澳洲Australia property How To Use Our Head Start In Property? As


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi everyone,

First of all id like to say a big thankyou to all the Somersoft members for doing such a great job in this forum. Us newbie’s ask soo many questions and we do really appreciate the information the more experienced guys and gals give us. Thank you. :D

Just plodding along living and paying off our PPOR that we purchased in May 2009. It’s a very small house (11sq) on a largish block of land (680sq) with approx $70k in equity built up due to a discounted sale price. (Owe 160k, Value 230k). My partner and I are starting to consider how we may be able to make use of this fortunate head start.

Our income story go’s like this. I make a very average $40k PA and my partner is not working at all. She receives government payments while looking after our baby girl (Now 10 months old) of $3,792 PA so in total we make $43,792. Our monthly mortgage payment is $1000, so you can see we are pretty stretched in regards to our cash flow at the moment.

The possibilities we have come up with are the following

- Live in PPOR and apply to sub divide the backyard, built another house out the back and rent it out. Keeping both houses for CG.
- Live in PPOR and apply to sub divide the backyard, sell the backyard land and use these funds to pay down the PPOR. Helping our cash flow.
- Live in PPOR and pay it off as we are, improving it as we go and enjoy the big backyard and watch the CG go up with the land content.



I just turned 30 yrs old and my partner turns 39 this year. We are on a very small income and feel there should be some way we can make use of our discounted purchase price.

The question I guess im putting forward to you is, what would you do in our situation? We want to be able to purchase residential IP’s through out the next 10-15 years and with CG, be able to LOE by approx 2025.

What ways would you “gear” and make good use of the situation we are in?

What other options along with the ones stated would you recommend?

Any questions, advice and information is greatly appreciated.

Cheers

Mick  

评论
Hi Mick,

Congrats on the equity!

We're a bit in the same boat with partner working (approx 50K) & me looking after bubs (no income from me apart from govt pmts & my couple of IP's.) We're paying off PPOR & 2 IP's.

Few questions:

Will your partner go back to work soon?

Where is your PPOR...is it in a suburb that you can immediately benefit from a subdivide?

Don't know much about cost of subdividing, but many on here do & could probably approximate it for you. Is it easier to buy IP in seperate location (spread the risk around so you're not all eggs in one basket) & do subdivided down the road a bit?

Our gearing is: a LOC against one of my IP's to pay all the IP bills (debt recycling / capitalising interest) & putting all rent monies into paying down our PPOR.

Regards,
M&M  

评论
We're in close to that situation but have even more equity (hoping to bring loans up to $210k later this year, but will have over $500k of house to show for it).

Our income is from multiple small and not consistent sources though so we have gone the lo-doc route. We have, without actually trying (in fact we were actively trying not to), managed to come by two properties that will be so positively geared they will cover themselves, a third property, and all associated expenses. Unless interest rates go up heaps more or my tenants work out how to cancel their automatic rent payment.

Positive gearing rocks - if it EARNS you money it doesn't matter so much if your income is low. Its the wallet sucking negatively geared ones you want to avoid. Usual deal to get positive - buy cheap and fix it up, build new in a regional, subdivide or rent by the room. Depends how dirty you want to get your hands.  

评论
Nothing against positively geared property, I believe it has a place in many peoples' portfolios. I just feel that I can get ahead faster relying on capital gains. I've read threads here suggesting banks are hesitant to lend against some country properties. I've also discovered some portfolios stall a bit because, while they may be paying for themselves with the rent, the cap gain is sooo small, it's hard to build up equity to release & purchase again.

Although I guess people like Steve McKnight would poo-poo that idea.
Horses for courses :)

I agree that neg geared can suck funds your wallet, but I believe my blue chips will far outweigh the early 'loss' through their fantastic cap gain potential. and in turn, allow me to purchase more..eg if rental income is 15-20K per year, my cap gains will (*hopefully*) be many tens of thousands more....in a good year, up to a hundred thousand more. (There's the bonus of a hefty tax return at the end of the year too...although I don't rely on this to fund my IPs.)

But, like you, seviceability counts & we have found it difficult on one income this past year. If we didn't have the rents coming in (I guess this promotes Rumpled's ideas), we'd be stuffed :)

How will you service this extra debt?
Will your cap gains be enough?

