May 23, 2022

#154: Listener questions - How do I recover from early investment decisions that were made without a plan? We have our home and plan to star

46 minutes

Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Properties still hotly contested Cate shares her weekend auction experience at a trendy inner-northern suburb in Melbourne. Despite the looming election, competition was strong and felt like we were back in the throws of September 2021 when the property market was going gangbusters. It goes to show that quality properties are still attracting competition. 2. Rents on the rise Capital cities have been posting mammoth increases in rents, with the trend now that rental growth is outpacing the rate of capital growth. High capital growth performing assets may have lower yields, but it's likely that rental growth will outperform in the long-run. 3. How do rising interest rates affect the property market? With many prospective investors nervous about investing with interest rate rises on the horizon, Cate shares data on historical property downturns and increases and how this has correlated with interest rate rises and falls. Check out our show notes for the link to Cate's blog. 4. Perth recovery For the first time in 8 years, the median value of Perth has finally reached a new record price. It's been a long recovery with many investors and owner occupiers wallowing in negative equity, but following the relaxing of covid restrictions, Perth has recovered from previous downturns. Show notes - Listener questions 1. A question from our listener - Should I invest in property now or wait until after we have kids? My partner and I are in our late 20s, work full-time and plan on starting a family in the next 3-4 years. We bought our first home in 2019 (Woodcroft Adelaide) which we plan on staying in long term. Since then, with extra repayments and the market we have built up equity (~200k useable). As our incomes will be changing with time off for kids, what advice would you have when weighing up the pros and cons of investing now compared with waiting until our incomes are more more steady (ie kids starting school) and we have paid off more of our mortgage. 2. Crunching the numbers The key question to answer is whether our listener will be financially secure if they purchase an investment property now and then go on to start a family, which comes with reduced incomes and additional living expenses. The trio crunch the numbers and discuss what price point would be viable. 3. Buffers and risk tolerance A fundamental point to consider when planning for an investment is risk management and whether the available funds buffer will allow our listeners to have a good night's sleep. Risk tolerance is key here, ask yourself, "would I be comfortable if my net monthly cash flow was very limited, neutral or even going backwards?". If cash flow will be negative during the period of having children, then maintaining a buffer large enough to support a growing family will be a critical consideration. 4. How does the family home fit into your investment decision? Our listener has done well for himself to purchase the long-term family home, which is large enough for a family with 2 children. Staying in the current home makes it much easier to build an investment portfolio. However, those who are considering embarking on the journey of having children and also purchasing an investment property must consider how their needs from a family home may change in the future once the kids come into the picture. If upgrading is on t...

...more