You build your asset base with bricks. The first property you buy is actually the most important and for this you need to make sure you get your decision making right. It sounds great to get a property in an area like Goomeri .. but its basically a reasonable distance from where the action is. As long as you remember that property is a social transaction you'll make your best business decisions. Think 5 years ahead .. not 10 or 20. If you cant envisage immediate or near term growth on the investment with the right conditions .. then you are investing for the wrong reasons. Investment in property should never be off-the-cuff speculation .. it should remain educated and researched guesswork.

Your first property needs to be a property with regular and consistant tenancies (you have no room in your budget yet to cater for extended vacancies), and quality tenants. It also needs to be a property that will receive some format of capital appreciation without the need of inflation to do the dirty work. If you find yourself relying on inflation to increase the value of your property .. you are investing in TIME. And whether you are 22 or 130 … time you wait for a property to come good is still time wasted from your life.

Social areas mean you need to invest in a hub. A lively hub .. a place with good transport .. a couple of decent restaurants .. a shopping facility within 10 mins drive .. and a convenience shop within 8 mins walk.

140k max will leave you with either country houses .. or near-urban units. But … we also exist in times where your dollar buys more. May I suggest you try negotiatiing with vendor terms ? You might be able to score more property for less money. At this point in time there are lots of lovely deals to be made. I just purchased a 170k 3br house returning $250 p/w .. because i had enough equity in my properties to draw on ..  i put 3% into the deal and borrowed the other 97%. My investment seems rash .. but the overall borrowing from these properties is a healthy 40/60  (40% me 60% bank) so .. I'd need a drop of 30% before the banks get twitchy. Work out the quick maths .. and the whole deal costs me $15 a week to run out of my pocket ($35 including water and rates). Thats chickenfeed. Could have been positively geared too, but i needed the loss

That was a month ago. If you can envisage deals out there .. go seek them. They not only exist out there .. there are willing vendors who will do negotiated deals to get the banks off their back. A sale is all about negotiating a win-win for both parties. Be the negotiator and win more deals.

Here is an easy insight. Unless the city or suburb has some severe problems holding it back .. the usual timeframe from boom to boom is about 15 years (give or take 1 year). So .. keeping that in the back of your mind, the easy thing is to look for a suburb or town where the last boom was 12-14 years ago. And usually thats a good indicator of its possibility of value.

Assess it from the following factors .. room for growth in the area, room for improvement on the property, possibilities of area improvement in the near future. Thats what you need to pick a winner. Give yourself the best of all three worlds and you'll get a good deal.

If i was sitting around with a 300k budget in 2011 … i'd be looking for another factor .. the possibiity of maintaining value in tougher times. Which you will need to do. Its one thing to make money on borrowed money. Its quite another to see your equity evaporate .. being left holding onto a loan .. and at that point .. the interest rates go up on you.

Get to know the area you choose to invest in. If its got a standard product (3br house, 2br unit) get to know what these items sell at and their market value. This helps you assess on a day to day whether you are dealing with bargains or sinkholes.

Look for areas of significant change. The top spots around Melbourne at the moment would probably be Geelong and Hastings for value. Check my other posts for where in Geelong.

Even now .. Mildura remains a high risk proposition. I know the figures look good, and I've done them myself. But the long term outlook on the area is placid at best … for the next 15 years at least. Thats the timeframe you are looking to make money on it. And there are better buys.

As a younger investor .. i was thrilled with the prospects of buying cheap in Moe and Morwell. They were VERY cheap (this was 20 years ago). Problem is .. they are STILL very cheap .. with troublesome tenancies and long vacancies. As an investor .. landlord and property maintainer .. thats just not where you want to be.

Do your homework .. and good luck.

There was a young man with no cash
Who found his finances werent too flash
After finding a broker
Who wasnt a joker
He found himself able to splash !

(ok .. i'm NOT a poet .. and thats almost a limerick)

see luke86 for the actual decent advice.

Stawell isnt happening.

The entire rural region consisting of Stawell .. Avoca, Wedderburn and Horsham are all suffering from a severe lack of farmers and farming related enterprises. So to put it mildly .. thanks to those lovely imported items you buy at the supermarket .. these towns are going to the wall.

