Young Investor - Strategy?

Hey Guys / Girls!

I joined this forum earlier this year and since then have purchased 2 IPs in the Logan Area.

I am 24 and started work just this year. (Medical Intern)

My most ambitious goal is to have financial independence on a "decent" income by the age of 30, or at least be at a point where i can take things easy and work part time - as i really enjoy travelling and want to travel a lot while i'm young!

My current thought process so far has just been to try and find properties below market value, with decent yield (6.5%+), in major capital cities or near to (ie. Sydney, Melbourne, Brisbane). I have so far only really considered Brisbane / Logan as properties there are within my price range and probably have more room to grow compared to Sydney / Melbourne.

My two properties currently are:
Property 1: Loganlea. 1000m2 land already has a large shed capable of converting to granny flat. Yield 6.3%
Property 2: Crestmead 650m2 land 5 bedroom. Yield 7.3%

Both properties were around 320-330k, purchased at 90% LVR with no LMI as i am in a medical profession.

I have enough savings to make a deposit on a 3rd property, and am now considering either:
a) Purchase in same area as i know the area well and can likely get another good deal
b) Search somewhere else to spread out my portfolio... but where?? North Brisbane? Adelaide? Melbourne?
c) Don't buy a 3rd IP, instead save up and do something else with it... but what?

I guess my ultimate question is: What are some thoughts from you guys here as to the strategy / where i should head from now to achieve my end goal as quickly but as safely as possible?

To give a bit more background:
1. I want to become a general practitioner so I have good employment prospects, and salary will grow steadily year to year. There is not much risk of me not being able to find a job so i can probably tolerate more risk than others.

@Michael_X , @Taku Ekanayake

 

Do you have a ppor?

If you live in brissy or surrounds I'd be buying ppor in area you know will have good rental yield move out after 6 months to a year and rent

Then move onto property number 4

I still think Adelaide and brissy great spots to invest but I'd be looking somewhere else other than Logan

Good luck sounds like you have some great properties already

I agree travel travel travel I have kids now and did a lot of travelling when I was younger can't wait till they are old enough to go gallavanting around the world again!

 

Thanks for the reply!

No actually I live in Sydney. Currently with my parents. I don't think i can afford a PPOR here in a place i'd like to live! My PPOR in the future may well be a place my parents can let me stay in though as they might go overseas haha

 

Hah I feel your pain!!!

I would look at Adelaide or north brissy I know there is a BA on here in radelaide that has great reviews.
Depends how much you have but can definetely get some great yield and I think has a lot of room to go up!
We got a property large enough 2 develop down the track. Meanwhile rent nearly covers mortgage
Good luck

 

Great work @Kelvinator, I would just keep making the most of not having to pay lmi. Just keep buying until you hit the wall, while your still living at home. Great to see another young person on here having a go. As others have said north Brisbane and Adelaide are deffintly looking good.

 

^I guess that's my concern though - to keep buying until I hit the wall, without actually achieving my goal of having some degree of financial freedom by a young age. Are there specific types of properties that i should target for my goal? (ie. ones with more potential to add value and create equity, ones with higher yields, ones in better locations for maximum growth which are negative cash flow?)

I feel like if i just keep doing what i'm doing, i probably won't achieve my ultimate goal.

 

What year did you buy the property in crestmead at 320-330k 5 bedder , im looking for the same type of high yeilding properties

 

If I were you I would be concentrating on a couple of growth properties and then start filling offset accounts and watch the passive income start rolling in .
At 90% a growth property in say Sydney or Melbourne won't have great yield but with your high yielding Logan properties,holding costs won't be to bad. IMO you'll own a good combination of growth and yield properties.

GOOD LUCK with it all

 

As @tomlemke has said I would take advantage of the LMI hall pass you have available.

I'd say b) would be your best option with a) you don't want all your eggs in one basket and c)is completely up to you. To build a strong passive cash flow portfolio you need a strong equity base as well. Plenty of places in Adelaide, Regional NSW and North/South Brisbane at the moment that tick all the boxes.

At 24 you are already doing so well! Good luck

 

Good buys and great yield. Loganlea and Crestmead is a great part of Logan.

I was also faced the same question after I purchased in Logan 2014, is should I stay or should I go. I decided to stay in Logan simply I know LGA well.

 

Question:
did you use BA for the 2 purchase, considering you might be time poor?
was it this forum, michael_x, your friends or your own DD for buying Logan?

 

@RetireRich101
Oh good to hear. Would love to hear how your Logan properties have performed. . . No I didn't use a BA but advice from taku and Michael from this forum really helped! I met them through this forum.

If you were in my position with my goals what would you do now?

 

Get a provider number and start your own medical centre. build a business that generates cashflow even when you are not working, couple with investment properties. get physio, psych, rehab and pharmacy in one place...you will do well.

 

I have read your first few post earlier in the year. Your situation is a bit unique than some. Your cash position would be rapidly growing when you become a GP, and including the CF+ properties your purchased would mean you pay more tax, and if you're comfortable with this, then it's ok.

All properties I purchased in Logan have the capabilities to add additional dwelling in forms of Annex unit (aka granny flat), strata/community title, subdivision and multi-unit dwelling. Most of them I could keep the existing house and build new dwelling either next or at the back. For now, retain existing and build new is the only profitable means in my books for the area.

Not sure about the plot of the house and access for the Loganlea property, but a 1000m2 allows you:

1. subdivide and build on the vacant land
2. subdivide and sell off vacant land
3. build new dwelling at the back and strata title it
   
4. build annexed unit(granny flat) at back

1,2,3 allows you separate titles, meaning you can sell separately, but you will incur infra fee. This could be 20k-28k

Your Crestmead 650m2 allows you only to build granny flat, but because the size of dwelling ( and assumed brick veneer type construction for the area), you may not have the back yard space to do this down the track.

The Logan Central /Woodridge/Kingston (aka SES suburbs) kicked off the growth, probably about 10-12% per year for the last 2 years. Elsewhere in Logan, such as Crestmead and Loganlea is around 5-10% per year. It is in better suburbs of Logan less tenant problems and is probably catching up for growth ( probably michael_x might alert you to it in the first place)

Hope above give you some background info, but probably won't help much in your decision moving forward though.

 

Hey @Kelvinator , welcome aboard.
Were you able to get a loan with no LMI, because you're in the medical profession? Might be worth looking into if you haven't already.

 

@Azazel

 

You have done very well at age 24. Would you keep buying similar CF properties or mix with neutrally geared historic CG properties?
Have you mapped out how to use your borrowing capacity?

 

Wowsers, might need some goggles.
Thought I gave it a good read.

 

I'll probably go with option 4 as it has got a massive shed with own water and electric supply already. Just needs insulation + interior renovation to make it a proper granny flat!

I guess that's what i haven't really thought about in detail! I guess with my increasing income, i could afford to get more neutrally geared / slightly negative geared properties in more growth areas... At the same time, i believe cash flow is ultimately what i need for my goal... especially since borrowing capacities are so damn small now (compared to before)!

 

Do you need council approval to make it habitable?
Different councils have different rules.