HI There
These forums are great and everyone seems to be getting great feedback.
Me and my partner are wanting to start getting out of the rat race and into property. But going through how everyone else does it – cash flow, capital gains, using deposits etc
Basically – my question is all to do with deposits…as we have $22k in my savings, and my partner has money in first home saver. We’re not sure whether to use that ‘nest egg’ for investment property or to use the deposit for first home – then go into property after that.
My concern with buying PPOR first – is that we wont have the cash for investing….Do you guys put down 10% deposit (on residential homes) – and even if the house price is ridiculously small such as $200K – the deposit alone is $20K….we’re not sure whether to invest here in Coffs or to buy outside capital cities like redbank plains in QLD near Brisbane…
So confused and want to start so badly!! People around here are fine with not retiring (getting out of rat race) before 65 and even if they do own investment properties – it is used for when they will be 65.
How did steve buy so many properties and have money for deposits?? because if hbuy borrow 100% – the repayments alone may not allow positive cash flow….
An idea was to build duplexs on cheap land – but then maying e construction loan during construction would be hard and it wont be tennanted until completion…
really not sure where to step…..
please help!Hi and welcome to the forum
Personally (and this is a personal decision) I've always had a preference towards buying your own home first and then getting into property investing afterwards. That way, you can take advantage of any Govt. FHB incentives such as the FHOG and concessionary stamp duty (if available).
Also, if you purchase something that you can add value to (particularly cosmetically via new paint, flooring, etc) then you might be able to increase the value of the property early on – and then tap into this equity and use it towards your first IP. Then repeat
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:preference towards buying your own home first and then getting into property investing afterwards. That way, you can take advantage of any Govt. FHB incentives such as the FHOG and concessionary stamp duty (if available).
JamieThat’s the way i would look at it as well, given you have such a low deposit …the gov grant would help you boost your deposit + use less of your own cash ( discount stamp duty etc…) ; if you decide to buy IP first you won’t have enough deposit to buy a 2nd place either way.
One common mistake new investors make is to buy ANYTHING they can afford ( ie CHEAP!) as long as the rent is good…this can be a good strategy, but i would personally avoid this as your first property…why?
These sort of first time buyers who buy ” cheap properties” , buy irrationally and just look at the numbers. Their thinking is ” wow it’s cheap, i don’t want to live there, because it’s too far from work and everything else or the neighbourhood isn’t as good…but the rent is good” ….. next thing you know the place is empty for 2 month and nobody wants to live there…
So if the first place you buy is your PPOR and your ok to live there, the chances that someone else is ok to “rent” that same place is very likely and it may turn out to be a good buy after all.
P.s Not saying buying cheap property in rural location with high rent is bad…just be careful, especially if your inexperienced.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
HI there guys thanks for your comments!! Awesome
While we are looking at both IP and PPOR – we are keeping are eyes out. The property we found on the weekend, is yes a cheap one i Coffs harbour. However my brother s an engineer and used ot renovate houses and has looked at this one and will help with cosmetic renovations and basic kitchen and bathroom upgrades. Its a 3 bed home with new paint and carpet. Asking price $235. However we submitted a tentative offer of $175 (it needs kitchen, bathroom renno, curtains, exterior paint, etc) . Rentals in area go for $290- 320. similar priced properties in the street sell for $250 despite being slightly in need in love.
Its been on the market for a while and the agent came back to me and said the vendor said thanks, but he’s had higher offers. I replied thats totally fine, but we are only offering $175 to $180K…I need help with negotiating as they are like….well to get a home at that price you can buy a vila…but this place doesn’t even have a shed or covered parking…..and no areas for storage!!
In response to your post..
I would be looking at incentives such as the QLD builders grant ($10,000) to any investor, must be permanent resident or Australian citizen and purchase must be brand new or off the plan. For more information on this Government incentive please visit QLD office of state revenue website http://www.osr.qld.gov.au/
Furthermore It all really depends on your individual scenario. For example if you are paying to much tax might be a good idea to look at purchasing brand new or if you do not perhaps better waiting until you have saved more of a deposit. At the end of the day whatever you choose I recommend you do two things:
1. Purchase Below Market Value <moderator: delete advertising>. Just briefly the best guide to ascertain current market value is bank valuation however you need to ensure you are buying in an area with solid fundamentals such as transport, schools and industry/employment.
2. Take out all emotion when purchasing and look at the numbers and growth opportunity.
<moderator: delete advertising>
I wish you the best of luck in your endeavours, just keep in mind the first property is always the hardest. If you buy correctly it will all be down hill from the first purchase choose wisely and make sure you listen to as many people as possible before making the final decision and purchasing your first investment.
[email protected] wrote:I need help with negotiatingHi again
You just need to work out the price that you're willing to pay.
To come to that price, you need to do a heap of research on the area, property, comparable sales, vendors reason for selling, etc.
Once you've determined the price – base your negotiations around it.
Personally, I wouldn't start off with a ridiculously low offer because you risk losing credibility.
Instead, start with an offer that allows for a couple of increases which will eventually see you hit your limit.
Best of luck.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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