Hi everyone!
I’m new to property investing, and although I am keen to get started, I’m not quite in the position to make that first step (I don’t have enough capital, and still studying at uni part time). I also work full time.. but i’m still young so not exactly on a huge salary!
For those who have purchased or found CF+ve properties out there, what amount of capital do you think a beginner would need to get started?
I don’t own any properties, so what other options do I have besides waiting for forever to have a deposit saved up?Also, what would be the minimum salary i’d need to earn to be financially independent in 8 years (passive income of say $100-150k pa)??
Lastly, I’ve read Steve’s book, and I was wondering if there were any other books anyone could recommend that details the ins and outs of property investing (what’s involved, costs, things to consider when purchasing property, etc) something more objective..?
Does anyone have any advice/pointers??
Clueless [blush2]
Hi Sarah,
First of all welcome to the forum – you wil find there are a number of people who will take the time to provide comment and advice to help you.
Initially you will need to determine your borrowing capacity as you may with the assistance of a good/creative broker be able to borrow more than you think.
Initially banks will lend based on your ability to repay and also the amount of security you have. Typically banks lend 80% of the value of the property – $100K house = you have to find $20K + costs of around $5K. You may be in a position to use loan mortgage insurance and/or the FHOG and/or funds from friends family etc to get started (check out the legal implication of this before embarking on such a journey)
If at the end of teh day you cannot borrow sufficient funds then you can put the time to good use by structuring a budget – saving money seems so much easier with a definite goal in mind and spending as muh time as possible learnign about property investment and doing your own research so you become more proficient as an investor.
At the end of the day the only real way to learn is by just ‘doing it’ – on the way you will need to watch out for people who will tell you ‘no’ – often their good intentions are based on misinformation and lack of experience.
Good luck with it all.
Derek
[email protected]Read my comments? Think I can help you? PM or email me.
G`day Sarah, Unless you have parents/friends with cash to lend you, there is no way to avoid saving for a deposit.I agree with derek that writing down a budget and having a plan on paper is a good fist step.Also, having that savings history{ from saving the deposit} will be beneficial when you do finally go to the bank to get finance.
Most times when we read a book that inspires us we want to do everything today and make things happen. R.E. investment in reality is pretty boring once the place has been found and the finance put in place. Channel your energy into educating yourself while you save and the day will come before you know it.
Jan Somers book “more wealth” has a chapter re; calculating passive income requirements etc.
She talks a lot about -`ve gearing{more the “old” school}, but it is good to have some balance and different opinions.This book also has good finance details.
You would be eligable for the first home owners grant. Have you been to your bank to see what they require?It costs you nothing and will help to focus your plans.There are numerous threads on this site dealing with the FHOG, do a search and chase this up.Regards Terry
Hi guys,
Thanks Derek and Terry, i really appreciate you bothering to take the time to offer some advice. When you’re still young and learning it can be quite daunting and overwhelming to think of where you should start.. it’s almost like learning another language!
And it’s so true that as soon as you read an inspiring book, you really wanna get things started ASAP. I guess i can use this time i have saving up to really learn as much as i can about investing in property, esp CF+ve.
Thanks Terry for your book suggestion, I will definitely have a look into it.
Ciao for now!
Just a point, banks lend up to 95% (you have to pay mortgage insurance [which protects the banks not you] but you can add that to the loan, to reduce your initial cash outlay).
Also you should keep 6%/7% (of property price) for closing costs.
John Burley’s book called Money Secrets of The Rich is very good. Most of Robert Kiyosaki’s books are good mind openers too.
Rgds.
Lucifer_auHi Lucifer,
As I understand it loan mortgage insurers also have some ‘no go’ areas and even though the bank may say yes if the LMI says ‘no’ no loan is forthcoming.
Certainly worth considering but needs to be checked out before embarking on any project.
Derek
[email protected]Property investment support – starts but never stops.
Only in very regional areas, but yes that is true.
Go here to see how much one of the two Mgt Insurers will allow you to borrow on a property in an area: http://www.pmigroup.com.au/LocationWizard.asp(As Derek suggested, Banks will offset their risk on to Mgt Insurers, so in the end they determine how much you can borrow). Also price impacts on how much you can borrow, and so usually you will be able to borrow a large % (so over 90%+) if you stay under $150K.
A good mortgage broker will advise on this issue (they mostly hang out in the Finance section).
Rgds.
Lucifer_auAs for books you could/should read, check out Leigh’s list:
https://www.propertyinvesting.com/forum/topic/6845.html
Cheers
MelSave hard work hard and get that deposit by hook or by crook. Sell the car, sell the dog, create unique and cheap chrissy prezzies, anything to make that first deal a reality. Harder now easier then.
My wife and I took 12 years to pay off a house in Sydneys west. Next month we move to Coffs 200 metres to the beach. Its 3 years from finishing off our home loan to now. It is possible so go for it.
DD
Can anyone do the numbers for Sarah on how many IP’s at say 50k a pop ($100 rent a week) she would need to get a passive income of 100k in 8 years? My mind isn’t working this evening
kay henry
Hi all if you have no or little capital… I think rick otton is running a one day Lease Option workshop this month in Sydney. anyone going to it … take a look if you are interested at
http://www.rickotton.comI might see you there.
Cheers,
Kiwi[biggrin]Originally posted by DD:
sell the dog
DD[evil5][glum][satan][thumbsdownanim]
Bad DD!!
Sylvester Stallone sold his dog before he made Rocky. He had written the script, and wanted to play the lead. he was offered a lot of money (can’t remember how much – about $400KK) for the script, and him NOT to star – ryan O’Neil to star[lmao]. He was broke, and couldn’t even feed his dog – so he eventually sold him ($100 or so) so that his dog wouldn’t starve.
Eventually he found whoever made it, and he got about $50K for the script and the lead and 10% of the gross. His first task was to find the guy that bought his dog. the guy wouldn’t sell him for any less than $7K (or maybe more – I’m really bad with this story), AND a part in the film – which he got.[specool]
Yay for dogs!
Cheers
MelSarah,
Read some of the books by Jan Somers.
Margaret Lomas is worth reading too, just as a comparison.
Cheers,
Aceyducey
Hi Sarah,
Welcome to the site. 18 months ago i was in the same position as you ie not quite a large enough deposit and no homes in my portfolio. In the last 12 months i have bought 2 properties and am about to buy a 3rd and 4th.
My advice to you is this;
– Stay focused and let nothing distract you from your goals
– Read, read, and read books
– Save EVERY penny you can. might seem you are missing out on the “good times” but those “good times” will still be there to be had later
– Don’t listen to negative people…in fact don’t even associate with them
– Surround yourself with people who are positive and encouragingAnd finally buy as much damn real estate as you can get your hands on [evil4]
good luck,
James.
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