Ok so I'm going to throw out a third option that I have personally taken. I am a 25 year old living in Brisbane. I wanted an investment property but also didn't want to pay rent anymore. So I bought a 2 story 4 bedroom 2 bathroom double lock up garage on a 600sqm block in south Brisbane for $450k. I live in the master bedroom with an ensuite (first time for me) and rent the other 3 bedrooms which are located on another level. My loan is $409 a week and I collect $500 in rent. And on top of this I'm not paying rent. This means my housing bill is completely taken care of. On top of that I spend my weekends and afternoon renovating the property which increases its value and because I live here I pay no tax on appreciation. I don't have to worry about housing inspections and I can have family and friends over to MY house that is paying for itself. And yes I still got to take advantage of first home buyer programs 😁
Thanks for sharing. What about the capital gain tax on investment property..also the fact that while renting you are still using that money to pay off someone else debt and that money is non recoverable... isn't better to use that to pay off your own interest on the debt
Can you explain more about how capital growth is meant to increase your chance of getting another loan for another property if the bank sees you've got cashflow coming in. When your explaining the Jane and John scenario
Man these so many scammer in Sydney who can increase your wage’s income and get you approved for a house loan 100% works and i know someone who did this strategy and he owns now three properties
hello can you please explain if you want to turn your ppor with a loan on it into an investment property, would it be an asset then ? also this would help cash flow and borrowing capacity? thanks
Hey ravi i love your vidoes but a 300k property in Sydney is very unrealistic could you make a video on how to buy properties outside of the state you live in
So wouldn't johns mortgages on his investments more or less be cancelling out his rental cashflow?? And if Jane saves up another deposit how is she in any different position from John prior to him purchasing his 2 properties?
Comparing PPOR to investment property is like comparing apple to orange. We all know people purchase them for different reasons, regardless the year (whether it's 2021 or in other years). It would have been more useful if you compare say REITs to residential rental property if you want to compare different strategies to create cash flows through property.
The point of this video was showcase the difference between these two tactics. I don't think it's like comparing apples with oranges given, alot of people on the daily ask me to compare between these two options. I'd love to cover REITs vs Investment properties which from an investing POV makes alot more sense. This video was requested quite a few times so hope that makes sense :) Thanks for engaging and watching!
Wait, you said what happens if Jane loses her job, what is she going to do. But what if John's tenants lose their job? And finds it hard to find long standing tenants? Ismn't there a risk if he has his own rent and property repayments to manage?
Oh and please also talk about the stress and anxiety (if any) that comes with investing in multiple properties so that we are prepared in advance what to expect. Or put it this way “how much time/attention do those properties take from you” Even though those are assets, if the interest rates go up lets say after 10years, those assets might have negative cashflow, surely it’s not gonna happen overnight and surely there will be work around for that. Just want to prepare the mind on how much stress/level of involvement with properties are we talking about here? .... specially for people like myself who are not passionate about property but do want to become like John.
Hi! I know, I'm so sorry, we have been so swamped with work that I haven't had the chance to properly sit down and do the proper research for the video. I don't want to just bring something out for the sake of it because, I value all of the time people spend watching these videos. I promise it will come as soon as things calm down with the business :) Thank you for the support!
Morning, in this scenario would John have to pay significantly less in rent to what he is receiving as a landlord to make this work? Curious because I have a ppr bought with the intention of Turing it into an investment after 1 year but for me to rent elsewhere for the equivalent of our io repayment or rent received would be hard or a major lifestyle downgrade as we are 2 mins from the beach on the Sunshine Coast. TIA
Hey Kate, that makes sense. It's usually the case that most that take up that tactic will find a property that won't rent as well so, it does affect your borrowing capacity afterwards significantly. Unfortunately, there's not much else you can do apart from two things, reduce debt or increase income. Hope that helps :)
Do we really need to buy 5, 10 properties? How does this affect the housing market and first home buyers who can't afford to buy because of competition from investors?
Hey Ravi, great content! Just don’t think this video explains the comparisons very well as there’s too many different variables between the two. It would be best to keep the numbers the same and compare how 1 PPOR vs. 2 investments go in relation to claiming depreciation and serviceability. Personally I used the government schemes and have seen the property increase $120k in 12 months with 40k down. Not realistic for most, but genuinely interested in whether my luck getting that right would still be about the same as the average person who took the rentvesting pathway instead.