Regards,
M&M  

评论
Congratulations on your start with the first property.

If I was in your position I would do the following:

1. I think you are netting somewhere between 38-40k per annum if I am not mistaken. I would suggest you do a budget to work out what oyur excess cash after all expenses is...if any.

2. Investigate all your major bill vendors to see if you can get better deals - i.e. Telephone, Mobile, Electricty, Car Insurance, Medical Insurance, etc. to see if you can save further on these. I did this and have saved over a $1k...happy to assist and give tips via PM.

3. Set-up a LOC with a band. Based on your numbers you should be able to pull out about 24k in equity based on 80%.

4. Find out what the various finance institutions will lend you? Based on my calculations you maybe able to borrow another 150k odd if you can get $200-$220pw in rent....based on serviceability.

5. Identify areas you can buy a property with mimimal maintenance...perhaps a unit or cheaper house in regional areas like Geelong, Ballarat, Bendigo. It will be difficult but it can be done.

Good luck....

MCS_80 said: ↑
Hi everyone,

First of all id like to say a big thankyou to all the Somersoft members for doing such a great job in this forum. Us newbie’s ask soo many questions and we do really appreciate the information the more experienced guys and gals give us. Thank you. :D

Just plodding along living and paying off our PPOR that we purchased in May 2009. It’s a very small house (11sq) on a largish block of land (680sq) with approx $70k in equity built up due to a discounted sale price. (Owe 160k, Value 230k). My partner and I are starting to consider how we may be able to make use of this fortunate head start.

Our income story go’s like this. I make a very average $40k PA and my partner is not working at all. She receives government payments while looking after our baby girl (Now 10 months old) of $3,792 PA so in total we make $43,792. Our monthly mortgage payment is $1000, so you can see we are pretty stretched in regards to our cash flow at the moment.

The possibilities we have come up with are the following

- Live in PPOR and apply to sub divide the backyard, built another house out the back and rent it out. Keeping both houses for CG.
- Live in PPOR and apply to sub divide the backyard, sell the backyard land and use these funds to pay down the PPOR. Helping our cash flow.
- Live in PPOR and pay it off as we are, improving it as we go and enjoy the big backyard and watch the CG go up with the land content.



I just turned 30 yrs old and my partner turns 39 this year. We are on a very small income and feel there should be some way we can make use of our discounted purchase price.

The question I guess im putting forward to you is, what would you do in our situation? We want to be able to purchase residential IP’s through out the next 10-15 years and with CG, be able to LOE by approx 2025.

What ways would you “gear” and make good use of the situation we are in?

What other options along with the ones stated would you recommend?

Any questions, advice and information is greatly appreciated.

Cheers

MickClick to expand...
 

评论
Subdividing or strata titling the block is easy money if you have the mind to tackle it - just don't overcapitalise on the second dwelling if you go ahead with the build. You will have to submit a DA and Development Plan if you want to sell the block with approved plans. I find it is easier ( if you can finance it) to get dual occ approval - then build the house - then strata title it - then sell it. Your problem will be to finance the build. Do some research with a good broker and check out the council DCP to see if it is all possible. Keep searching for a way to improve your lot.
Also, Jan Somers books give great practical advice for people in your situation. I would highly recommend them if you haven't read already. All the best, :)  

评论
If I was in your position I would do pretty much what Sash has suggested, however would also look into sub-dividing your block which will give you some nice capital to fund deposits. If you go this route, remember to recycle the debt by paying down your PPOR and then redrawing the funds as a LOC.  

评论
Congrats MCS,

I would be focusing on CF+ deals only as anything else will kill your serviceability.

Maybe a $100k purchase rent $200-220pw kinda deal.

And perhaps get cheaper and add some sweat equity.  

