Forum Replies Created
Hi Matt,
I have deleted the repeated thread in General Property. Double posting means that conversations can become disjointed and make it difficult for individuals to follow.
All the best trying to find a mentor.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Brett,
This thread has an extensive discussion on many of the key points.
https://www.propertyinvesting.com/forum/topic/7693.html
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by quiggles:be clear as to why you are doing this. Does the property fit into your strategy? If you haven’t got a strategy, get one of those first.
Good comment Quiggles – got to know why the property is being bought.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Paula,
Congratulations for wanting to improve your ‘lot’ – you are amongst friends here who are pursuing thing albeit we may have slightly different philosphies.
For starters do not be afraid to buy an investment removed from your place of residence. There are many here who do exactly that with some people owning IPs across the country and in some cases even overseas.
Provided you are able to do your own research and undertake your own checks and balances and have access to ‘local experts’ then you are well on the way to success.
As a general rule ‘holiday lets’ do seem attractive investments from a numbers point of view.
However (there is always a but) make sure that the occupancy rates are realistic and check to see what costs are involved. Some holiday lets do have very high costs which can make gross returns look less than rosy after all costs are considered.
You will need to consider management fees, cleaning fees, fixtures/fittings and furniture replacement costs (which may or may not be considered in strata fees), rates, strate fees, advertising costs and so on.
Other factors worth considering is the financing and resale of these units. Most lenders tend to consider these as riskier propositions and as such will not generally lend to the 80% level typically found in residential property – as such this property may take more than its share of available equity. Obviously this is less of a problem if you have equity to spare but otherwise it can create a longer term problem.
Many investors tend to steer clear of holiday rentals as investments and you may therefore experience some difficulties selling in the fture and/or realising gains made.
I also recommend you do a search of the forum as other people have asked similar questions in the past.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi all,
Picked up the financial review and it had some statistics that may be of interest.
Kambalda – 112 sales in 2005 (huge number of sales), median price $91K, 6.4% growth in 2005, 10 year trend 1.7%.
West Kambalda – 16 sales in 2005, median price $93750, 4.6% growth in 2005, 10 year trend -4%.
Certainly not numbers to be excited about.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Aussie,
Good comments – something those of us who live in prone areas should consider.
A couple of points that individuals should remember.
When a bushfire approaches it is usually on a large front. Invariably the capacity to allocate a fire appliance to each threatened piece of property is severly limited so individual homeowners should not rely on an appliance being available at your time of need – after all most bushfire fighters are all volunteers.
If a fire is approaching get yourself correctly dressed – thongs, shorts and tank tops do not count as adequate attire. Love the news footage of people on their rooftops squirting hoses around attired as described.
And finally, if you want some more information
http://www.fesa.wa.gov.au/internet/default.aspx?MenuID=325
I am sure other organisationsin your respective state has similar information available.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958HI Graeme,
I suggest that you do a search – the search function is located under the Forums button at the top left of the screen. Roll your mouse over the word forums and you will get access to search facility.
Julia Hartman (www.bantacs.com.au) used to post here quite regulalry. She however is basedin Bribe Island – may be worth a drive.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Pups,
I would suggest that your accountant be sourced from references from other property investors – this will save you a lot of time, effort and heartache. I suggest you indicate your state/city and you will invariably find that others here can recommend a suitable accountant.
In much the same way individuals may also be able to recommend a solicitor that is located in a suitable location.
As for financial planners well – most have little understanding of the benefits of property investment as their salary/business worth is based on commisions and trailing commisions. From memory Alan Kohler (?) wrote a great article in one of the weekend papers about the worth of financial planner’s businesses.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Without knowing the Victorian suburbs my comments are more of a general nature.
Debt for your own home is amongst the most draining of all debts as it usually takes up a large chunk of family income and has such a long life. In essence the one thing I would strongly advise is to start modestly so that this financial drain is not too significant. There is often little or no need for the four bedroom, study, theatre room and all associated mod cons and each one of these features does add start up costs and ongoing costs to your situation.
For me start modestly and then look to investing when things are established and stabilised.
Future family plans may have an impact on this plan.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi ClairS,
This topic comes up from time to time and a number of issues associated with retirement villages previously canvassed.
I recommend you use the search facility which is accessed via the forum button on the left side of the top of the screen. There is a drop down menu which appears when you roll your cursor over the forums link.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Terry,
Yep I did mean ATO – have edited the error in the original post [exhappy]
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Mitzu,
I believe Terryw is based in Sydney.
http://www.discoverhomeloans.com.au
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi FR,
For what it is worth I would prefer to see you make a concerted effort to reduce your existing debts before embarking on any investment program.
Use 2006 to pay down the one of the loans (I assume there are two loans $12K + $20K) and then look at a joint investment with your mother.
