An Interview with LeoT

[LeoT]

Hi LeoT,

Thanks for sharing so much in your interview, it was great to get a few insights - I started a forum account just so I could post here. My partner and I live in Brisbane are currently saving for a place. I'd like to ask what your living arrangements were when you first started? I.e. we're currently renting and not too sure whether we should buy an IP and continue renting, buy a PPOR, or buy an IP to live in with a few tenants, with intention to buy a PPOR as our portfolio grows. How did you approach this?

Cheers,

MMack

HI MMack,

Welcome to the forum mate. The question your asking is a good one and at the end of the day it all comes down to your goals/timeframe and what your willing to accept or not. When it comes to building wealth, your borrowing power is going to be 1 of the most important factors that will determine how fast you can build your asset base. Basically, the argument for renting while you invest is simply because in a lot of cases you can rent a place that you like for much less than the mortgage repayments on the same place would be. Hence, your weekly income is affected less so there is more money to invest with and it also increases your borrowing power (because you have more income you keep).

But you also need to weigh up if you are comfortable in doing that and if its something your partner is also comfortable with. Its really a personal thing. I know many investors who bought IP 1,2,3,4,5 etc before they bought their own PPOR. I know some that bought their PPOR and rented it out while they rented themselves and kept buying IPS. You need to work out what your comfortable with and what you can accept.

One thing I can unequivocally say is if you buy a PPOR that has a huge mortgage say 1m plus, that will definitely affect you building an asset base fast (depending on income etc but for most ppl) and I would strongly not advise that.

Good on you for starting mate!

Leo

 

[MMack88]

Thanks for replying LeoT, it's great to get some interaction my partner and I have relatively high incomes and have been reading as much as we can in order to make an informed decision, but after reading a few books that highlight the power of positive cashflow, it seems that may be very difficult to do at the moment. Our first IP will be somewhere in the Brisbane area +/- 15km; do you think going for capital growth (probably with negative gearing) is the best strategy at this time? Correct me if I'm wrong, but I'm not sure it could be anything but negatively geared this close to CBD.

Also do you have an opinion about when might be a good time to buy in?

Cheers,
MMack

 

[LeoT]

Thanks for replying LeoT, it's great to get some interaction my partner and I have relatively high incomes and have been reading as much as we can in order to make an informed decision, Excellent starting point mate.

but after reading a few books that highlight the power of positive cashflow, it seems that may be very difficult to do at the moment. .If your goal is to build meaningful wealth in Australia, i wouldnt put too much worry on cashflow positive at this stage of building your asset base and expecially if you have 2 good incomes. If your goal is to build large amounts of equity and as fast as possible, i would focus more on the growth drivers of areas that show good potential for CG and buy well ect as opposed to making your top priority to be cashflow positve

Our first IP will be somewhere in the Brisbane area +/- 15km; do you think going for capital growth (probably with negative gearing) is the best strategy at this time? It depends on your goals but some negative cashflow for an asset that has good-great CG potential (as long as its not too NG, and you will have to decide what is too much for you) is not a sin IMO. Ultimately it will have to be a ballanced portfolio but some NG for a good asset is not a bad deal IMO especially if you have two high incomes. The important thing is to make sure you buy an asset that has strong potential for medium term CG .

Correct me if I'm wrong, but I'm not sure it could be anything but negatively geared this close to CBD. I would say quite a few would be NG expecially houses within 10km from the cbd. Most likely $50-$100/week or more depending. [/COLOR]

Also do you have an opinion about when might be a good time to buy in?
. Yesterday.

Cheers
Leo

 

[MMack88]

Thanks mate, we really appreciate the advice from someone who's been and done it our motivations are really to build our financial freedom - we're happy to be corporate slaves for a little while with that goal in mind, but not for 40 years

Cheers
MMack

 

[aussieB]

Hey Jaco,

Glad you didnt listen to her mate. Good on you. The thing is, the second you put yourself in the say..1% of society, automatically 99% of most ppl wont be able to identify with you, understand your reasoning and decisions etc. Its pretty normal. the important thing is to stay well clear of most of these ppl. They are dream destroyers! And they would have you work 9-5 for the rest of your life and retire on peanuts. One of the most important lessons i leant was never underestimate the power of the people you mix with.

Cheers

leo

Hey Jaco, I just got to read your post mate
I was once watching a celebrated life coach talk, and he said something to the effect of, "I never even shake hands with people I don't know. If they aren't optimistic, just the sheer negativity around them will bring me down." and I'd laugh at what a bunch of bollocks that was. But, I am beginning to see it clearer now - never underestimate the power of the people you mix with.

 

[sanj]

Hi Devank,

What gave you the impression i was a tradie? haha hell no, im not patient enough for that.

cheers

Sam

Oops? What happened here?

 

[LeoT]

Sanj some ppl i know personally know my real name and YES leot is a handle. but i am intitled to the privacy!!

All the other posters are NOT me!!