What to invest in?

In these times, what would be the best investment, with a borrowing of 1.8M?

1. A solid residential property (we need a home as still renting)?
2. A quality commercial property?
3. spread out money and invest in few different types of real-estate?

thanks

 

Thanks Sim,
Answers:
personal income ok
No experience in commercial
We are young, so looking at growth as most important factor

 

It all depends... but diversification and a good team is key!

Hi Natasha,

The answer is - it depends!

Do you have a long term vision about what you will need in terms of net worth and passive income, and by when?

Are you eligible for the First HOme Buyers Grant and stamp duty exemption on first homes? If you are, it may be worthwhile purchasing a place to live for a certain period of time, and then renting it out as an investment property.

You also want to make sure you are well diversified. For example you might purchase a home to live in (and then move out of), one block of land to subdivide and build on, one commercial property for the high rental yield and another residential property in a different part of the country poised for good capital growth.

You want to make sure you have a good experienced team on board to help you plan your strategy to match your vision, source properties where you don't have experience, and with finance, structure and tax.

You want to make sure you have plenty of buffer if interest rates go up or if tenants move out. And you want to make sure you have insurance in place to protect your income.

Also important is the name or entity you are looking to build your portfolio within. This is important for asset protection and tax implications.

 

Hi Natasha

Only you can answer this question especially if you're renting. Do you have a desire to own your own place? What are your future plans? ie: careers, kids etc. Keep in mind that whilst you're young and independent renting can be fine but once you expand you may want the security of your own patch where no-one can turf you out and you're paying off your own CGT free piece of dirt. It's a very emotive topic but suffice to say that most of the wealth of ordinary Australians has been from their largest asset - their PPOR.

I don't invest in commercial property but instead have collected resi RE over a long period of time (with buying and selling along the way as well as a lot of renovating!) and the growth has certainly worked well for me
Slow and steady seems to win the race when it comes to well positioned and selected resi RE but then again I can't compare to commercial as I have no intentions of investing in it. From what I've read, it's a little too volatile for me and reliant on long term leases with possible extended periods of vacancy. I have a friend in commercial RE, however, and he has a mixture of resi and commercial in his portfolio. He reckons that the maintenance on a shed is far less than a house and he has a point

Do some more reading and asking questions, however, and talk to both types of investors before you jump in. Best of luck

 

I have to agree with Jacque there. Our wealth has all stemmed from our PPOR.starting small, doing it up, capital gains etc etc.

If you are new to investing I would take it slow and read everything you can. And most importantly get advice from people who have actually done what you want to do. There are a lot of people out there who will give you advice but in my experience not many have the runs on the board.

Property is my first love and I have enjoyed doing renos and it has paid great dividends to us. BUt you need to know where you want to go before you decide how to get there.

The main thing I guess is don't analyse everything to the point of not acting.
I have met sooo many people at wealth seminars that are so busy running around setting up "structures" and checking out returns to the nth degree that they never actually get around to investing. They are always "talking" the talk but never bother to walk the walk.

I would encourage you to get information for yourself and go for it. good luck and have a good time.

 

I agree - get your info - run your own race.

I like house and land - renovate and sub dividable where possible. But everyone is different.

Some like units - close to city.

Some like brand new house and land for tax benefits.

There are pro's and con's for each investment style.

Eg. you buy unit close to city - you have strata fees and body corp managers to deal with also. Then the style of unit may attract a variety of tenant demographics - students, single professionals, young couples - this group is traditionally more transient, so your tenancy turnover may be higher than houses.

If you consider houses - the more affordable ones are generally further out from GPO so you need to feel comfortable with that. You will attract families that may stay longer in the area if located near a good school and high school.

How do you want to buy it - in your personal name or trusts?? Buy in your name if you can get financial benefits out of it - buy in trusts as part of your asset protection strategy....

Most important is that you are now thinking about it - so do some more research, find your comfort zone and take action - just do it. Good chance you will do alright.

 

Hi

If you are going to borrow $1.8m I strongly suggest that you should educate yourself before you do anything at all. $1.8m is an awful lot to borrow without knowing a lot about investing and your comments suggest that you are a novice.

There is plenty of unbiased education available - try the Australian Investors' Association, the Australian Stock Exchange seminars, the Australian Shareholders' Association, property associations, etc and expect to pay to go to such seminars, freebies are usually promos for expensive stuff. Also, buy a few good books or get them from the library.

Best of luck.