All Topics / Help Needed! / My strategy of beginning

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  • Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    I’m looking to get into property investing. I have calculated that I will need about 30,000 to begin(like deposit and other crap). For the 250,000 investment property. I have given myself 3 years to save this 30,000 up. Which means I have to put 200 a week away into it. Between me and my gf thats going to be $100 each a week. Which is easy as ive done that with my car repayments.
    Then I have also thought about how much it would cost like having to satisfy the loan after we get tenants and the tax deductions. I have estimated $100(does it sound alright, to high, to low). So we can get a principle/interest loan and pay the other 100 that we save back into the loan.

    So when at the end of the year when im 25, i have roughly estimated that the property will be worth 360,000 and we will owe 200,000. So that gives us 160,000 equity to use to buy our own home. Also the FHOG will help to start that next venture. Then later we can continue more to buy more properties.

    How does this sound to everyone?

    Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    37 Views, and not even one person willing to give any advice at all.
    Doesn’t even need to be advice, just says something(thats appropriate)..

    Profile photo of JapanScottJapanScott
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    @japanscott
    Join Date: 2003
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    Is that $250,000 place that price now, or when you have the deposit in 3 years time? Is that $100 dollars a week after taking the rent into consideration, as the loan repayments would be around 350 per week I think. How many years are you waiting to see the property appreciate to $360,000? How old are you at the moment?

    Profile photo of TK79TK79
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    @tk79
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    hey mate,
    good luck with your plan. Maybe you can save more than $100 a week in a few yrs time as maybe youll have a job that will be paying more. Also youre still young so dont forget to have fun as well, there will be plenty of time later on for paying bills, mortgages, worrying bout money and investments.

    Profile photo of mathewc73mathewc73
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    @mathewc73
    Join Date: 2005
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    Hello,
    Good luck. Dont just look at the optimistjc scenario, also consider what if the property does not go up? What will you do?

    I think also you may not qualifiy for a FHOG if you already have an IP???? I think I read that somewhere.

    Mat

    Profile photo of Hoop1982Hoop1982
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    @hoop1982
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    Post Count: 10

    Youre correct matt!
    If you have already got a IP you then do your FHOG, at least it is in victoria anyway!! Good Luck[thumbsupanim]

    Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    Thanks everyone for your responses.
    Um, im 17, ill be 18 on the 30th, yippie only a week away.
    Um, that 250,000 is price then, but now im thinking i should be going for 300,000. Um, that 100 is after i take out the rent and the tax deductions. Um, appreciation, i think ill let it go 3-5 years. That should be a pretty safe tiem frame(i know, i know, there are other things, not going, maybe go up all in one year, i know :).)

    Well, In uni i will probably be working in a firm for those few years, and i should be able to make way more than i have been now, even if its only a few days(like it is now). Um, then i could add more to the amount going in each week. Yes, i will have to have some fun. I will deserve it, though in moderation, then i will get most out of it(i will appreciate it more).

    Thanks everyone.

    Profile photo of redwingredwing
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    @redwing
    Join Date: 2003
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    He Ya go DV

    Check out this Thread for a Scenario

    Somersofts PIA and something like REViQ are great for projections as well

    “Money is a currency, like electricity and it requires momentum to make it Effective”

    Online Positive Cashflow and Renovating Calculators

    Profile photo of tony wpbtony wpb
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    @tony-wpb
    Join Date: 2005
    Post Count: 88

    Hi DraconisV,

    if you want to fast track your entry time a few suggestions.

    Learn about rebates in property. I will explain more shortly…

    You and your gf should ask for a pay rise . Make sure you have a good case why you deserve it (if you dont start working harder then ask). Also request to do overtime and be eager to look to advance in your line of work. More income never hurts.

    Budget your money , it is amazing how much you can save when you know where your money goes.(dont become a tight ass though no one likes that)

    With the low capital it is more difficult but a rebate could help. Determine the value of an property only via a recognized bank panel valuer. Valuers can tell you which bank panels they represent.
    Your job is to find a property at say $300k , offer about $230K. The contract will be written at $300K with a $70K rebate at settlement. (your deposit) . This way with costs at about say 6% ($18K) your total investment is $8K with borrowings of 80% of val is $240K . The latest article of ‘Sydney prices crash’ should help your negotiations.This would mean you will begin in 20 weeks, so get saving.

