……… How the property market has changed in the past 12 months. From "Do Positively geared properties really exist?" to positively geared properties all around the country, I kinda feel for friends of mine that wont even slightly consider buying anything but a negatively geared property…… to maximise tax returns.

I dont know if the ass is going to fall out of the market with an increase in interest rates and inflation or if the affect is one of a moderate slow down over a longer period….. All i know is, i cant wait for the ride!

Cheers!

hey,

its a pretty broad question which is affected by a lot of variables…. e.g specific local area? a unit in inner city brisbane is going to perform differently to a unit in coffs harbour etc. etc.

Historically i have found that higher returns(rent) come from units, but bear in mind costs associated with units…. body corporate etc.
Houses, generally speaking, offer greater capital gain as the land value is included moreso with a house than it is with a unit. unless you have a unit in an 8-unit block in central cbd location which would be ripe for development.

what i have encountered: units = higher rent, less investment flexibility.
houses = greater capital gain, maximum investment flexibility, lower rent return.

hope this helps

Mick

I have tried a couple, Allianz, Comminsure and finally Terri Scheer insurance.

I had a couple of issues with Allianz(even though im yet to claim anything) Their after sales service was pretty terrible.
When ringing to upgrade my coverage with Allianz, they couldnt even tell me what I would be covered for, transferred me a couple of times and then contradicted themselves. I didnt re-new.

Tried Comminsure…. I got a discount as I have multiple services with CBA, no big problems. Just not the best deals.

If you want value for money though(e.g. 18months coverage for the price of 12) and nil hassles I cant speak highly enough for Terri Scheer insurance, I was put onto them by a friend and now I do the same for my friends. I have never seen marketing from them… all word of mouth but they are good. They are versatile with their coverage(who would have thought that other major insurance companies couldnt cover you for owning both units in a duplex and still cover common ground – all on 1 title) Terri Scheer had no problems with this. Im not positive but I think they ONLY do landlords insurance, not owner occupied.

Good luck with this, maybe others can post up any good deals with insurance companies to keep us in the loop?

Cheers,

Mick

For what its worth……

It is possible to get into property at a young age. I did(24 now).

Sure! I was eating noodles for a little bit there, and things werent overly comfortable.
I had to sell my WRX and downgrade to a 1989 soccermums car. But i got there.

Affordability is an issue, there is no denying it. But I have the following advice.

Matt007, stop going to seminars….. if you havent found your niche yet from them, im afraid your only going to get further disheartened from here.
Read up on books, Steve Mcknight, Anita Bell just to name a few. Ask anyone here for advice.
Im NOT a mortgage broker, but once your comfortable with basic knowledge about the industry make an appointment, find out how much your repayments would be on certain loans and whether that is affordable for you. then cruise down to auctions, or(if you dare) the buyers agents around the place and get a feel for where you can afford to buy.

For both Matt007 & Behrendorff,
if you guys are dead set and want to get into the market……… Maybe your first property should be an investment. Get someone else to pay(rent) most of the loan off for you. This way you arent limited to your local area and are allowed more freedom with selection of properties that may be cheap or up for a bit of capital growth.

It will still be hard but possibly worth it. Maybe Behrendorff you can move back in with your parents or friends for a few months and save more cash…. maybe downgrade your car and hold off buying that plasma or PS3.

Event Horizon is on the money, make it a hobby!
Also, some people are predicting bad things for the property market here in Australia, IF they are correct, it may be better to hold off purchasing property.
However, generally speaking if you can afford the property and you really want to get into the market, it is already fast becoming a buyers market. Just dont over-extend yourselves with servicing the loans.

Good luck!

I just had a quick look at realestate.com.au……………………….

and only knowing a fraction of the details of your current house it would appear that he is asking a little much.

A search for rental properties yielded just 11 results in Woodvale.

10 of which were for $500/week or less.

Of these results 8 were 4 bed/2bath houses. (2 of these were asking $400 a week)

They look alright to me. Depend on your needs, id go armed with this information to your managing agent. If they dont budge on price, i think you will find despite the pain of moving that you will get your money back with the first month or so purely based off the savings available in rent.

Thanks for the additional info Ormeau,
Can I ask you a couple of additional question?

firstly, I tried the link and it wouldnt work on my computer…..? i googled latoc and got several results…..  which is the one you are recommending?

secondly, i have read a few of your posts………. Id be interested(only if you are willing to divulge) your plans for investment in the future…. whether your looking into RE holdings or alternative forms of investment. If you dont wish to place it in public forum pls feel free to msg me.

Regards.

Hey,

Im a young investor. You may not realise it but I believe age is the BEST leverage of all!
My theory is: The younger you start investing the more time you have for your assets to grow and grow……..

Just let me know if you can convice the banks on that one!

There is no blueprint but here is a good place to start:

Read, Read, Read. There are a number of authors available in regards to domestic property investment with very different strategies available. I would recommend reading a few of these and making up your own mind based on your situation and what you feel comfortable with. Be flexible with this

Set Goals. Set some realistic goals for yourself in regards to property accrual, eg: buy first prop, then buy another within another 2 years and 1 every year after and so on. Whatever floats your boat and is in line with your strategy, negative gear/positive gear/buying for depreciation etc etc.

See what you can borrow. Im guessing finance will be an issue, I always recommend brokers as you get an entire 'suite' of loan products in one simple visit and if your broker is any good and you can communicate, they will help you select the best one for you. Why go to a bank which may only have 5-10 loan products when you can go to a broker with 700? Seeing a broker initially will enlighten you as to your borrowing capability and they can direct you in regards to your obligations(repayments etc) to meet the loan agreements.

