more information?

 

You have 550k property, 600k shares and 230k cash. + 500k super?

Your goal would be a property + say 2m of shares in a decade.

You save 48k a year, and reinvest everything.
So you're not far off just on normal saving + reinvesting into ETFs.

Though how exactly is it low income if you can save 48k a year? Your borrowing capacity should be way higher).

Do you even need leverage? You have a good level of assets for your desired income.

 

His income alone is $120,000 per annum but we don’t know what their combined income is. If he has no debt, you’d assume (at 45 years old) the serviceability would be more if the other wage was $80k plus.

 

House in Melbourne, but note the rental return isn’t great there. So next best would be house in Brisbane, in the best location you can buy in. Or House Mount Druitt area. No joke. If your budget is high enough.

 

Sorry, a correction, we save $4000 per month, but only invest $3,500 per month, the rest is saving for some longer term expenses.

From my employer I earn $7262 pm after tax (because I work for not-for-profit a chunk of my income is tax free). My wife does very reliable casual teaching two days a week and earns on average $2500pm, but probably won't do that for the next 10 years. Our unit at Revesby grosses $380pw and our average net rental income from it (before tax) is $1240pm. We do not own the house we live in, it is provided by my employer.

 

Still really interested in what others would do with these parameters.

 

I would also consider Gold Coast, assuming that your budget is 600K plus.

Then you are potentially owning something that could assist with your retirement plans .

It seems that you need to be positively geared too? Or does that not matter so much.

Some ppl make money buying IPs in Ipswich, or cheaper suburbs in SE Qld, you could buy two!!

 

10 years is a LONG LONG time. No1 on here knows what will happen and where is the best place to buy.

10 years ago in back in 2011 if I knew what was going to develop I would have put each and every single cent in real estate instead of pursuing multiple failed businesses, buying expensive cars and wasting money on just stupid stuff.

Every dollar would go into RE. The next 10 years well not a single person knows.

Maybe everything changes and not a single person cares about living close to the CBD due to changing work environments. Maybe we get another pandemic? Maybe another global financial crises? Maybe some other natural disaster that effects everyone. Who knows.

 

Your fully owned unit in Revesby is a potential source of equity if you're willing to take the risk of borrowing funds against it.

Given your life's stage and situation and where you want to be in just 10 short years (I have the opposing view of 10 years being extremely short - barely a blink of an eye in the grand scheme of things), I would strongly consider putting more of your cash that into shares, as property tends to make sense on a longer term scale, and 10 years might not see much change to your capital within that timeframe. Given that this past year has seen significant capital growth in properties; I anticipate the next 2-3 years the growth may plateau and 5 years out, you'd sit half way through your desired timeframe on not much gains; and at the end of 10 years may only see 50-80% gross gains on your capital from now. Deducting the costs of the loan, you may only net an overall 4-5% pa after all the fuss and hassles. At which shares might propose a better option.

But that's based on my pessimistic view of property prices in the next decade; and likewise an optimistic view of shares (they may plummet 40-50% as the crypto markets did overnight last night).