评论
Thankyou for the replies and advice everyone :D

mary&mat said: ↑
Will your partner go back to work soon?Click to expand...
Not full time no. We plan to have a matching pair of kiddies in another 18 months or so, so wifey will be at home for a little longer. We do have plans for her to work from home, though this will not be making us millions.

mary&mat said: ↑
Where is your PPOR...is it in a suburb that you can immediately benefit from a subdivide?Click to expand...
Our PPOR is in Werribee. Western suburbs of Melbourne. Id say if we sub divide, the back half would be worth approx. 135-145k. So a healthy cash injection if sub dividing is allowed on our block.

mary&mat said: ↑
How will you service this extra debt?Click to expand...
Our only choice will be CF+ properties. So this will help service the debt.

mary&mat said: ↑
Will your cap gains be enough?Click to expand...
Depends on what we do with it. We are novices with financing property. The old fashion side of me says “Pay it off the PPOR and own the house outright”, the investor inside me says “Use this cash to deposit against IP’s”

Rockstar said: ↑
Subdividing or strata titling the block is easy money if you have the mind to tackle itClick to expand...
Where do I learn more about subdivision? Is it solely up to the land owner to do all the work/thinking etc. I did some hunting around for info on sub diving in our area on the net and only confused myself even more. Can we get a simple “Yes, you can sub divide” or “No, you can not” from the council?

To Sash, Mary&Mat, RumpledElf, Skater and Nathan. Thank you so much for the kind advice. I guess we have no other option but be thrifty in out investment and really study up on creative ways to make the most out of every single dollar we earn.

Any more questions and advice welcome :D

Cheers

Mick  

评论
Hi mick,

Give th council a call and chekc the zoning fo your block and ask what coudl be done at the moment etc - good leanring curve and the couple of peoplle I spoke to were actually pretty helpful.  

评论
Ok, the more knowledgeable may be able to point out the pitfalls with my idea, but here goes anyway....

What about putting a self contained bungalow/granny flat where you would be subdividing, many of these bring in good rent, for a minimal outlay. This gives you extra income, adds value to your property, giving you time. Then go LOC to buy a cheap cf+ investment property.

You can still subdivide your block later on, and in the mean time its still brining in a rent. Not sure of your block layout, how much of a handyman you or your wife might be, all these things could make a lot of difference. If your on a corner block/easy access, you may be able to pick up a cheap house and it will only cost your removal charges to get the house (cheap house), then renovate to suit your budget.....Potentially not much more expensive than the granny flat set up, but potentially more rent.

Hope I haven't confused you too much.....I'm having this same issue with the do I/dont I subdivide, I have two rentals/blocks that I want to subdivide, but its the $$$ issue here too.  

评论
schweedy said: ↑
What about putting a self contained bungalow/granny flat where you would be subdividing, many of these bring in good rent, for a minimal outlay. This gives you extra income, adds value to your property, giving you time. Then go LOC to buy a cheap cf+ investment property.Click to expand...
Councils are pretty anal about bungalow subdivisions in Melbourne. I think you'll find that they won't allow it, as it has to "fit in" with the rest of the suburb.

Have you thought about going back to school and getting a diploma or degree in a field that pays better or doing an apprentice? Even though you have done extremely well to get this far, I need to be honest. $43K per annum in my opinion will make your investment journey difficult. You're still young, grab the bull by the horns and do what you got to do! Sacrifice a few years of study and then watch the dollars roll in.  

评论
Thanks for the input schweedy, we are considering all options and this will be added to the list. :D

The_Bludger, you're spot on. Finding a career that pays more is on the agenda. I have been a "blue collar" worker all my life and am looking to get into sales where commission based bonuses are at. I have had 4 years experience in sales and customer service so far and am considering sales to be the way to go about making more dollars. The more I sell, the more I make etc.

My partner and I both have plans to make money "on the side". I have been building a small photography business that has sprouted out of a hobby. This will help bring in more money etc. Nothing huge at this stage, but every cent helps.

Regarding going back to school/study, I would love to study more about sales and marketing to help further a career in sales. I am actually considering going into a cut throat career as a new car salesman. Many have given me some advice why this is a good/bad move and will be weighing up all options in the very near future.

You are right, 43K PA is peanuts compared to what others make and our investment journey will not be as easy as others, however, I for one am up for the challenge and would love to show what is possible while making a below than average income.

Once again, anymore advice or questions welcome :D

Cheers

Mick  

评论
Sorry, I meant for the bungalow idea to be not subdivided, but more an alternative, still giving MCS most of the backyard for those kids he's having, whilst bringing in some income now, and increasing his own properties value.......with still the option down the track to subdivide later on.