Stawell's population of 8000 (official figures base it at closer to 6000) is really not enough to keep a town active and vibrant.

To sum it up nicely .. the town is rusty .. the properties are VERY affordable .. the returns are great .. but your risk is that by the time you want to sell .. there may be no-one to sell to. A lot of elderly .. not much strong business in the town and not much industry.

There was a time a couple of years ago where even the prized Stawell Gift was going to be taken away from the town. As you might rightly guess .. people of the town took to arms and protested heavily.

The correct thing to do with this town is watch for any major positive changes promoting growth and bringing people to the town. When that happens your property purchases will be goldmines. Rental demand IS still very solid .. but .. there isnt that direction you need for both growth and value to be achieved in a purchase.

Either a long hold and wait .. or to keep an eye on and watch for the trigger for activity.

In the early days of the United States they were all idealists. They'd come from the harsh landscape of Britain and they werent going to do things the same way whatsoever. So .. they banned the use of private property as such. All property belonged to the United States govt indirectly and you looked after it on their behalf.

This meant you couldnt sell a property without running it through a council .. you couldnt lend on a property because it wasnt yours to lend on, and you couldnt really sell a property as there was no buyer market anymore.

It took two harsh winters .. a total lack of capital money supply and actual starvation for the idealist citizens of the new country to change their mind about their approach to capitalist practises. And they never looked back.

If you have a problem with either the idea of ownership of property .. the fluctuation of free markets or the application of derivative based capital, I suggest you head to an idealist paradise such as Cuba .. or maybe Venezuela or Lebanon. Whats that i hear .. you dont think they are that great?

Exceptionalism has a price. And if you want to live in a realistic world you need a sound capitalist base. You may not approve of everything that goes on in such a society but thats what voting .. democracy and protests are all about. As Winston Churchill once said 'It has been said that democracy is the worst form of government except all the others that have been tried'. I'd apply that to capitalism WITH democracy. Until you can assure me of a better approach, I negate your false idealism.

I'm settling for 3 wonderful sets of pork spare ribs out of your deal.

In this country we VET our 95% applicants more thoroughly than ever. All the free money days are gone. You can still get these loans AND SO YOU SHOULD BE ABLE TO. With a reasonable asset base they gear poor performing deals into winning solutions. They arent for everyone .. and so they shouldnt be.

We arent the US .. our proportion of sub-prime deals is a miniscule proportion of our market and our loan structures are a lot more sound. Thats going to hold us up well in the longer term.

I took my Agents Representative at Swinburne Prahran Campus.

Back then you could take it nights and do it over a series of nights to get it done.

Not too expensive and a reasonable course.

However having had my ex go through REIV offices in Camberwell I would suggest it provides better materials for a long term grounding in the business.

If you were entering real estate now you'd find yourself on an uphill battle since there are few properties to bring to market .. a VERY competitive market to get the properties, and very hard to match buyers to properties since there are so few buyers. You could find yourself on the 3 month campaign .. in the front door .. and after 2 or 3 months .. out the back door.

However if you are raised in this market .. when the market turns around and eventually booms you will be able to compete and negotiate with the best of them as you will know how to source both vendors and buyers in rarified times.

I'm sorry .. I missed most of the fun of this thread .. simply because I have a life. But it sounds like pure comedy.

I would take Jumping Jack Flash with a grain of salt. In fact .. pass him the whole bloody salt container. He's going to be sitting there .. grumbling about the state of the world until the cows come home. And for him .. he may just be sitting in a small tent .. in a large empty paddock.

I was upset about not living up to MY standard .. and not living up to options for a couple of years. And then it was pointed out to me that most of the people who had built fortunes around me in my neighbourhood were RUSSIANS. Yes thats right .. people who came to this country post 1990 with next to nothing or even less. And now they lived in million plus houses. In the same ten years i was complaining about things. Thats gotta show you the money development is still there.