Thanks bud, obviously you can understand it would be way too difficult to explore all potential scenarios but I think you get the point. I personally rentvest and seems to be working out :)
Hi Ravi, is Jane's serviceability completely cooked even when looking at cash flow neutral properties? Also wouldn't John's serviceability be impacted by the rent he has to pay being a non-homeowner? I bought a PPOR in Nov last year and this video left me sweating.
They both will have their servicing affected however, it's alot worse with the unproductive debt with a PPOR. Just how Banks look and assess these things. Still plenty of opportunity! Happy to help if you want to book in a strategy session to discuss further. www.searchpropertyau.com.au
Hey Ravi, very helpful video thank you. Love the strategy of rent vesting. I had a question about Jane. What if Jane moves out and rents someone and rents out her “PPOR” I guess she will loses time in the market as she has to live in the PPOR for 1yr. Then she would need show 3-6month of rent payments to show that the rent can cover the repayments. Again she loses another 3-6months. Just wondering if that is correct? Cheers
What is the best step forward if you bought the house you live in, and have been paying it down as much as you can, and are looking at investment properties?
What about investing in other assets like vehicles, lands, or even stock market? Investing in real estate might be risky especially with someone with low income and huge expenses.
Hey Ravi, great video & loved the examples. What if Jane decided to live in her PPOR for 6 months to get the FHOG & then decided to rent it out as an IP? Either Moving back home or moving to rent elsewhere. Would this change the outcome for future loan approvals? Thanks!
Great question Luke. It would depend on where the location of Jane's property is. Usually when "Jane" purchases her PPOR for the grants, it's in her backyard which generally is not a great idea. If the fundamentals of the market she purchases is, is good, well then it could play out well. Hope that helps :)
How can you find 2 properties under 600k that would produce positive cash flow tho ? Would be pretty rare with a 600k budget. And in Johns situation even tho he may be getting income from his 2 investment properties. He would still be paying $350 per week ( for example ) to rent somewhere else...
It all depends on which locations you are looking at. We find plenty of deals that have great capital growth as well as strong cashflow positions under $350k. Yes correct but, I also didn't factor in how the PPOR is going to be negative cashflow for Jane. So, kept it consistent with their "living" cashflow to not be reflected. Hope that makes sense, thank you for the support :)
If you are willing to consider Western Australia, you might be able to find 2 properties (apartments, not houses) under 600k that would produce positive cash flow in today's market. Having said that, I agree with you that it's a pretty unrealistic scenario. Not to mention, investment properties which produce positive cash flows today may not necessarily continue to do so going forward (inner city Melbourne and Sydney are classic examples) - you are at the mercy of demand and supply dynamics of the market, which is out of your control.
Thanks, Ravi for awesome strategy insight. I would love to see How John's story ends and what could be the worst case scenario. Thank you again.All the best. You are doing a great job Mate.
I bought my first property for only a 3.2k deposit. As that is all I could afford at the time 😳 I'm glad I got in quickly than wait and save for a proper deposit
I just went to the bank and asked for a loan (one of the big 4 bank) and they said you can only borrow more if you stop renting and move into one of your investment properties LoL
Some real clowns work at these financial institutions. I had one of them try and give me advice on the property market last year and she literally made no sense. Upon asking her how many investments she had made, she said 0. CONTEXT IS EVERYTHING :) Thanks for watching and supporting the channel!
Hey Ravi I love your videos and the efforts you put in them. I was waiting for this video because my wife is more like a Jane, and I'm more like a John. However it seems that the comparison is not right. It would be nice to see best case scenario for both, and also worst case scenario. What if Jane's property gain in value? What about the rent John has to pay? Would it put his cashflow position down to zero? So many answers I was waiting for...
Love the videos Ravi. Would a graduate salary of $50-60k be enough to pursue John’s path or is it something that is really only achievable with an average/above average salary? I’d love to see a detailed, step by step case study on how the average person could build a portfolio like John!
Thank you Josh! You can start on a graduate salary however, when you start looking at growing the portfolio, the income needs to increase otherwise banks won't be lending out again. When I started I was on about $55k - $60k so it is certainly possible!
