$600k equity to Invest

[rocket]

Hi All.
If you have $600k equity to invest in property , what would you do ?

I know some will say it all depends on personal circumstances etc etc... but I want to see what the general sentiment is. End of the day we all want to make money long term & have a passive income , hence the goal is common.

Please answer your thoughts with emphasis on areas,property types, yield, mortgage term & fixed/float etc.

[Lovethiscountry]

I would buy a leased versatile industrial building in Auckland for around 1mill.

Possibly Otahuhu, Penrose, St Johns, Mt Wellington area looking for minimum 7% net return.

Something with a four year lease, or more with two yearly rent reviews and a personal guarantee from the lessee making sure that they owned property to back it up.

[Lovethiscountry]

With a interest only loan of 400K floating at the moment but fix after the next expected rate drop to a 3yr term

[propertybuyingNZ]

that is quite a substantial sum, I would rather do something of buying 20% bmv for cash purchase, reno, sell, and do as many of it as possible, you would get way more than a 7% return but more work too.

for hands off, there was a 3 flat property for sale in Wellington, close to town, perfect for airBnB, could give you 12%+ return, I could buy two of those and employ a manager.

[Damap]

I would buy something around a mil to 1.2 in a Blue chip part of Auckland right now. Either a home and income or a solid B and T with water views in East Auckland.
It won't be too long before none of us can afford to buy them so get in now and watch it grow!

[AlFa]

I've got actual cash around 500k mark so more than interested in this question.
Re Damap proposal - I tried but could only get another 500k in lending so missed out on cheap and very run down villa in Herne Bay which was sold for 1.7mil.
Now looking at buying with opportunity to sub-divide

[Damap]

East Auckland you can get great stock for a mil. Howick, Bucklands, Eastern, Cockle Bay even Pakuranga Heights, Botany, Golflands, it's all real estate gold.

[AlFa]

Yeah but then I'd have to topup mortgage for 2 houses with no chance of buying anything else

[Damap]

I dont understand why. 500K mortgage on a 1 mil home and income (returning 5% on the mil). Cash positive and 500K equity to buy more houses.....

[AlFa]

Hmmm... now I'm lost so I put 500k deposit for 1mil house with 500k in lending. And then I can just use the same 500k (now in form of equity) to put as deposit for another house? I feel there should be mistake somewhere but can't see where.
Btw Damap do you have an example of such property somewhere handy?

[rocket]

That's the thing. ..With blue chip ones you come to a stand still with serviceability.
How to get that going Damap.

[Lovethiscountry]

Mr Leftus. How can one continue to buy in your example while meeting banks lending criteria?

[Damap]

No mistake. You have put 500K cash in to the property. You can theoretically use that equity for more deposits. Your broker can show you the best way to structure it. It may be simpler to get a larger mortgage on the first house and keep the cash of course it depends on your situation.
IF you search home and income on trademe there are 102 for sale in Auckland.

[Damap]

That's the thing. ..With blue chip ones you come to a stand still with serviceability.
How to get that going Damap.

Well that wasn't the question. The question was what would you do if you had 600K cash to invest. How to keep investing when you hit the serviceability wall is a whole other issue. Depending on ones goals one of the things I have learned is that volume doesn't equal success. Depending on your age, owning 5 homes and getting them paid off is a far easier retirement plan than trying to buy 20 or 50.

To the actual question you raise I don't know the answer. I have always relied on my brokers to advise me on what to do and what to buy next to make sure I could keep borrowing. Depending on how aggressive you want to be there is plenty of money out there you just have to pay a bit more for it sometimes.

[Damap]

How can one continue to buy in your example while meeting banks lending criteria?

See above.