Advice needed

C

Carbie

Hey guys and girls!

I am currently in need of some much needed advice on purchasing my first of hopefully many IP's

I will lay out my current situation to you guys and where i stand with things at the moment, then i would greatly appreciate any advice or information you guys could spare.

I am currently a 24 year old Electrician working over in WA in the mines.

I already fully own a 2 bedroom apartment in port Melbourne just off the beach, valued at $710000 2 years ago. The apartment if fully paid for and i owe nothing on it.

In my bank account at the moment i currently have around $90000

My thoughts are this at the moment, im looking to get my foot into the market, either with 1 or 2 or even 3 purchases over the next couple of months, i am mainly only looking at melbourne suburbs or rural victoria at the moment as i am familiar with victorian areas.

My question is, Where is good area to get into at the moment, sitting in my current situation, would i be better off buying a handful of IP in rural Victoria with strong rental yields, or purchasing just the one property closer to Melbourne cbd with not so great yields but possibly better CG. Areas i have been looking at lately have been frankston, and also down gippsland, moe, morwell etc.

I am just really unsure about where to start, and how to find a 'great deal'.

How much deposit/s should i be putting down and how much should i be borrowing etc etc.

Should i be keeping the port melbourne place for long term? it currently rents out for around $610 pw

As you can probably tell i am rather new to all of this so any extra information you think i may need would be greatly appreciated.

Thankyou, Kind Regards, Chris
 
Carbie said:
I am currently a 24 year old Electrician working over in WA in the mines.
I already fully own a 2 bedroom apartment in port Melbourne just off the beach, valued at $710000 2 years ago. The apartment if fully paid for and i owe nothing on it.
In my bank account at the moment i currently have around $90000
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Hi Chris. Congratulaions on what you've achieved so far.

You have done well, but you have not structured things correctly from a taxation point of view. You have not provided enough info to give advice (i.e. income, tax etc), but my advice to you would be to sit down with a good mortage broker and get the structures right.

Carbie said:
My thoughts are this at the moment, im looking to get my foot into the market, either with 1 or 2 or even 3 purchases over the next couple of months, i am mainly only looking at melbourne suburbs or rural victoria at the moment as i am familiar with victorian areas.
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This is probably a stupid thought as you should not invest where you are familar with but instead where you'd make the most money with the least amount of risk. :eek:

Carbie said:
I am just really unsure about where to start, and how to find a 'great deal'.
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You probably have enough income & assets to do better than a few rural Victorian deals. Somewhere with some real growth prospects.

Carbie said:
How much deposit/s should i be putting down
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as little as possible usually.

Carbie said:
and how much should i be borrowing etc etc.
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As much as you can usually.

Carbie said:
Should i be keeping the port melbourne place for long term? it currently rents out for around $610 pw
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The issue with this place is that you will be paying tax on the rental income as you have no mortgage expenses. The structure is wrong, which is why Im recommedning to talk to a good MB / accountant / lawyer.
 
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Fantastic start! As Propertunity said your main issue here is you've paid off your investment property. Not a bad thing objectively speaking but it means you have lost a lot of tax deductions that were legitimate ways to reduce your tax. I would suggest you structure the future finances properly so this does not happen again so you are able to grow your portfolio more quickly as both your net assets and income will be strong.
 
My current income is around the 150k mark AFTER tax, but at the end of the year i plan on working back in melbourne as i have had enough of being away from home, and would be back onto a job paying somewhere around the 70k mark before tax.


Would the port melbourne place be worth selling so that i could split up the money and buy a couple of places so that i can re structure my funds?

How can i find a good MB to speak to?
 
Carbie said:
Would the port melbourne place be worth selling so that i could split up the money and buy a couple of places so that i can re structure my funds?
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No, don't sell, (in my opinion), if you move back into Port Melbourne and live there.

You can keep the property and refinance chunks of equity out in cash, to be used as deposits on IPs.

Carbie said:
How can i find a good MB to speak to?
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There are a number of mortgage brokers that post on the forum here.
 
Carbie said:
Would the port melbourne place be worth selling so that i could split up the money and buy a couple of places so that i can re structure my funds?
Click to expand...

I do think you would be well guided to have a look at a five or 10 year plan, and work backwards from their.

The reduction in your income from where you are currently to 70,000 per year will have a huge impact on your capacity to be able to save or invest in future assets.

Amcor question its to be do you want to live in the place at Port Melbourne............ or was it always bought just as an investment property ?

if the latter, and you are not going to owner occupied it, and at some point you are going to buy another property that you will live in, if you were my client we would really need to look at how you could buy your next place to live in with the minimum amount of debt.

Depending on the outcome of that modelling, that might indicate selling.

There are some relatively simplistic modelling thinks he can be taken through to ascertain what you really want in this regard.

Thanks

Rolf
 
Hi Chris

I think you need to surround yourself with experts regardless of where they are located! Rolf has been contributing to this forum since 2001. It appears to me he knows his stuff.

Something else I would be thinking about is asset protection. Do you buy your properties in your own name or in a Trust?

In my opinion, you must have the end result in mind.

Good luck.
 
ok guys first off thanks alot for all of the information you have provided. I will now start looking for an accountant that is in the loop with property, then once i have my finance sorted i will begin to look for a BA.

One more question, if you guys had a choice of buying 2-3 500k properties in hampton, or 6-7 300k properties in frankston. Which would you be buying?

As i am looking at both of these areas a lot lately and need to make a decision to buy in a more established area with proven growth, or take a punt with frankston and be able to buy more properties.

Thanks again guys
 
Carbie said:
ok guys first off thanks alot for all of the information you have provided. I will now start looking for an accountant that is in the loop with property, then once i have my finance sorted i will begin to look for a BA.

One more question, if you guys had a choice of buying 2-3 500k properties in hampton, or 6-7 300k properties in frankston. Which would you be buying?

As i am looking at both of these areas a lot lately and need to make a decision to buy in a more established area with proven growth, or take a punt with frankston and be able to buy more properties.

Thanks again guys
Click to expand...

Spread the risk - don't buy everything all in one area. You could buy a couple in Frankston, one in Hampton, one nearer CBD, one interstate
 
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