Heck yeah would love to see how john buys his ppor debt free! And also interested to know from the perspective of a middle aged broke loser just figuring out this stuff now 🤔. I love your videos Ravi thanks for creating them to 😊
Watch Part 2 here 👉 th-cam.com/video/QKUYw6-pyk0/w-d-xo.html
My TOP 10 Predictions for Australian Property in 2021 👉 th-cam.com/video/_ZBcB58UK9M/w-d-xo.html
yes would defo like to see that vid of buying PPR debt free!
Good stuff Ravi!
Thank you!
19 mins 34 seconds that will change my life for the better. I am so glad I came across this video. Thank you Ravi.
So glad you enjoyed this! Thank you for watching and kind words 🙌🏽
Yes, I want more information!!
Thanks for an awesome video Ravi, very interesting content, keep up the good work!!!
Ok so I'm going to throw out a third option that I have personally taken.
I am a 25 year old living in Brisbane. I wanted an investment property but also didn't want to pay rent anymore. So I bought a 2 story 4 bedroom 2 bathroom double lock up garage on a 600sqm block in south Brisbane for $450k. I live in the master bedroom with an ensuite (first time for me) and rent the other 3 bedrooms which are located on another level. My loan is $409 a week and I collect $500 in rent. And on top of this I'm not paying rent. This means my housing bill is completely taken care of. On top of that I spend my weekends and afternoon renovating the property which increases its value and because I live here I pay no tax on appreciation. I don't have to worry about housing inspections and I can have family and friends over to MY house that is paying for itself. And yes I still got to take advantage of first home buyer programs 😁
Thanks for sharing. What about the capital gain tax on investment property..also the fact that while renting you are still using that money to pay off someone else debt and that money is non recoverable... isn't better to use that to pay off your own interest on the debt
Can you explain more about how capital growth is meant to increase your chance of getting another loan for another property if the bank sees you've got cashflow coming in. When your explaining the Jane and John scenario
Great Video, Ravi!! :D
Thank you! Appreciate it :)
Man these so many scammer in Sydney who can increase your wage’s income and get you approved for a house loan 100% works and i know someone who did this strategy and he owns now three properties
hello can you please explain if you want to turn your ppor with a loan on it into an investment property, would it be an asset then ? also this would help cash flow and borrowing capacity? thanks
I regret now ravi , I would do better way like you said ! But I m heading buy now my 3rd investment property . 😊
Why cant you 2x 300k properties and live on one? Wouldnt that be youre paying for your mortgage and investing at the same time
Hey ravi i love your vidoes but a 300k property in Sydney is very unrealistic could you make a video on how to buy properties outside of the state you live in
Love the videos
So wouldn't johns mortgages on his investments more or less be cancelling out his rental cashflow??
And if Jane saves up another deposit how is she in any different position from John prior to him purchasing his 2 properties?
Comparing PPOR to investment property is like comparing apple to orange. We all know people purchase them for different reasons, regardless the year (whether it's 2021 or in other years).
It would have been more useful if you compare say REITs to residential rental property if you want to compare different strategies to create cash flows through property.
The point of this video was showcase the difference between these two tactics. I don't think it's like comparing apples with oranges given, alot of people on the daily ask me to compare between these two options.
I'd love to cover REITs vs Investment properties which from an investing POV makes alot more sense. This video was requested quite a few times so hope that makes sense :) Thanks for engaging and watching!
We live in a society were going out is a distant memory, isnt that right? Sharman...
456th like. Thanks for this video.
PLEASE RAVI make a video about rentvesting . Also PLEASE make one about duplex/triplex investing . Thank you 🐐
Coming soon :)
@@PersonalFinancewithRaviSharma thank you for being the light in the darkness of Australian real estate content creation
Please do a video on rentvesting, thanks
Check out the latest video on the channel Alex :) Hope it helps
Wait, you said what happens if Jane loses her job, what is she going to do. But what if John's tenants lose their job? And finds it hard to find long standing tenants? Ismn't there a risk if he has his own rent and property repayments to manage?
Took it to 242 👍 Ravi, you’re killing it mate. Love the content
Isn’t this plan dependant on having
tenants for the investment properties?
Yeah that's right and hence why it's so important to be in locations that have low vacancy rates.
rentvesting
Yes it will be great to see how to buy PPOR after 4-5 investment property
Coming out today :)
Please make a video on rentvesting thank you
Awesome, will work on that video soon :) Thank you!
