Have First Property, What next?

[House Hunter]

I recently bought my first property in Auckland. A two bedroom unit that I've renovated over the past two months and am now renting out. It is negative geared.

I'm single and in my 20's so the amount I can borrow is largely limited by my $53k salary. Therefore, buying a second rental property in Auckland is not really possible in the immediate future due to my serviceability.

I'm quite frugal and live on a around $19k of my take home $41k each year. I'm in kiwisaver. I used the sharemarket to help create my house deposit along with my savings from wages.

So what do I do next?

[Chow Hei]

Back to the sharemarket

[PTILoveYou]

Hi HH

If cashflow is really a problem for you, and you don't want to top up another property, then I suggest you keep progressing on your job in the meantime while wait for a better time to buy in the future when the market cools.

Also continue to be frugal and pay down debt in the meantime.

Or else buy out of town like Hamilton etc for cashflow.

Gary

[House Hunter]

If cashflow is really a problem for you, and you don't want to top up another property, then I suggest you keep progressing on your job in the meantime while wait for a better time to buy in the future when the market cools.

I'm progressing my career, but that only takes up until 5pm or so each day. So I've got week nights and weekends.

Also continue to be frugal and pay down debt in the meantime.

Will do, it has become habit now so easy to maintain.

Or else buy out of town like Hamilton etc for cashflow.

I see the future (like yourself) to be in Auckland, as central as possible. I just figure if I'm fresh off the plane, I'm not going to settle down in outer Hamilton. Just like if I went to England, I'd settle in Central London, Australia, Central Sydeny, etc.

[House Hunter]

Back to the sharemarket

This was the option I was leaning towards. I enjoy it and did quite well out of the investments I had. I sold them to fund the house deposit, so will start over again.

[PTILoveYou]

This was the option I was leaning towards. I enjoy it and did quite well out of the investments I had. I sold them to fund the house deposit, so will start over again.

Just be aware US is in a bull market atm, and the sharemarket will collapse in the next 2-3 years.

[Damap]

Pay down the mortgage on number 1 property as hard as you can. It won't take long till you have enough equity to go again with debt reduction and a blazing market.

[PTILoveYou]

I see the future (like yourself) to be in Auckland, as central as possible. I just figure if I'm fresh off the plane, I'm not going to settle down in outer Hamilton. Just like if I went to England, I'd settle in Central London, Australia, Central Sydeny, etc.

Then buy if you can afford it, then else just sit tight, learn as much as you can about property investing, then wait for the next recession to buy in central.

Also assess how recession proof your job/career field is, the worst thing can happen is you get made redundant from your job, and you can't find another one in a hurry, while having 2 rental properties to top up each week!

[House Hunter]

Just be aware US is in a bull market atm, and the sharemarket will collapse in the next 2-3 years.

How can you be sure?

[PTILoveYou]

How can you be sure?

87, 95? 2000, 2001, 2008, history is quite predictable don't you think??

[House Hunter]

Pay down the mortgage on number 1 property as hard as you can. It won't take long till you have enough equity to go again with debt reduction and a blazing market.

Wouldn't it make more sense to keep the mortgages quite high and use the money instead to invest into the share market? Borrow at 4.9% and earn the 15-20% I was earning annually.

[House Hunter]

Then buy if you can afford it, then else just sit tight, learn as much as you can about property investing, then wait for the next recession to buy in central.

Also assess how recession proof your job/career field is, the worst thing can happen is you get made redundant from your job, and you can't find another one in a hurry, while having 2 rental properties to top up each week!

As I said above, I can't really afford a second property with my $53k income at the moment. I'd say career field is pretty recession proof. Not linked to the building/finance industry or anything.

[PTILoveYou]

Wouldn't it make more sense to keep the mortgages quite high and use the money instead to invest into the share market? Borrow at 4.9% and earn the 15-20% I was earning annually.

Can you be sure you can still keep making that profit in the sharemarket when the market turns??

Leverage is a double edge sword.

If you make profit the gains will be good, but if you lose, leverage will hit you extra hard!

[House Hunter]

Can you be sure you can still keep making that profit in the sharemarket when the market turns??

No I cannot be sure if the companies share price goes up, down or sideways. That is completely out of my control.

All I can control is the price that I buy the company at.

It is no different than buying a property.

[speights boy]

If you have a reasonable idea of what you are doing in the sharemarket ( you seem to), and you can borrow cheaply (you can) and you only want AKL central property(you do) then I think shares are a reasonable option currently.

I added to a current holding today.