hello people, newbie here, been watching that ‘untold wealth’ infomercial with that property guru John Fitzgerald…that got me interested in investing in property. But he wants $300 for his advice so i decided to look for advice on the net and stumbled across this board…I just wanna ask you experienced investors can someone like me who earn only $52k a year really do this? I have doubts because i mucked around with a loan calculator, loan of $380000 (95% of property), 30years, monthly payments around $2400. If i work saturdays i can earn around $3000 after tax per month…so i can afford my first property even without a tenant cos i still live in mum’s house…but in a few years time i don’t see how i can afford mortgage repayments on another property without constant supply of tenants on both properties…this is why i’m confused because i always see people on a current affair shows on average wage having 10+ investment properties in a short few years…should i shell out $300 for John’s advice? Or anyone know a good ‘step by step’ book? I’ve got about $50k saved up, was planning to buy a $345k unit in Cremorne sydney bout $290/w rent but Mr Fitzgerald insist house & land is the way to go because land appreciates…so now i want this $410K house at newcastle but only returns $250/w..but i really like it because there’s water views and only 1 street back from the waterfront houses. Buying interstate is not an option for me….so guys, should i or shouldn’t i give this a go?? nice meeting everyone by the way..you all seem to be a buch of good people..
A lot of people who earn a lot less than you have made a fortune through property, so I wouldn’t worry too much. Keep reading the forum and you’ll get an answer to any question you may have… That’s my experience anyway[biggrin] Welcome aboard- G7
I suggest you read up on the topic. Jan Somer’s books are a good place to start. Steve’s first book is pretty good & reading one of Robert Kiyosaki’s books is worth doing (only one, they mostly say the same stuff).
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Have you ever heard the question:
How does one man eat an elephant?
One bite at a time.
At your position looking ahead it seems quite daunting and unachievable. Set yourself a goal to buy your first property. It wont be as hard as it seems. Then armed with your new knowledge, experience and confidence you can buy your second. Before you know it you will have some equity and be thinking of the third….
Make sure you find a lender who will lend you the most according to your situation. Nthingis more frustrating than finding your lender wont come to the party for number three but others will. This is a brokers expertise is invaluable.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If you want a step by step guide, I prefer the Anita Bell investment book. She explains everything very clearly in layman terms so the book is very readable.
Steve’s book is also very good and its a must read if you want to go CF +ve.
Robert’s books are less informative and more inspirational, if you ask me. Its more investing philosophies rather than practical advice. Don’t take me wrong, I love his books but just feel its not useful practically.
I have the opposite problem, I have carried out a fair bit of research but have no money to get me started. The benefit is having done 6 months reading/researching/visiting this forum I am starting to gain an understanding of what is achievable and that has helped me focus on what I want. Now, I earn about 20k less than you a year and am determined for this to work and confident that I can do it, so I am sure you will have no probs provided you are sensible about your actions.
Just don’t jump into anything without researching and don’t rely on just one person as a source of info…eg that guy you mentioned.
Sometimes I remember the phase “you need money to make money” and think how true it is. But at the end of the day I try not to get disheartened. I have taken on a second job and am working towards reducing my debt so I can save the necessary deposit.That’s is the action I am taking. In your case your action could be to research to give you a broader knowledge base to provide the confidence you need to put your hard earned savings to work. Try the librarys, I have found most of the different people mentioned on this site have books for loan, and it’s free yay!!
I don’t know if I make any sense…it sounded better in my head [laughing]hi all! thanks for the good advice! you lot are an inspirational bunch… looks like i’m gonna have to get steve’s book…anyhow i’ve decided to buy that 400k house as my 1st investment….i’ll let you guys know how i go…
sam :o)
I think the way some people on this forum can get 10+ investment properties in a few years (and not on a huge income), is not to buy the big 400k number, but to buy rather cheaper houses. So if you decided to, you could buy 8 X 50k houses… instead of one 400k house. Then you could say you had 8 houses
The theory (and practice, for many on here) is to basically buy a house for 50k, and get over 100 bucks rent for it (about 10% rental yield). So the 410k house you buy has 250 bucks yield (about 3% gross) but the 8 X 50k houses would have, between them, 800 bucks a week rent.
This is not merely theory- many on here do just that. However, with the changing market and recent capital gain for almost every area of australia… it’s harder to come by those 50k houses (even if you want to). You’re left with mostly mining towns and country towns (not that there’s anything wrong with that- just depends on if ya want that as your portfolio).
Your 410k house will require money from your pocket (negative gearing) and Fitzgerald is an advocate of that. One point of negative gearing is relying on notion of capital gain for well located properties. Positive gearing proponents are focussed more on rents (although pozz geared places have mostly enjoyed some CG too during the boom).