Oh and please also talk about the stress and anxiety (if any) that comes with investing in multiple properties so that we are prepared in advance what to expect. Or put it this way “how much time/attention do those properties take from you”
Even though those are assets, if the interest rates go up lets say after 10years, those assets might have negative cashflow, surely it’s not gonna happen overnight and surely there will be work around for that. Just want to prepare the mind on how much stress/level of involvement with properties are we talking about here? .... specially for people like myself who are not passionate about property but do want to become like John.
I'd love to hear that point covered too, though I doubt any property guru/buyer's agent would ever address it.
nice information, but even the past one year renting a property was a challenge. hw abt that scenario?
also I think it best works for singles than families.
Ravi when are you posting the 10 suburbs to watch video for getting the 300 👍 you promised us ?
Hi! I know, I'm so sorry, we have been so swamped with work that I haven't had the chance to properly sit down and do the proper research for the video. I don't want to just bring something out for the sake of it because, I value all of the time people spend watching these videos. I promise it will come as soon as things calm down with the business :) Thank you for the support!
Amazing where do I signup?
You can check out our website to lock in a strategy session - www.searchpropertyau.com.au
Morning, in this scenario would John have to pay significantly less in rent to what he is receiving as a landlord to make this work? Curious because I have a ppr bought with the intention of Turing it into an investment after 1 year but for me to rent elsewhere for the equivalent of our io repayment or rent received would be hard or a major lifestyle downgrade as we are 2 mins from the beach on the Sunshine Coast. TIA
Hey Kate, that makes sense. It's usually the case that most that take up that tactic will find a property that won't rent as well so, it does affect your borrowing capacity afterwards significantly. Unfortunately, there's not much else you can do apart from two things, reduce debt or increase income. Hope that helps :)
Let's hear more about Johnny
Good Old Johnny boy is making a return soon ;)
Do we really need to buy 5, 10 properties? How does this affect the housing market and first home buyers who can't afford to buy because of competition from investors?
Hey Ravi, great content! Just don’t think this video explains the comparisons very well as there’s too many different variables between the two. It would be best to keep the numbers the same and compare how 1 PPOR vs. 2 investments go in relation to claiming depreciation and serviceability. Personally I used the government schemes and have seen the property increase $120k in 12 months with 40k down. Not realistic for most, but genuinely interested in whether my luck getting that right would still be about the same as the average person who took the rentvesting pathway instead.
Thanks bud, obviously you can understand it would be way too difficult to explore all potential scenarios but I think you get the point. I personally rentvest and seems to be working out :)
Hi Ravi, is Jane's serviceability completely cooked even when looking at cash flow neutral properties? Also wouldn't John's serviceability be impacted by the rent he has to pay being a non-homeowner?
I bought a PPOR in Nov last year and this video left me sweating.
They both will have their servicing affected however, it's alot worse with the unproductive debt with a PPOR. Just how Banks look and assess these things.
Still plenty of opportunity! Happy to help if you want to book in a strategy session to discuss further.
www.searchpropertyau.com.au
Hey Ravi, very helpful video thank you. Love the strategy of rent vesting. I had a question about Jane. What if Jane moves out and rents someone and rents out her “PPOR” I guess she will loses time in the market as she has to live in the PPOR for 1yr. Then she would need show 3-6month of rent payments to show that the rent can cover the repayments. Again she loses another 3-6months. Just wondering if that is correct? Cheers
Hi Ravi,,
I live in Victoria and I have 80 k deposit with me. How can I implement this strategy?
What is the best step forward if you bought the house you live in, and have been paying it down as much as you can, and are looking at investment properties?
what John does next. thanks for the great content.
Thank you! Will work on John’s next move soon :)
What about investing in other assets like vehicles, lands, or even stock market? Investing in real estate might be risky especially with someone with low income and huge expenses.
No doubt. Have a look at my other videos on the channel where I look at investing into other asset classes too :)
Rent-vesting please
Yes! Will be great to see how John's story ends. You left it on a cliff hanger!
loving the consistency with uploads Ravi, always great info!
Thank you so much! Appreciate the support :)
Hey Ravi, great video & loved the examples. What if Jane decided to live in her PPOR for 6 months to get the FHOG & then decided to rent it out as an IP? Either Moving back home or moving to rent elsewhere. Would this change the outcome for future loan approvals? Thanks!