As for financing investments – many investors prefer interest only as this reduces your monthly outgoings. Having said that there are some who pay P and I in order to own the property outright. It really comes down to you beliefs and goals.
Certainly a tenant will pay rent which assists with the monthly interest bill and other outgoings. Whether or not they meet the full amount is dependent upon where and what you invest in.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Redwing,
Calvin has an IP in Nollamara (from memory)
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Brett,
I must admit I do not know Bundaberg property market intimately so please take what I say with a grain of salt.
I just skim read Herron Todd White’s December property report and they indicate that the Bundaberg market after strong sales in Sept/Oct, the market appears to have settled.
For the full spiel see page 34 on the following
http://www.htw.com.au/pages/info_centre/review/MR%20Dec%202005.pdfBe aware that you are at a stage when you will experience some doubts (this is normal) so do not panic if this happens to you. It is par for the course you are embarking on. One of the side effects of this is that you will think that you are making an error in short listing an area.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Brett,
Congratulations on wanting to start your investment journey so early. A common thought throughout this forum is ‘if only I had started earlier’.
As it currently stands you have time on your side and as such you should, with commitment and diligence, be very successful in the long term.
The critical issue for you when determining which property to buy are its fundamentals. For this reason whether or not a tenant is in situ is largely irrelevant as a well chosen property will have little difficulty securing a tenant anyway. It is far more important to make a good choice of property in accordance with your goals.
Financing could be an issue and it is recommended you get in contact with a broker fairly early in the peace. They will be able to determine how much you can afford to borrow, which then, in turn, will help you to refine your purchasing areas.
Some lenders do lend 100% of the value of the property but you will need to meet their criteria and rules. You may also find that lenders mortgage insurance is prohibitive. This cost is tax deductible and will help make the first step somewhat easier to achieve.
Another option may be for a member of your family to lend you the required deposit funds from their available equity. This is something some parents and relations will do for members of their family. It has some pitfalls but a frank and honest discussion can alleviate these before they happen.
I hope this is of use.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Matt,
Congratulations on the job. You will find the real estate can be profitable – but it can also entail hard yards so all the best.
Working in the industry you will have opportunity to see many deals before they ‘hit the market’ so from that perspective you are well placed.
Just remember this community is all about sharing of information and not peddling your product.[exhappy]
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Joel,
Congratulations on having clear and diverse goals for yourself. For many people this is their stumbling block and they often end up doing what they always done.
Originally posted by joelc:What I want to know is is it feasable to put down a large deposit (30-40%) and turn a -geared IP into a +Geared IP and hopefully rely on CG on property value down down the track, or should the 20% deposit be a benchmark and something that’s not to be crossed when investing..
Is my large deposit better off sitting in a bank and or shares, or am i doing no harm in turning a -geared IP into a +geared IP with a large deposit?
As Terry said there are many ways to invest in property and making large deposits is one of them. For me I would prefer to use my deposit money/equity to maximise my property purchasing power at a time when disposable income (from the sounds of it) is at its highest level.
I would not discount the possibility of using LMI (although your residential status may affect this) to extend what savings you have to leverage into more property.
The other side of the negatively geared property equation is that by choosing wisely and allowing for a bit of time you will see rents and values increase. Of these two there are greater returns to be made in the long run through growth rather than rent – it all depends upon your investment philosophy and beliefs.
I’ve set a modest goal of having 1mill$ positively geared property before i’m 30, is it silly to think I can only do this via large deposits?
For me the key is what are trying to achieve – and will larger of smaller deposits be more ‘valuable’ to you as you strive to achieve this goal.
I’ve yet to speak to any financial advisers..
Most financial advisers have limited experience or understanding of the property market and will try to steer you away from property.
When I see mates driving around in their fancy cars, renting fancy units with their fancy debt repayments, I always get the old rundown ‘You can’t take your money with you’ from them.
It’s very tempting to have all those fancy things, but I’ve come this far doing without and I’m willing to go for longer.
It is true that you cannot take it with you but some delayed gratification will help you make choices when you get to your desired level of financial independence.
I know that I do not want to always work a 9 to 5 job just to maintain what I currently have. Equally I am sure that you too do not want to be on a ‘pipeline’ for the rest of your life.
Hope these are of use.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Terry,
We do have free redraw capacity and have used this to fund investments through reduction of the loan limit (after allowing some breathing space for ‘bad times’) and ‘transference’ of the equity into equity loans/loc.
Might be a little convoluted but it does clearly distinguish between personal and investment expenses, on paper and also in my bookkeeping processes.
If I even dared suggest that we flog the PPOR and move into one of our IPs at retirement I am sure the wife will dislodge my reproductive organs and reassign their normal place of residence. Not a pleasant thought.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