If you qualify for a loan: Visit an accountant whom specialises in property investment, they will guide you on the best ways to maximise tax deductions and what to target when purchasing, also they can give you an idea of what costs are 'claimable' at the end of the financial year or when sale occurs(heaven forbid).

Get to know your target area. By now you should have an idea about how much you can spend, whether you want to buy a negative/postive geared property and a general idea about what you want. Time to get the newspaper, jump onto realestate websites and Find a target area(if not local) that you feel suits your investment goals/requirements. Get to know the background of the area, Aus beaureu of statistics is helpful also ringing property management offices about what is in demand in the area will help you find a good target property that will be rented as much as possible.
 
Once, you have found your area. find your house. You should have generated a fairly lengthy list of criteria to aim for with this purchase and while you will never find a property that suits all of your criteria, you may come close and you will need to decide for yourself what concessions are worth making for the greater good. When purchasing my last property, I set a blueprint of what my broker can finance me for, what property my accountant will be able to do the most with and what property the rental managers are 'hot for' in the area. This helps me make my decisions. Armed with all this you can hit your local real estate agents.

Inspect, analyse numbers. But over analysis will probably just scare you! It scares me! Some of the numbers you will need to crunch are the management fees, local rates, water rates(residential landlords usually pay these as well) and insurance, these are all ongoing costs involved with the ongoing ownership of an Investment property.

Once you have inspected a few, found the property that best suits what you are looking for, time to put in offers. I have no real tips here. It is important however to get it as cheap as possible. Even request an extended settlement period in your contract so that you can gain access(before you have to start finance repayments) to do the place up a little before getting tenants in. I have done this successfully once before.

At this time, you know you are serious about buying start looking at conveyancing options, whether they be a franchised 'no frills' company or a solicitor. Remember most of the time, you get what you pay for. A cheap conveyancing option may not be cheaper in the long run!! A conveyancer will run title and other searches for you and will generally oversea the obligations of your future contract.

When signing a contract to buy, ensure that it is subject to pest and building inspections, finance(if applicable) and any other conditions that may benefit you. Important: Once you sign a contract you are liable for any damages etc that occur on the property, Get insurance!!! If any accidents happen during the contract period you are very liable.

Now appoint your conveyancer…… He will start working for you straight away. Usually you name your conveyancer in the contract to buy the property but if you have done your research you already know who you are going to use and if this changes the contract can be modified to reflect this.

So you have a signed contract, you have organised insurance to cover you. Time to get moving quickly and get a building and pest inspection, if the property is older – the report will resemble a mechanical report for an older car. There will more than likely be problems with the property although most may be very minor. You can utilise some of the information in the reports to further negotiate the contract price, for example if safety switches need installing, you might be able to knock off $300 from the contract price to enable you to do that and so on. Once you receive the reports read them carefully!

Concurrent with the previous you should also be working towards finding a good property manager. Hint: Become a renter, Look in the paper for the most attractive ads, go to open houses. Find the one that the renter is going to choose and go with them!!

In addition to this, you should have another appointment with your broker to organise finance. He will be very happy to see you again, and you should 'nut out' the best deal possible for you. This needs to be done asap after contract signing(if finance wasnt pre-approved) so that there isnt any finance delays towards the settlement of the contract on time(delays could cost you money).

So now, you have a contract for a property. Insurance cover, Building and pest reports. A property manger ready to take the reigns of your big investment and a mortgage broker working diligently to get your finance on time and an accountant who is looking forward to seeing you next financial year, All of this getting overseen by your conveyancer.

Its all about building a good team. At this time your broker is getting you the best deal, your property manager is advertising your property(before settlement) as a rental and your conveyancer is doing all the relevant searches to protect your interests.

Now, You wait for settlement and enjoy the 'bumps' along the way.

This is just my opinion and I am not a professional, all due diligence should be taken on an individual basis. This should be used as a very basic guide only as situations vary from person to person and state to state.

Id love to hear other peoples opinions/thoughts? Have I left something out?

Regards and best of luck

Mick

Hey again,

Look at all this support!!!

Your best bet, to find a reputable broker(important decision) would be via friends of yours who may have had dealings or at possibly via these forums. Be careful though, I imagine that if you have an initial bad experience with a 'cowboy' broker this may taint your view and force you to reconsider. If none of these are an option……. shop around! Go to several brokers(even if they are different offices of the same franchise). You will soon get a feel and be able to separate the men from the boys.

Questions will vary depending on your individual circumstance but here are a couple to get you started:
-If I do not meet the serviceability for any loans, what can I do to improve my situation?
-What are the difference between High-doc, Low-doc loans? (maybe useful if you have limited time in position at your new job)
-What specials are available(e.g. loan discounts/honeymoon loans)?
-Does the recommended lender offer 'professional packages'(Handy if you want to increase your portfolio of property and get rewards along the way – if you stick with the same lender)

Also(at a later stage) dont be afraid to haggle about 'loan application fees' with the broker, these can be several hundred dollars and if your good you might just get the broker to fork out for it or the bank to waive it as to either of them your business is worth more than the application fee!

I encourage anyone else to contribute any other questions, but as stated before it depends on your circumstances and what you hope to achieve from this purchase.

If you can get finance, and you are comfortable with your own ability to meet the repayments of the loan(calculators available at echoice.com.au), then next I would recommend seeing an accountant who deals in property as there may be ways to legally claim a tax deduction on your PPOR(principal place of residence)  or in other words, the place that you plan to live.

I just had a thought………. perhaps your tax accountant could recommend a broker?

All in all, I would go to the Broker/s with the expectation of rejection. Dont get dismayed if/when they say you need to fix a few things to meet the lenders requirements, this might take a little time and perserverance but there is a forum of people here that have seen and still see the reward of such efforts. Its worth it in the long haul.

Hope this helps!

Mick