I need some advice my husband and i are new to property investing and would like to know the best way forward has any one got any hints or tips that may help us to start.
Nicole
Welcome to the forums Nicole,
A good place to start is with setting goals.
If you have equity in your house that you cna use for a deposit then don't worry about this.
You will need some sort of deposit. So i guess the a goal to set is to save a certain amount of deposit for this property.Or if you have outstanding credit cards debts or personal loans, set goals to remove them and get the deposit going.
When you set the goals. Be specific, dont just say i am going to do something. Say i will do this(specific thing) but this time(date).
Break the goal down. So say you need a 20K deposit by this time next year.
You break it down. ok 20K in 52 weeks. that is about $285 per week you need to put away every week for the next year.
While you are completing this goal you can set others and acheive them.
E.g. read some books on property investing.
Go the some real estate agents and check out some properties.
Search for properties, so that once you get your deposit ready you can get straight in and know exactly what you want to buy.
You could go to a bank and see them so that you may be able to rationalise your deposit(what i mean by this is that you can work out exactly what you need for a certain house).
Educate yourself(this links to the books above) but also do what I do, I ask many many questions on here, whenever i'm in doubt I just jump on here and ask away. Everyone here is happy to help, it has rubbed off onto me I'm happy to help anyone(as long as they are willing to learn).I'll leave you with those thoughts.
Kind Regards,
Christopher Fife.I agree with Chris.
Education on finance and the real estate markets is crucial. Start now and never stop.
If you have a lot of comsumer debt (other than your home loan) it is not adviseable to go into property investing until this is cut out.
The reason why is that to be a property investor requires very good money management habits/practises, and unfortunately, people with lots of consumer debt tend to not have those habits.If you are relatively free from comsumer debt then well done, and you should start to formulate a plan.
Start with working out what percentage of your income you have free for investing, and work out how you can free up more of your income for this purpose.
Then set down a plan for saving a deposit, or being able to access any equity you might have in your existing home if you have one for a deposit.
Work out (with a mortgage broker's help) what you may be able to borrow SAFELY, what repayments you could afford should there be no tenants in the property for a while, what type of loan you will need.
This will give you a basic outline of your budgets and possible purchase price for an I.P.
Work out your strategy; buy and hold, flipper (or trader), renovating, subdivisions, developing, wrapping etc.
Then you can start to do some market research and try and identify some areas that may be viable for your strategy.A couple of basic calculations for you to help work out cashflows on an I.P:
1. allow for approx 20% of the rent to be eaten up by the "holding costs" such as management, insurances, rates, repairs, 4 weeks vacancy, etc (this doesn't include the loan interest). This is probably a little on the over-cautious side, but it pays to over-estimate the expenses.
2. purchase costs for an I.P will be around 6% of the purchase price. Again; maybe a little high.
3. never take an agent's estimate of the likely rent as gospel. Do your own research on what the actual rents are for your type of property in the area.ok thanks for your help, we are at the stage where we have about 120k equity in the house and we don't have any other debt so i will continue to keep researching.. thanks again. any other tips would be appreciated.
Does any one know of an accountant on the Sunsine Coast who knows the in's and out'd of property investing?
1. Goal setting. What do you need to own/control to get to where you want to be.
2. A financial snapshot of where you are now. What can you borrow now to get started?
3. Short term goals – what do you want to have done by end this year?? By end 2008?? By end 2012??
Remember the goal is not to just buy IPs and see where you end up…. Many people want financial independence and might decide they need $2M worth of asset returning 5% pa + capital growth to achieve this independence. Then work out what you need to do to get the ball rolling TODAY.
Just my opinions – seek independent advice.
Cheers,
would it be worth while setting up business with a partner/ friend and buying renovating and selling? has any one got a spread sheet to work out associated costs?
L.A Aussie wrote:A couple of basic calculations for you to help work out cashflows on an I.P:
1. allow for approx 20% of the rent to be eaten up by the "holding costs" such as management, insurances, rates, repairs, 4 weeks vacancy, etc (this doesn't include the loan interest). This is probably a little on the over-cautious side, but it pays to over-estimate the expenses.
2. purchase costs for an I.P will be around 6% of the purchase price. Again; maybe a little high.
3. never take an agent's estimate of the likely rent as gospel. Do your own research on what the actual rents are for your type of property in the area.Those are good calculations. I have always wondered how I will go about working out my expenses(other than interest).
20% nice figure, i'll run that through my calculations currently and in future.
With the purcahse costs. for me first home, so the purchase price will be very low. But ill keep 6% in mind.
I agree with you on the third one Marc, these agents may(will) inflate the rent to try and get an easier sale, and maybe a higher price. So do your due diligence and don't believe everything real estate agents are saying. "they are working for the sellers, not the buyers".Thanks for those tips Marc.
Chris.
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