Hi LC888

Is your mortgage broker rich as a result of investing in property?  If not I'd tread with caution following his/her advice.  You want to take advice from, and copy the actions of, people who have already gained wealth using the exact same vehicle you are trying to use (ie property).

Do you happen to have depreciation schedules on either of the investment properties? 

I read through the purchase agreement for one of those retirement village dwellings once.  Gobsmacked is an understatement.  A very distressed friend of mine wanted a few savvy friends to read it over as his mum was wanting to sell her home and buy one "for an easier lifestyle" and he was very concerned by the contents of the contract.

Have a read of one and you'll quickly change your mind.  Ridiculous rules such as:

– No more than two visitors at any time without first notifying the land owner.  So basically her son and his wife and kids could never spontaneously pop in for a visit.  Permission would have to be sought and may or may not be granted.

– If the owner of the property dies, whoever is the poor sod named as executor of the will is required to carry on making payments on their behalf.  Um, what the?  Whatever happened to sorry the estate will get liquidated and you'll get your money when the property is sold.

– If you ever decide to sell the property you are only allowed to put a tiny sign on the fence.  Either way you have to first offer the property for sale to the land owner and the land owner will decide the sale price.

Need I go on.  Run away from such properties. 

Haha! Richard is exaggerating a bit, but I do know the place very well.

There's always loads of them on the for sale and rental market.  This means they are not in limited supply.  This means you'll end up having to discount your product to get a tenant or to on-sell the property.  You want your product to be in demand.  Not in an oversupply glut.  Not sure whether it is the available deposit you have that is driving you to this product and its low buy-in price, but you'd be wayyyyy better off buying a 3 bedder house further out of town in an area of strong demand on a 95% lend.

I agree.  Give Jamie a buzz.  Don't bother hunting around for finance yourself, all you will achieve is getting a few rejection stamps on your credit file making it harder and harder each time.  The likes of Jamie and Richard put deals together like this all the time and know exactly which bank will say yes to your application, and with the most favourite circumstance.

Just in case you were unaware, you do not have to pay a broker a fee.  The bank does.  So really and truly nothing to be gained by attempting to play DIY mortgage broker on your part.  Give Jamie a buzz.

Oh very interesting Claire – thanks for sharing!

Hi Royce

First and foremost, congratulations on being in such a good financial position

Be aware that you'll get plenty of offers of assistance to relieve you of your money…. some will be with your best interests at heart, and others will not.  You can leverage the skills of some awesome professionals out there, and their fee will seem small with where they help you launch yourself to.  Just be sure that if you get help, the person you are asking to help you to smash it out of the ballpark will indeed do so, and that the result will be better than what you can do by yourself.

Some people choose to purchase a home to live in, and others choose to spend all their cash on deposits for investment properties, and they carry on renting themselves.  It really depends on your personality and life circumstance.  For instance, someone with children might not want the stress of being a tenant with the ever-present threat of eviction and not being able to get another property in the same area.  Such a move can resulting in having to move out of the postcode catchment of the schools in the area, which results in having to move to a different school, and so on and so forth.  Conversely, someone younger might love moving about a bit and being near all the action, where it is affordable to be as a tenant but not as a homeowner.

That's the first big decision you need to make.  Whether you want to buy something to live in or whether you intend to rent a residence to reside in.

With regards to the First Home Owner Grant, did you know that you can buy a duplex pair (two little houses glued together but on the one title) and live in one and rent the other out?  Just something to think about…

Looking forward to reading more about what you fancy doing… everyone will have an opinion on where you should invest hehehe

Good Lord Terry, that's got to be post of the year.  That is smash it out of the ballpark advice if ever I saw it.  Royce you'd sail an awful lot further with Terry on your team than you could by yourself.  If I were you I'd be dialling his number as fast as possible.

Yes, you are entitled to FHOG, and you will still be entitled to it if your first one or two acquisitions are actually Investment Properties.  Presuming the FHOG still exists later on of course.

Hi hazzamac

The mortgage guy at the bank may be good, or maybe he won't be.  The same can be said of mortgage brokers.  As Jamie mentioned, you want a broker that understands investment properties.  My own opinion is that you might as well get people to help you that are already wealthy themselves via property, and/or have helped plenty of their clients to be wealthy via property.

You would be surprised how different the results can be if you are coaxed into the wrong kind of mortgage.  Especially when there are intentions of eventually converting a PPOR to an IP.

Jamie is one of the very well respected brokers on the forum – I'd highly recommend giving him a buzz to discuss your ambitions.

With regards to negotiating, I have come to learn that having to negotiate is literally terrifying for some people and it's just something they do not want to do.  A real estate agent will see that coming a mile off and there is an opportunity there to take advantage of the weakness.  There is always the option of using a buyers agent to overcome such a dilemma.  Alternatively as has been suggested, go through LOADS of properties.  You'll soon be able to quote within 2 or 3 thousand dollars what the current property shoppers would be prepared to pay for it.  As an example, you'll be able to say well in this street, a tidy house with a brown kitchen and no garage is worth $380k but if there is a newish white kitchen and somewhere to park the car, we're talking $450k.  Different street, different story.  Depends how close things are to the local shops and transport, and how pretty the street is.

Keep checking in with us and let us know how your thoughts are progressing so we can help you.