Great question Luke. It would depend on where the location of Jane's property is. Usually when "Jane" purchases her PPOR for the grants, it's in her backyard which generally is not a great idea. If the fundamentals of the market she purchases is, is good, well then it could play out well. Hope that helps :)
I want to see that video how to buy a home debt free
Awesome, will work on that video soon :) Thank you!
I'm literally in this position, this video arrived at the perfect time
So glad this helped you Nicholas! Thank you for spending the time to watch :)
I want that video Ravi!! How to buy debt free place of residence. Otherwise I’m going Jane.
Thanks so so much for creating this video. Gratitude♥️
Awesome, will work on that video soon :) Thank you!
How can you find 2 properties under 600k that would produce positive cash flow tho ? Would be pretty rare with a 600k budget. And in Johns situation even tho he may be getting income from his 2 investment properties. He would still be paying $350 per week
( for example ) to rent somewhere else...
It all depends on which locations you are looking at. We find plenty of deals that have great capital growth as well as strong cashflow positions under $350k.
Yes correct but, I also didn't factor in how the PPOR is going to be negative cashflow for Jane. So, kept it consistent with their "living" cashflow to not be reflected. Hope that makes sense, thank you for the support :)
Wasn’t Janes PPOR being a negative cashflow the whole premise of the video?
If you are willing to consider Western Australia, you might be able to find 2 properties (apartments, not houses) under 600k that would produce positive cash flow in today's market. Having said that, I agree with you that it's a pretty unrealistic scenario. Not to mention, investment properties which produce positive cash flows today may not necessarily continue to do so going forward (inner city Melbourne and Sydney are classic examples) - you are at the mercy of demand and supply dynamics of the market, which is out of your control.
Keen for both of your suggested videos! The property market sounds like it's due for a "correction"
Thanks, Ravi for awesome strategy insight. I would love to see How John's story ends and what could be the worst case scenario. Thank you again.All the best. You are doing a great job Mate.
Thanks manan, appreciate it :) John’s story continues tomorrow
Yes please will love to learn how to purpose owner occupied debt free! :)
I bought my first property for only a 3.2k deposit. As that is all I could afford at the time 😳 I'm glad I got in quickly than wait and save for a proper deposit
That's crazy! haha Now they are offering 2% deposits for some people so yeah crazy times are upon us haha
rentvesting please
Will do :) Thank you!
In the meantime, you can check out this video - th-cam.com/video/eRLSKwbuKcs/w-d-xo.html
🏡 Video on rentvesting please. Thanks for the amazing content as usual Ravi! 🔥🔥
Lets see what John does next!
Thanks Tony! Appreciate the support :)
I just went to the bank and asked for a loan (one of the big 4 bank) and they said you can only borrow more if you stop renting and move into one of your investment properties LoL
Some real clowns work at these financial institutions. I had one of them try and give me advice on the property market last year and she literally made no sense. Upon asking her how many investments she had made, she said 0. CONTEXT IS EVERYTHING :) Thanks for watching and supporting the channel!
Hey Ravi I love your videos and the efforts you put in them. I was waiting for this video because my wife is more like a Jane, and I'm more like a John.
However it seems that the comparison is not right. It would be nice to see best case scenario for both, and also worst case scenario. What if Jane's property gain in value? What about the rent John has to pay? Would it put his cashflow position down to zero?
So many answers I was waiting for...
Glad you enjoyed the content! :) Good idea, maybe a part 2 of the video could work too
Love the videos Ravi. Would a graduate salary of $50-60k be enough to pursue John’s path or is it something that is really only achievable with an average/above average salary? I’d love to see a detailed, step by step case study on how the average person could build a portfolio like John!
Thank you Josh! You can start on a graduate salary however, when you start looking at growing the portfolio, the income needs to increase otherwise banks won't be lending out again. When I started I was on about $55k - $60k so it is certainly possible!
Heck yeah would love to see how john buys his ppor debt free! And also interested to know from the perspective of a middle aged broke loser just figuring out this stuff now 🤔. I love your videos Ravi thanks for creating them to 😊
Awesome, will work on that video soon :) Thank you!
Mate I love you videos but...... your voice is so high pitched HAHAHAHA
Yes we need to know how John goes! LOL
Please make the vid of John buying debt free man !
Awesome, will work on that video soon :) Thank you!