Forum Replies Created
There was an interesting article on this in API magazine a couple of months back detailing the pro's and con's, although cant remember exactly which issue right now. I'll have a dig through at some stage and let you know if I find it.
Completely agree with Terry and JacM you would be crazy to put so much money into an asset which appears destined to underperform. You appear to be making your decision based on emotion rather than rationality which ultimately could come to bite you in the future. The very fact you are on a property investing forum suggests there is a part of you that is looking for a win win situation i..e Lifestyle and sound investment.
I stongly recommend you take some time out to get some perspective on what you are trying to achieve. Dont forget some of Australia's wealthiest people still personally rent their own home from other investors., whilst putting their own money into pure investment properties. It is important to get into the market but getting into the market doesn't have to be through your PPOR (principle place of residence).
BTW you mentioned the size of the apartment being another debate. Not really. If the apartment is under 50sqm then this could be one of the main reasons no one is willing to lend you the 80% you are looking for. There are many reasons for this and I would suggest you talk to your broker as to the reasons you are not being offered the LVR you are looking to achieve.
Have you explored the option of seeing if one of the owners in the block would consider renting to you as a long term standard lease? Whilst placing your hard earned money into an asset which has much stronger opportunity to grow?Not that it helps a great deal rhetrospectively. But I think it really comes down to ensuring the areas and properties you target during the research phase have a balance of both strong rental yields and capital growth prospects. Ultimately whilst the growth allows you to access equity to buy more property it is the net yield and thus cashflow that enables you to stay in the market and to keep on buying.
Given that you have 11 IP's already you probably know some of the other more obvious tricks. But just in case.
– Make sure you are claiming all available depreciation, and filing a tax variation to keep the money flowing.
– Charge market rent.Also as JacM briefly mentioned make sure you assess the oportunity costs of improving each of your properties so that they maximise their appeal to each properties relevant demogaphics.
I.e. I recently purchased a unit for $481,000 having been told it wouldnt really appeal to investors as I would be able to achieve a weekly rent of just $425 per week. A rental yield of 4.59%. I knew from assessing the competition that due to the area appealing to a more affluent and time poor demographic that units which were fully modernised were able to attract a premium in their achievable rent. As a result by spending just $22K on renovations, I have now just been able to rent the property for $550 per week. A yield of 5.68% on the total investment.
Hope this will help in the future.
Hi Jimmy,
Firstly I think its really important to understand that despite the RBA's three consecutive rates rises, compared to the Australian long term trend interest rates are still actually relatively low. Most economists believe the cash rate for this cycle will peak around 5.5% (or approx 8% SVR before discounting)
I honestly feel that there is never a better time than the present to buy property providing you research the area thoroughly and ensure you are buying at the right stage of the property cycle for that particular suburb. That said its really important you speak to a trustworthy broker or financial planner.
Personally I wouldn't feel comfortable buying unless I could afford the IO repayments of at least 3% higher than the current cash rate, although everyones appetite for risk is different.
Last but not least, be careful about basing your decisions on what papers tell you. Ultimately they are there to sell papers so will only print stories that will engage their audience, and so often you will only read the extreme highs and low's as opposed to the reality.
Regards
D2B
Just don't forget most agents will take anything you say with a pinch of salt, hence the expression "buyers are liars". I honestly think that the less you say the better. Best to just let them know you are interested and to be kept updated if your biding your time with making an offer. Also dont forget once you do put forward your low offer, keep it simple and stay quiet. The less you say the more power you'll have.
At the end of the day, whilst its always nice to land a perceived discount on the asking price, the reality is that property investing should be considered a long term strategy, and as a result so long as you havn't paid way over fair market value and have completed your research and due dillegence you will probably end up doing ok.
Thanks for the great feedback.
Strangely enough my medium term goal is to become a buyers agent however the advise I have been given from other buyers agents so far is that I should first obtain my RE licence and then after a couple of years apply for my buyers agent licence.
I think on reflection it would be naive of me to think that my prior success in the UK alone would position me to jump straight in, especially given the very different methods of operating here in Australia.
That said if you have any ideas on how you think I could expediate the process from RE agent to buyers agent I would be extremely grateful. Also if there are any drawbacks to being a buyers agent in comparison to a selling agent?
Thanks once againa
D2B
Thanks Mike for your generous offer and extremely prompt response.
Seb
Just remember that supply and demand will always determine price point, and whilst Frankston is clearly an area worthy of researching in greater depth, there is a considerable degree of heat in that market now. So just make sure you do your due diligence.
On the subject of Margaret Lomas. The woman is amazing and I strongly reccomend any new investors or experienced investors for that matter to watch her shows your money your call and 'property success' . I have read her books, and watch the shows religously and am still waiting for her to be caught out on any question.
