Hey Folks,
I’m a uni grad who’s saved up 50k through part-time jobs and a university scholarship. Having just graduated and holding a full time job I’m starting to lean toward the world of property to begin making the most of my money. I’ve read the book “Steve McKnight’s From 0-130 Properties in 3.5 Years” and while I find some of the advice there quite solid it doesn’t really shed much light on some of the more fundamental questions that I face right now. Questions like, should I start with a student unit near the city? Or perhaps a house in the outer suburbs? Should I keep saving so I can invest in something bigger? Or perhaps jump to shares instead for the short term? Or should I do a financial planning course first?
It’s all very confusing for me right now and I would appreciate any comments or stories people on the forum might have. Thanks in advance.
edit: fixed my horrible spelling!
Hi Boshen.
Firstly, there is never the perfect time to start investing into property but, you must start sometime. What and where you invest is going to be contingent on many factors: your ability to borrow and service a mortgage on an IP; how much you can borrow will pretty much dictate what you can invest into (i.e. unit, house, etc.); how much you are earning and your ability to get tax relief through depreciation and variation; and so the list goes on.
Once you have established how much you can afford to borrow then you must do your 'due diligence' with respect to future capital growth, demand by tenants to rent the property, investing into an area that has the necessary public infrastructure such as shops, public transport, schools, etc and so on.
I am sorry, but I have no quick answers to your questions other than to keep learning, listen and take advice from experts, read Robert Kiyosaki's 'Rich Dad, Poor Dad' and keep sponging as much info and education as you can so when you buy that first IP (and the first one is ALWAYS the hardest) you will do so knowing you have managed as much of the potential risks that you can and can invest with confidence.
I hope this has been of benefit to you.
Kind regards,Bo5hen,
A major achievement .. to be holding that much as a start! Since you have just graduated from university and started on your track to success, there has never been a better time than now to get your investment underway.
There are four key components you will be taking to the banks, your savings, your job history,external remuneration (non job earnt money, rents stocks etc) and of course your creditworthiness. Make sure that you have all these in place before you approach banks now. Before the GFC they'd let one of these components slide .. but now with the current pullback on lending, they expect all of this.
My first suggestion is before you dive, learn to swim. You can either learn from books, or learn from observation .. but that takes time. And whatever you purchase .. make sure you are in control of it. Too many people buy into shoddy bodycorps, off the plans that never happen, and student accomodation. And really .. at that point the only person they have to blame is themselves .. for allowing someone else to take control.
Student accomodation, aged care, and hotel managed properties all fall into the same category. You are buying a small asset with a ramped up rental on the basis you are securing a SINGULAR DEPENDANCY. Now if i'm a real investor … i want a property that i can stick anyone who feels like renting it into, without restrictions or legal issues. And these propertys have their singular dependancy as their point of failiure. Banks see this .. and now they wont lend on most of those categories. There are still much better deals to be had out there.
Visualise mentally where the property you purchase will be sitting in 5 or 10 years. Will there be growth happening in or around the property? Most times you can see in advance .. a suburbs direction. And you need to be able to percieve this before you set money down on a property you want to buy.
Finally .. buy a property with upside and potential. Good sized bedrooms, big backyards, location. Property .. despite presenting figures … is still .. all about people. Buy something that can be lived in repeatedly and often.
I would be buying shares at least buy 10 or 20k, consider using put options which is like giving away 10% of your profits to insure against fall in price. There can be large oportunity costs holding savings. If you want to invest in property you will need a buffer, shares are a good buffer. While there are exceptions and bargains do pop up , generally i dont thnk now is not the best time to be investing in property although it appears builders are reducing their prices, as the FHG building flurry is done. You can get good leverage for small outlay and minimal risk with shares. I consider property a long term investment for those on higher income in the current climate, having said that it is good to get a foot in tbe door with property. I would be looking at regional areas at the momment some have had stagnant growth but yeilds are increasing but prices have started kicking up in the last few months. The last place I would be investing is student units anywhere, or houses in outer suburbs, unless you know the area and know you have good value.
First of all, welcome to the forums!
Saving $50,000 whilst you were still at university is quite an achievement!
What should you do with that money?
Well that's a good question, but it really depends on you
- What are your goals?
- What time frame are you looking at to achieve this goal?
- And Why?
There are plenty of ways to make money, whether it be in properties, shares, commodities or businesses, but what is vital is that you do your due diligence, and educate yourself in your investments
If you would like to invest in properties, what strategy will you be looking at?
- Capital Growth?
- Quick Cash/Renovation?
- Cashflow?
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