Hey Zads,

I'm a little concerned that you are completely new to investing, don't know where to start and then decide to look in Tennessee! That might be OK if you're living in Bristol or Memphis or Nashville…but if you're an Australian wanting to invest it seems like there are risks galore for you (if you can loan the money) even though your outlay may not be that huge. 

I would suggest to you to be a little more careful, get some education, find out more about property investing and then set some property investing goals. If the Tennessee property still looks good then keep considering it – you might find other properties look just as good and are a little closer to home!

There is heaps of free information out there, from these forums to podcasts, magazines and TV shows, and you can always borrow books from your library. Expose yourself to some of these before you expose yourself to a $30,000ish debt for a property on the other side of the world from you.

Good luck mate!

Den

Hey Leo,

I tried a few products but ended up just making my own spreadsheet. As Terry says, it was a great opportunity to learn too.

I made sure I considered the following:

• purchase price
• interest rate (and I ensured I inflated it a bit for safety)
• loan value
• expected rent
• management fees
• other costs (water, rates, body corp etc)
• any costs associated with the loan, including set-up fees and ongoing fees
• stamp duty and other purchasing charges (which can vary from state to state)
• depreciation (and build year)
• insurance

My spreadsheet is a bit of a work in progress still (and I have ten properties) but I'm very happy with it. Kaz and I are developing some software which will hopefully do a better job and I can let you know when we've done it if you'd like.

I also have a very rough spreadsheet which only considers:

• purchase price
• interest rate (and I ensured I inflated it a bit for safety)
• loan value
• expected rent
• stamp duty and other purchasing charges (which can vary from state to state)
• a rough estimate of other costs

which I use when I want a really rough estimate of how a property will perform. The rough guide gives me a good indication of whether a property is worth investigating further and it's great because I don't spend my time on stuff that might sound better than it actually is.

Have a go at creating your own spreadsheet!

Good luck!
Den

Before spending a considerable amount of money on reports, are you looking at the statistics in the back of the two major property magazines? These tables are far cheaper (although often a couple of months old) and can be used to narrow down your target areas considerably. Give these a go first, and you might find that a little legwork can garnish you the same amount of information (or pretty close to it) as those reports.

And good luck!

Hi Leo,

I now understand more about what you want to achieve.

As far as structuring your loans, I agree with Richard – you are best to speak with a mortgage broker who specialises in property investment. You can approach your broker armed with the information you get from your accountant.

When it comes to the entities that should own your properties (whether yourself, trust accounts, companies) it is far wiser to speak to an accountant who understands the implications of each of these set-ups.

You say you've already read about ten books on property investment – that should give you some pretty decent background knowledge to work with. Use what you already know to structure your questions and then find an accountant who specialises in property – I found mine by asking fellow property investors who their accountant was. When I found an accountant who was relatively local and who had the trust of someone I knew personally, I made an appointment with the accountant and essentially interviewed them.

You could simply look up accountants in the yellow pages and see who specialises in property investment (or if nobody does, find some near you and then simply call them and ask what their niche is).

Does this help? Let me know – I'd be happy to chat further with you.

Cheers,
Den

Hi Trippsy,

Welcome to the world of property investing. It seems you've found some properties with good rental returns and that's great. You might be able to save up, buy one (or two, or eight) and do quite well. The problem is that the properties you're looking at might be in a region which is undergoing a decline, and they won't hold their value. It might be fine for two or even five years, but then people will move out and you have a $100,000 investment that is worth less and less as the decline sets in.

I'm not saying that this is the case but it must be a consideration. As yourself  a few questions like;
* what are the current industries around? (how permanent are they and how varied?)
* what is the population of the town and is this in growth or decline?
* how close are you to a major centre?
* what is the locality like in terms of infrastructure, transport, employment opportunities?
* what is the property valued at? (get an independent valuer out to have a look at it)

Once you have answers to these questions you are in a better position to judge how permanent the good times will last for you if you invest there.

Good luck!

Hi Leo,
What advice are you looking for, in particular? You might find that you don't need an accountant just yet – there may be other experts who are cheaper and know a lot about property investing (especially if you are a beginner).
I'd be interested to hear what questions you were intending to ask the accountant.
Good luck!
Den

I'm finding this thread really interesting reading, not only for the different turns it takes but because of some of the ideas expressed.

Frankston fella states, in my opinion quite correctly, that you can't just expect to find CF+ properties easily. Camscott says, "every single property bought in sydney can be turned into a cashflow positive property if managed correctly," which is at best misleading. The implication that EVERY property in a major city can be CF+ lacks foundation and I am positive almost every property expert would agree. Frankly, you do need to know where you're looking and you do need to do some legwork.

Basically, it comes down to this;
1. If you find a property which has great rental return compared to what you'll pay for it, then it could be CF+. Do your numbers, and if you have done a lot of homework (and been a little lucky) then you may have a CF+ deal, even if you finance it from a regular lending institution.
2. There are some properties which might give you good rents but they're not CF+ unless you can arrange some kind of financing deal which will bring the numbers into your favour. This is where skills in arranging vendor financing come into play – they can turn a property which is pretty good into a CF+ property.
3. Some properties can be divided (such as those mentioned here which have a granny flat on the block) so that you're able to receive rent on two dwellings for-the-price-of-one. It's worth looking at these.

Failing all of these, you're unlikely to find a CF+ deal. You do need to do legwork and you do need to spend time. Hotspotting is great if you are looking at a particular area and you'd like more information, but it's not so good if you're still looking for an area as you'd need to buy a few reports and, as previously mentioned, this can get expensive. Consider buying a hotspotting report and then seeing how much of that information you can find yourself online. You might be surprised.

If you're still reading this then here are a couple of locations which might give you some decent returns. Try Bathurst (NSW), Ballarat or Mildura (Vic) or maybe some outer northern or southern suburbs of Adelaide. Add this to my previously mentioned SE Qld spots and you've at least got a start.

Good luck!<br /:)” title=”>:)” class=”bbcode_smiley” />

Here are a few locations that might work for you…

Well folks, if you want to get away from the spruik then let’s answer the original question… Where would you buy in Qld or Vic?
QLD: The market in SEQ has been pretty soft for a while and there are some good buys – I’d still look around Logan, Beenleigh, Eagleby if you want solid rental returns. For the price you’re quoting, you could afford a house which one would expect to have higher capital growth than a unit (capital growth is quite often linked to the land content of a property, hence houses are expected to appreciate more – usually but not always the rule!). Also look in Brisbane but you might have to be a little luckier.
VIC: I personally reckon the Victorian market is slowing down – you might be better looking up north. If you really want a Victorian property, I’d look somewhere along a growth corridor. You may have missed the boat for places like Frankston or Noble Park, but maybe Melton and Kurunjang aren’t so bad, or even Tarneit in the west?
I hope this helps. Good luck with your property investing!
Cheers,
Den

Good luck fella!
Sounds great, just make sure you do your research. I'd love to hear how you go!<br /:)” title=”>:)” class=”bbcode_smiley” />
Den

Hey Mike!

Congratulations on your move into property investing, and good luck.

Start by reading blogs and articles, and if you're keen a friend and I make free podcasts. Whatever you choose to do, there is heaps of free information out there. I agree with Find_Another_Slave – you really need to consider exactly what you want to get out of property investing BEFORE you start buying. There are several strategies you can employ and the property you buy will be determined by the strategy.

Have a listen to a couple of our podcasts and see what you think. Keep reading here and at any forum you can get your hands on. Find a property investment magazine and look through. Make a conscious effort to know more!

And good luck! Feel free to get in touch if you'd like to ask any questions.

Cheers,
Den