Hi all,
I am 22 years old, and have owned my property for one year. Admittedly I purchased my property without doing too much research, altough I did read some books and sought advice from some friends. Anyway I currently have a 185k loan and I believe my property to be valued between 210-220k. From next year it will be rented for approx 200pw. I paid the minimum payments this year which is around 560 p/f but from next year will have an extra 400p/f to pay/save (due to promotion). I have an aggressive stance towards investing in real estate and I believe that acquiring knowledge is the most crucial part to achieving my goals. So my plan for the upcoming year is to gain as much knowledge in real estate and hopefully purchase a second property. My question is wether I should put the extra 400p/f onto my loan or into an easily accessible fund, that I can access to purchase my second property.
That is my situation at the moment and I realise that I have made some mistakes with my first purchase. 97% Loan.. Fixed for 3 years at 6.79. Does anyone have any suggestions as to my strategy for the future and lend valuable advice?
Hi
This site that has a heap of articles that might help. http://www.prosolution.com.au
I am a novice at this property investing sruff but am becoming very interested and actively seeking to get into the market.
My thought would be to research off-set accounts for your additional $400 so its working against your principle but still accessible, then start searching for an IP. The equity in your current property would probably help.
I will be watching this space for any other thoughts aswell.
Good luck.
MakkaHi Shade,
Just picked this one up.
For what it is worth your current LVR is around 90% of the value of the property and as such you don’t have a great deal of equity to play with.
My first recommendation would be to sit down with a broker to see what the best course of action is with respect to ‘getting the next one’. They would be able to ascertain your current borrowing capacity and provide some direction about the best use of any surplus funds in the meantime.
Certainly an offset account is the best place to park spare cash and maintain your current repayments until you get to a situation where you have sufficient deposit or equity for IP no 2. Parking cash in an offset account and maintaining repayments will reduce your principle a little quicker as your monthly interest bill will be reduced.
Above all – see a broker = step 1.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi all,
Ok I have taken the first step and spoken to my broker. She has informed me that I will be able to purchase another property 100% plus costs up to 200k. Aslong as both properties are rented out. ‘Aslong’
Now I’ve run some rough figures and I believe I can do it, but it does look like I’ll be doing it tight for a little while. I’ve been reading alot recently and I’ve found that most successful real estate investors have always talked about there research.
Where does one start with research? I mean I go on the net and spend hours looking for the right house that meets my prerequisites. I ring the real estate agent and have a quick talk to them about the property, upkeep costs etc. Does anyone have any suggestions for research? and comments on some of the products Steve offers? I have been thinking about investing in some of them..
Would love your thoughts and advice
Next step Derek?..
HI Shade,
For me I would suggest that you are over leveraged.
Your current property has an LVR of around 90% and you are considering borrowing 100% of the next property. To me that is ‘over leveraged’ and unless you are certain of the values of your properties and their growth prospects I would suggest a safer route is to pay some more off the existing IP.
In most circumstances this is not my usual comment but given the situation I would suggest slow and steady is a surer road to success given the numbers offered so far. After all time is on your side.
Notwithstanding my previous comments your research areas are going to be soemwhat limited by your budget.
Initially I would recommend you sit down and work out why your are investing (growth or income or a combination thereof) as this will, to a certain extent determine where you will invest.
Once you have identified affordable areas that meet your criteria then log onto log shire/city websites, domain etc to determine some of the macro features you are after. Then it is a matter of digging into the area – set up networks with people in the area and show them you are a serious investor.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958At these early stages of investment I would look first into the right structure to start your portfolio as this is very hard to change later down the track. Find some books on companies and trust funds. I would suggest you do this before you purchase your next IP.
Shade121
There is some good advise given in the replies to you. At 22 with a little research and experience in the future I am sure you will one day be very wealthy indeed. BUT, remember your youth and approach your investing in a way that will make the trip an enjoyable experience. A comfortable LVR will assist in this enjoyable trip. Do not make this a stressful venture. Remember you have time on your side.Do you know the joke about the old bull and the young bull standing on the hill looking at the cows below. Take the attitude of the old bull.
Bradshaw.
Hi all,
Again thank you all for your replies. I am still working towards the goal of purchasing my second property around mid to late next year. Although I will have a high LVR, I hope with a good contingency plan in place incase things start to go wrong (ie money set aside incase I lose a tenant) and with the right research and knowledge I’ll be able to invest confidently in my second property. I am erring to the side of caution however as life experience has already taught me never to rush.
I do have some questions as to what is meant by ‘the right structure’ I’d like to know because I dont understand, specially regarding books on companies and trustfunds. Sorry.
My reason for investment is for capital growth and have long term goals 10-15 years in mind if that applies to what you mean by structuring?
Sorry Bradshaw but I also dont know the joke of the old bull but would love to know.
Thanks again all, and please continue with your thoughts and advice.
FYI
For those who know the joke about the old bull and the young bull. I emailed Shade 121 and told him the joke. Not sure if it was appropriate to post on this forum.
Bradshaw.
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