The point is this. Nathan will make money. He knows what to look for and how to go about it. And i'm surprised if he hasnt had his set of 'diggers' behind him just wanting to put him down to size. I had that. And I pushed them aside and got on with business. To the point now where business largely gets on with itself.

Engelo10 .. if you are finding the positively geared properties and the options to start you on your journey .. go for it. You'll find half a dozen Jumping Jack Flashes along the way. Ignore them .. listen to what the market is saying and a little dose of reality. And in no time at all you should be realising your dreams in full living color.

By the way .. if you are sitting on a nearly fully paid off PPOR .. take it to the banks and get your equity moving ! Be there with cash when the prices start dropping, because at that time there is no better way to negotiate.

Sha .. if your budget is 360k you have options up and down the SE coastal corridor. You also have large swathes of the upper western block. Your budget should not be your limiting factor on your placement. Its possible to buy quite a nice place in pakenham for close to 300k still. The question is really what you want to derive as the end result. And how much travelling time you will need to get to work.

If you are going to try to take advantage of the FHOG to buy a PPOR .. you will need to purchase the property AS a PPOR .. not as an IP. This means  you must fulfil the conditions of the FHOG. You must live within the property for at least six months .. starting from a time within the first 12 months of ownership. Thats the rules .. and thats how you get to keep your grant.

However .. once you have fulfilled the conditions of the grant .. you are allowed to rent out the property for up to six years and still have the property as your PPOR (as long as it remains your designated PPOR) and receive full benefits from this. After that the property would be treated as IP and would be subject to treatment as IP for taxable purposes on sale. If you return before the six years are up .. then you can still have the property as PPOR and have it CGT exempt. So .. if you keep this in mind .. you can have your cake and eat it too.

360k is not a limiting factor in the melbourne property market. You should still be able to find some very nice properties in melbourne well within this range. Grab a search engine and start looking.

Is there some sort of cosmic secret to have evolved here?

First of all .. congratulations Engelo on finding out all about neutral to postively geared property investment. Despite the numerous books published over the last ten years specifically on the subject. Despite the fact that most authors say its a way to build a healthy and large portfolio quickly.

If you have any major revelations about the discovery of fire .. and the wheel .. feel free to spread the news of this too.

In all seriousness .. kudos to you for opening your eyes to the fact that a property workhorse for you doesnt need to be enslaving you in an unrecoverable debt structure.

There are lots of deals to be made in the current market. I'm picking up investments returning 8% gross .. borrowing at 6.75% and gearing them so the 2% outlay for water .. rates and maintenance is covered by the income. Its a very sweet deal.

And I go to friend's parties where they talk about the doom and gloom of the stockmarket .. bonds and of course property. And I hand them a drink .. and comiserate for them. All the while laughing all the way to the bank.

Keep it a secret. We dont want anyone else to find out 

With loans … its a market and you gotta remember that.

Someone offers .. and someone accepts. People tend to think the banks are the only people offering money.

A couple of my recent deals are boring on paper but exciting in fact. I went around the student units in melbourne (you know the 'unsaleable' ones) and just ticked the ones who now say VENDOR FINANCE. And i went around creating a series of deals gearing these places at close enough to 8%.

It means my responsibility now lies in servicing the loan with the VENDOR and not the bank. It means i'm getting approvals. And it means the loans are geared on OPM. And thats how you make money.

Will the properties be hard to sell in the future? Yes .. but not impossible. Will they increase in price? WHO CARES. I'm almost guaranteed that the income from them will increase over a number of years .. and that will validate my deal.

Once the banks say no .. you have a stack of other possible options. Think creative .. and negotiate. Often if you have the capability to make a property work and the vendor cant .. he'll allow work to be done pre-settlement. If you have equity to 50% there are solicitor's funds.

Dont just write out a deal on paper and discount it because the banks say no. In my early years of investing I kept getting knocked back because my income was considered 'too low'. The fact that my rentals were enormous and geared to a point that created a small income on paper .. well .. the banks really couldnt care less. They were looking for their 'facts'. And I was looking to minimise on taxable income.

Work the deal. Think the deal. Write up your options on paper BEFORE you approach a bank.

And dont rely on luck. Rely on creating your own luck.