All Topics / Help Needed! / New Investor – strategy needed
Hi
I have become interested in property investment and have started research. I know the first thing i need is a strategy, however when i spoke to a property expert they were charging $700 for a one hour phone call to set up a strategy and i can't afford that yet so i was after your advice.
I'm currently saving, and in 5 years would have saved $90,000 cash, so in 2 years will have $44,000 to maybe invest while i continue to save the rest. I don't really know what i want to do, but positive cash flow sounds good as well as capital growth. Renovating seems a bit involved at this point. So i was thinking of making my first purchase in two years of about $200,000 with a $44,000 deposit and renting that property out, then purchasing another property three years later for $300,000 with $50,000 deposit to avoid paying mortgage tax. (does this matter?) or do i only need a 10% deposit?
So i'm just trying to get an idea at this point, if i should start investing and if my portfolio would be any good with a start of $90,000 cash?
Your opinions would be greatly appreciated.
Pru
Where did you get the "property expert"? What makes them a property expert?
Where are you located (Damn I get sick of asking that- wish they'd fix that on everyone's name. It's so annoying.
There are lots of places you can go without paying high fees.
Hi Earl
Thanks for your reply, i'm located in Sydney (camden). I got the property expert from the your property investment magazine. (we find houses.com) and that was the quote i got. I would prefer to get someone to see me in person and explain things, but it seems these things are done over the phone with most of what i've looked into.
Most lawyers don't even charge that much!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Pru,
I think you have quite a good strategy already without needing to pay someone $700 per hour. Are you looking to purchase a house for that much for a unit?
Re your question about the deposit – you will need a minimum 10% to get into property. This however will mean that you will pay lenders mortgage insurance when your LVR goes under 80%. This is tax deductible for the first 5 years. LMI premiums skew once the LVR is over 90%.
I would also strongly recommend you do the numbers. By this I mean plug in the rental income and the outgoings and see what the property looks like today and for the next 5 years in terms of Capital Growth and cashflow. This will help you determine the right strategy and in turn property.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Pru
95% lends are possible for an IP – meaning you only need a 5% deposit and enough to cover costs such as stamp duty and legal fees.
We've managed to get a few 95% IP lends for forum clients over the line recently.
Check out this article I wrote on using a smaller deposit and leveraging LMI to grow the portfolio quicker.
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]
I think the important thing to do is get started
I admit I run a mentoring program however it a sideline to what I actually do
Many of these so called experts are salesman, you pay them a fee and they try and sell you a property. Now I know I am being a little unfair. What I am planning on doing is establishing a property club in most major cities and you will be able to come along and gain some knowledge from not only me but other like minded investors. I am doing this because I know that there are right and wrong ways to do things.
Many first time investors lose money because they either listen to the wrong people or do not do any due diligence
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Nigel will you be running one in Melbourne?
HI Joe
At this stage I am looking at Melbourne, Sydney, Brisbane and Adelaide
It is about finding the right people to be involved
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
We all came to start at the beginning so if you're new in this kind of business, I think I can help you.. Just follow this link Real Estate and it helps you a lot.
Hi Pru
The answer to the question of "When should I start investing" is "as soon as you can". The reason is that "time in the market" is a strategy that does not tend to fail. You buy a place for say $200k, you rent it out, and each year you put up the rent. Meanwhile the value of the property is going up, and eventually the mortgage payments are so small relative to the rents coming in that you almost don't notice the mortgage any more.
Jamie has already indicated that 95% lends are doable. On a $200k property, that means a $10k deposit, plus as I recall somewhere around the $7k mark for stamp duty. Is something like that achievable for you in a year or so?
PS Jamie is a very well respected broker on these forums, maybe give him a call and have a chat and lay your plans and timelines so you have some direction and you know exactly what you need to do.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
thanks for your reply Jamie, i read the article and found it a great help and believe now more properties are very achievable. Still saving for a deposit at this stage, but i'll continue learning and give you a call closer to when i've got my saved deposit in a year at least.
Regards
Prudence
thanks for your input, it has helped me alot and i'll keep Jamie in mind. So yeah i should have about $20,000 saved in a year so still just trying to get educated. Can anyone recommend a particular book or website that actually breaks down different strategies. I'm finding this the hardest, and most i've read are just not specific enough eg, buy, renovate, sell.
Regards
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