I am still pretty much a novice. Grew up with a sanding block in one hand and paintbrush in the other, while dad bought and maintained several rental properties.
My partner and I have managed to acquire 2 IP's and own our PPOR, but our incomes have dropped over the past few years due to starting a new business, so I have had to curb my own need to buy another rental property.....I'm now looking another year before I can even look at it......not to mention another job or two.  

评论
-Our motive, our "why" of life is 1. financial independence for ourselves, so the motivation is strong. There are some other motives too, that's not be all-end all.

-Our incomes are relatively lower than some, (yours for example), and relatively greater than others.

-We have been able to build a property portfolio, accumulate assets to springboard us onto "whatever".

-Perhaps we have had an advantage over some, knowing regional Victorian cities rather well, but more than that, when we buy, (or build), it's all about the "deal".

-"Buy well".

-We have been able to buy, (and build) IP's where we have created equity in the beginning, at the purchase.

-That buying well, studying a regional city, inside out, networking, rat up a drainpipe for what's selling, what's coming onto the market, what's not selling, why, where, for, how....networking...it's good foundation work for pouncing/creating our/on deals.

-It has not been exclusive to growth, it hasn't been coastal tsunami growth, just steady, old, regional city stuff. It gets affected by drought and financial crisis, and yet it still grows..It takes the hit and then business as normal.

-Our regional cities/areas (we have property in) are Bendigo and Horsham, also have some other deals in other areas, but that isn't something I would like to reccommend. It was more specialised industry to an area.

-But it has "all" been about the "deal"....adding value, shrewd buying, buying well-for "us". Learning, learning, doing, doing...

Wishing you all the best on your investing too, if you would like some generalised Victorian data/statistics, feel free to PM, I can email it off. It may have some useful information for you. A very small part of the toolkit.:)  

评论
MCS_80 said: ↑
- Live in PPOR and apply to sub divide the backyard, sell the backyard land and use these funds to pay down the PPOR. Helping our cash flow.
[/I]
Cheers

MickClick to expand...
Given that your income is small, you would probably have trouble obtaining finance to do a build.

Even doing a subdivision is costly (my SIL is doing one now) there are lots of out of pocket expenses upfront.

Therefore, to do the above option would be your most likely way to accelerate your progress IMO, but it would still be a bit of a finance stretch.

Once you have your PPoR paid off there will be some decent equity to use for another investment, or you could use the funds from the subdiv to put down as a deposit on another property with a good cashflow - good rent return and depreciation.

Then continue paying down the PPoR as best you can

IMO it is better if you can increase your "footprint" by adding more properties. Any cap growth will compound.  

评论
Nathan said: ↑
Maybe a $100k purchase rent $200-220pw kinda deal.Click to expand...
Love to hear this Nath.

Too many people poo-hoo the cheapies; thinking that the more expensive "blue-chip" type properties in the glamour areas are the way to go.

This might be ok for a high income earner, but in reality only a small percentage of the community are.

It isn't hard for someone on a lower income to accumulate half a dozen or so of these types of properties, and as you and I know; the cashflows and overall returns are often way better.  

评论
We have plenty of properties purchased in the lower end of the market bringing in nice rental returns and apart from a couple of painful sales (due to a need to sell rather than chosing the market) we have also made tidy capital gains when opting out.

Blue chip investments may get better capital gains however you have to be able to hold onto the investment, and the ongoing costs can send people to the wall if circumstances change. In addition if you are buying and holding only blue chip then the banks will stop lending you money because of a lack of serviceability.

Personally I believe in a mix of positively geared and capital gain investments in order to run as close to CF neutral as possible. This way if circumstances change your lifestyle doesn't have to take a plunge and you are not forced to sell in a fire sale.

Regards

Andrew  

Property Investment

Australia property Selling Hints | Sydney

澳大利亚Hi folks I recall ready somewhere about what are some simple tricks for making your place more attractive during a home open. Im seriously thinking of selling my little pad and want to maximise my efforts. Any hints greatly appreciated. 评论 ...

Property Investment

Australia property Re-zoning | Sydney

澳大利亚What would the chances of a NSW Local Council allowing a community titled development (homes, community buildings, etc) on an area zoned Protected Agricultural land? Does anyone have experience in this area? Looking at the local council LEP, ...