Hi everybody,
I'm a 21 year old student and very interested in property investment. I still live at home with family and my dad is a full time hotel accountant (the only one working in the family), thus, leaving no time to do much research in the property market. Lately we've purchased our first IP in the same suburb we live in, it is currently rented out to students and we provide homestay service (my mum). We've basically loaned 100% (600,000) for this property and making returns of roughly 4500 per month (will be stable for roughly 2 years as they are under 18y.o students and happy with the place).
I always look at houses on realestate.com.au/ and constantly go for inspections for future potential opportunities. My dad is very conservative and it took me forever to convince him to buy our first IP. Now the property has gone up in value and we've made slight renovations so the house is in good nick.I am now looking for ways to go about my next IP, I mainly look at suburbs close to my PPOR as i know the area well and feel confident. Houses around my area have been rising and prices are becoming high, making the risk higher and even harder to convince dad. I've been reading lately on sub-division and renovations to IP, to renovate and sell quickly or buy and hold. I've talked to dad and he said he can only take another $500,000 out of the bank which makes it hard to purchase properties around my area. I also use realestateview.com.au for some brief statistics on areas of interest, as i mainly look at suburbs which have schools, universities and shops close by for people.
I'm located in Melbourne, Australia and have been looking at the Eastern suburbs of Melbourne. Any advice, information or personal experiences would be greatly appreciated.
Sorry if this is stupid but I am willing to listen and learn from any advice, also, if I didn't ask, I wouldn't know.
Thank you
Hi,
Alright I'll have a crack with my 2 cents.
First I'll have a stab with the suburb, Box Hill South or Burwood. Hey I might be way off… Secondly I like your figure of $4500 a month. Over $1k a week is interesting. How are UNDER 18 yr olds paying out this much? Are we talking overseas students? Or is this a combined household income?
Then I would ask with regards to reno or sub-division whether you can pay the mortgage as well as paying all the associated costs. Can you hang on to a property for anywhere from 6 mths to 2 years without sinking? You may have tenants for 6mths out of an 18 mths project. Can you pay $1000's a month on an empty property? (This is without all the other costs of doing ANY work on a property)
I would suggest rather than jumping in head first you do just a little more reading. Hey I'm not saying waste time ( Coz OMG the markets moving and there will never be another time, quick panic buy!) I'm saying read a couple books to see what you are getting yourself in for. A good sub-division one is by Ron Forlee, Australian Residential Property Development. Sorry I haven't got a good reno one because I haven't got round to reading any yet. Plenty of good real estate books here http://www.businessmall.com.au/ . Get some property investment mags and look at the suburb listings in the back for information on whats moving and what's not and rental yields.
Lastly not every opportunity will be over your back fence or round the corner from you. You have a whole state and a whole country to shop in. (yeah and world, I know!)
No one is going to hand you all your knowledge, you need to work for it. But do work for it, you are the only person who will be able to gain all the information. Ask questions, this is a good start. Who cares if you sound silly or you ask the "wrong" thing, just keep asking. No one is going to tell you where they planted their money tree but they may tell you how to find the seed.
Good luck, I hope some other people weigh in with an opinion or 2.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeI have a view point that paying $500,000 plus for a house limits who you can rent out the property to.
I own property worth under $300,000 in Cranbourne and it is affordable rent for the rental market.
The other point is would you rather have all you money in two properties or spread over 3 or four properties. It is putting all your eggs in one or two baskets which is a higher risk.
I live in Forest Hill and I see a lot of empty rental properties.
Also
If you try to rent out a new property between November and Late January you will have difficulty finding tenants it is just the way the rental market seems to operate.
Thanks D and duckster for your comments.
Cause all the tenants are homestays the rent ranges from 200-250+ per week and we have 4 students. Yes they are overseas students who need to live in homestays. The 4500 is basically just rent from the students, but as they are homestays we have additional expenses such as paying for their food/extra groceries etc.
I've never read any books on property as we've just sort of started. I do all my research throughout the internet and from personal experience, which is why it is so hard to make decisions and I'm inexperienced. Maybe it would be wise to start with the books lol.Duckster i also live in Forest Hill, maybe you can teach me sometime haha..
I understand what you guys are saying it's just i don't know other areas as well as local markets. Being local and having local friends (local and overseas students), i know what people are willing to pay and what i can get out of a house…
I will need to do thorough research before starting look and invest in unfamiliar areas.Thanks again for your help, keep the comments coming
Ah Forest Hill. Well at least I was in the same state
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHaha yeh…ive been living in Forest Hill for about 21 years now lol…how come u moved?
I was thinking of buying a property and hoping to renovate it and sell quickly…what are your ideas on this? or would the buy and hold technique be more wiser considering the market?
The property I'm interested in is around $600,000, its in a good location at land roughly 650 sqm. But the renovation work seems to be a big job. We've got a family friend who does most of the renovation work cheaper for us and I've also looked and ask around the area, some houses can sell from mid to high 700,000's (with similar land size).Another question, how do others build up the confidence to invest in areas they don't know? and where to start?
Pick somewhere and look at the figures, will it be C+ or will it be positive geared or whatever you want. Then do research, whats the population like, who rents and what type of house/unit etc. What are the industries in the area. Is there roads, trains, etc. What about schools.
Then drive around. nothing beats going there especially if you are unfamiliar with the area. You can soon tell if there is nothing worth buying. If you drive around and have to lock your doors and leave in a hurry this may not be your cup of tea. If you go to a suburb and it looks like something is happening, renos, building work, units, then there may be opportunities. If there is heaps of building and the suburb is getting touted as the next big thing you may have missed the boat (may).
hope this helps
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeI'd suggest starting with a subscription or two to property investing and mortgage mags. They have a lot of really current information in them that is updated monthly, as well as solid articles to start from.
DWolfe is right: You've got a whole country to shop in. If there are empty rentals in your area, consider Sydney. Most of the market is ridiculously tight up here.
And my own two-cents: Student accommodation has its pros and cons. Some of this months mags talk about the potential legal issues around supplying internet to tenants. There still seems to be good money in students, even without the homestay factor (and we've had homestay students, when things got tough, all of my life!).
Keep researching. Never stop. Be careful, but understand that you will make mistakes, always learn from them, and keep moving forward.
Oh, and talk to a licensed professional who really knows property if you're not sure where to step next. I'm not one of those… I'm just full of ideas and facts and figures that I know worked for me, and for clients! You need info that relates to *your specific situation* before you pick which option to move forward with.
Good on you for getting into this at 21!
Thanks D and Elizabeth for the ideas.
I've actually been very interested in property for some time, but as a full time student i cant really do anything myself…
Our first IP was for homestay to maximise rent to BE with the banks. My mum cooks for that house and she won't be able to do it for any other houses as i can see it's tiring her. I went out and got this months property magazines and bought the book "How to grow a multi – million dollar property portfolio" by Michael Yardney hoping I will gain heaps of information from reading it..I've got high ambitions so I will definately work hard
Thanks again
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