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Belinda
Guest
I have just finished reading a book on property investment called "Creating Financial Security through Propert Investment" by Debra Lohrere, which has convinced me that buying investment properties is one of the best ways to build up a wealth base, due to the power of compounding.
I am only on an average wage, but have enough equity in my own home to either purchase a $300K property in the outskirts of Melbourne (I live in Australia) which will rent for around $14Kpa (4.66%GRR) or two cheaper country properties in Moe for $145K and $155K that would give a combined rental income of $19K. (6.67%GRR)
I plan to borrow 95% on an interest only loan at 6.5% ( I have been looking at the interest rates that everyone on this forum have been quoting, so don't fall over. 6.5% is good for Australia at the moment) so my repayments will be around $18525. On top of that I will have rates of approx $1800 with both options and real estate fees and commissions. Both options will be negative geared, but the $300K IP would cost me around an extra $60pw to sustain. This is well within my budget, but I wonder whether I would be better going for the two cheaper properties which will cost me a lot less, for my first investment and then look down the track at going for higher valued properties.
I know that the capital gain will most likely be a lot higher on the $300K property than on the country ones. But as I intend to build up a portfolio of hopefully 10 to 15 by the time I retire in 30 years, I am just as interested in what sort of returns I will get, as in the capital growth.
Just wondering what other peoples thoughts are on these two options.
Thank you in advance.
Belinda
I am only on an average wage, but have enough equity in my own home to either purchase a $300K property in the outskirts of Melbourne (I live in Australia) which will rent for around $14Kpa (4.66%GRR) or two cheaper country properties in Moe for $145K and $155K that would give a combined rental income of $19K. (6.67%GRR)
I plan to borrow 95% on an interest only loan at 6.5% ( I have been looking at the interest rates that everyone on this forum have been quoting, so don't fall over. 6.5% is good for Australia at the moment) so my repayments will be around $18525. On top of that I will have rates of approx $1800 with both options and real estate fees and commissions. Both options will be negative geared, but the $300K IP would cost me around an extra $60pw to sustain. This is well within my budget, but I wonder whether I would be better going for the two cheaper properties which will cost me a lot less, for my first investment and then look down the track at going for higher valued properties.
I know that the capital gain will most likely be a lot higher on the $300K property than on the country ones. But as I intend to build up a portfolio of hopefully 10 to 15 by the time I retire in 30 years, I am just as interested in what sort of returns I will get, as in the capital growth.
Just wondering what other peoples thoughts are on these two options.
Thank you in advance.
Belinda
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