So if you have an income focus, you might want to buy the cheaper houses. If you have a growth focus, you may want to buy more expensive houses. 8 cheap ones = 1 expensive one…. less rent may equal potential for growth (but not guaranteed)… more rent = you pay nothing from your pocket, and it’s possible that these might achive CG too (but not guaranteed).
I think Fitzgeralds’ stuff has sensible strategies, but you might want to just buy a bunch of books rather than pay a few grand on seminars/products when you first start out.
The notion that land always appreciates in value… well, not in some rural locales. You can still buy land in some places of Australia for $1000 a quarter acre- just as you could ten years ago, and, I imagine, just as you will be able to do in 10 years time for those same blocks.
Whilst I don’t agree that ALL land appreciates (some does- particularly when it’s in scarce supply), buildings do depreciate. Hence, one could use depreciation allowances, kindly brought to you by the Tax Department
Post 1985/87 properties have these, and they can reduce your tax.Sam, you’ve said buying interstate isn’t an option. You’ll find on here that many people have bought land all over australia- and beyond. You might see this as an option later- dunno, you may not
Final point of this tome… one 400k property with a low rental yield, will have you paying it off for a long time. Prices are slowing around many parts of Australia. So you have many, many options to buy well. There may not be a need to rush in right now.
kay henry
Yeah! Yeah! Kay has a very good point Sam. Buy more properties and get more rental income. This way you can also diversify your investment property to different locations. If all properties goes up in prices then you’ll be laughing all the way to the bank. Good Luck Sam!!!
yeah kay does have a good point…but like he mentioned 50k houses are in mining/rural areas, i’m worried about capital grwoth in these places..whereas the $400k place whilst not near a capital city, have nice water views…the house itself definitely needs work(new paint,new doors/lights), intersting kay mentioned depreciation on buildings cos the house is only worth bout 60k(25yr old house)…so i’m buying it more for the land…but i’m very happy with the price cos other properties in the area they’re asking round $460 to $500k…infact i like the place so much i’m thinking bout keeping it and in 15 years or so knock it down and build a bigger 2 storey house…also i would like to ask your opinions on investing in units?
yeah kay buying interstate’s no good for me, not enough time to go look interstate although i’d like to go down to hobart and have a look in the future..any comments on hobart?
anyway i’ve made an appointment with the solicitor to sign contract on thursday…keep you guys posted..
just a quick question to Kay Henry…maybe I need to do more research but are you Henry Kaye or a follower?? I just saw an article about him at the start of this months property investor mag and was curious???
Peach
Originally posted by Ricksters12:… Buy more properties and get more rental income. This way you can also diversify your investment property to different locations. If all properties goes up in prices then you’ll be laughing all the way to the bank. Good Luck Sam!!!
On the point of diversification, Robert Kiyosaki says that diversification does not make people rich. The idea is to focus and take calculated risks. Any comments ?
Peachy,
I am kay henry- the other person is henry kaye :o) And I follow noone
bennido- all these people say different things- one minute they are saying “multiple stream of income”; the next they are saying diversification is risky or whatever. One says “don’t be in the herd…” and then you have a million investors mooing “I am not in the herd!” (a la life of brian “we are all individuals”). One says do the opposite of what everyone else does… etc etc. doesn’t matter what any of them TELL us to do- they’re not the boss of us. Much of what the gurus say probably makes sense if they didn’t constantly sound like trashy amway advertisements.
Anyhoo, long day at the office.
)kay henry
Kay
Sorry for the mix up, that is what I thought. Bit of a coincidence and prob lucky your name isn’t the other way around by the sounds of this article!!
Peachy
Peachy,
Kay isn’t Henry Kaye, she’s ‘The Messiah. I should know, I’ve followed a few in my time!”
Bennido and Sam,
on the point of Kiyosaki, my position is that if all his stories are in fact utter BS, none the less, I found the benefit regardless in it’s motivational effect to push me forward. On his point of non diversification I admit that I agree because I think once you take a postition in property, (eg CF+, wraps, buy and hold, reno’s etc, etc) become as skilled as you can in that one area and then once you have gained the confidence and feel you have gained some mastery in that area then it is a lot easier to then transfer those skills/confidence to another area. Also you may find you are dead keen passionate in one area (which will increase your chance of success dramatically) and find that other areas of property/investing bore you to death. For me, I think I’m better at focussing on one area I know (?) and concentrate on that, rather than dispersing my efforts all over the place. Everyone’s different.
Cheers,
Gatsby!Aesop told fables, but they still had the power to change lives.
I believe in focusing on one thing, getting it down & then moving onto the next….it’s how babies learn – and it seems to work for them.
However if something DEFINITELY isn’t working, move on &^ come back later…..
As the saying goes: ‘try, try, try again – and then give up!’
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
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