    If you want some property investment software i developed some , you can track your investments email myself your details and i will post you a free copy. I dont distribute it normally but i like hearing young people making an effort…for themselves

    Profile photo of redwingredwing
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    @redwing
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    Originally posted by tony wpb:

    Learn about rebates in property. I will explain more shortly…

    With the low capital it is more difficult but a rebate could help.

    Determine the value of an property only via a recognized bank panel valuer. Valuers can tell you which bank panels they represent.
    Your job is to find a property at say $300k , offer about $230K. The contract will be written at $300K with a $70K rebate at settlement. (your deposit) .

    This way with costs at about say 6% ($18K) your total investment is $8K with borrowings of 80% of val is $240K . The latest article of ‘Sydney prices crash’ should help your negotiations.This would mean you will begin in 20 weeks, so get saving.

    Hi Tony

    Isn’t there a possibility of some ‘Nasty’ tax implications for the seller with this strategy, how do you overcome that?

    I think its an interesting idea though and your software sounds great [thumbsupanim]

    “Money is a currency, like electricity and it requires momentum to make it Effective”

    Online Positive Cashflow and Renovating Calculators

    Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    Thanks everyone. When I join any forum on the internet, only like one or two people are willing(or want) to help me. But on here everyone is giving advice and helping me out.

    From my impressions so far property investors are very nice people.

    Tony, correct me if i’m wrong. Your saying that I invest $8,000. Which means my savings towards buying a house is 8K. Once I get that in the bank I can start… Is this right?

    Thank you Tony for offering your investment software to me, it is greatly appreciated. I will PM you my details and everything.

    Also Tony do you know where I can find more info on rebates, from reading it i am still kinda confused with it a bit.

    Thanks.

    Christopher.

    Profile photo of tony wpbtony wpb
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    @tony-wpb
    Join Date: 2005
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    Hi Redwing and DraconisV,

    the vendor is not imposed with addittional tax as they pay based on amount recieved and the rebate is documented as a discount at settlement. Similiar to Harvey Norman cash rebates on air cons.

    There is a clause added to the special conditions the sale is subject to acceptance of the rebate agreement. The rebate agreement , i can post a copy if you wish.

    Also Redwing if you wish i will post you a copy of the software , thanks for your tips in regards to it , in the other post

    cheers

    Profile photo of tony wpbtony wpb
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    @tony-wpb
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    Post Count: 88

    Also , yes that is correct using that technique you would only need $8K .

    You must of course ensure you then have the cashflow to service your investment . Which if you can save $200/wk you should be right , without knowing your financials .

    Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    Ah nice, discounts i like it.
    Hmm, the rebate agreement, ah can you please post one to me, so i can fully grasp this idea.
    It will show me what sort of investing forms need to be filled out aswell.

    Profile photo of tammytammy
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    @tammy
    Join Date: 2005
    Post Count: 155

    If you use the rebate scenario, in the future when you sell, for the purposes of CGT, do you use the price pre or post rebate?
    Tammy

    Profile photo of DraconisVDraconisV
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    @draconisv
    Join Date: 2006
    Post Count: 319

    Well personally I am planning to never sell, just buy, buy, buy.
    And reap the rewards. Refinance is the word:).

    Hmm, to be able to get the finance needed for this loan i would need this $8,000, so if I get HECS on my uni fees and not upfront(20%off), then I should be able to save quicker, as at the end of the year I am going to look for a more paying job that is flexible. And Um, yea that job will be an essential part as i will need it to show the bank I am earning (i hope)enough income to satisfy them.

    Also in regards to the FHOG I dont think I will worry about living in there for 12months(or whatever) and renovate. I will just starting renting it out. As I will need to rent to help service the loan.
    I’m so eager, I hate the HSC bring the property market along, i’m ready to tackle you head on.(when i get my monies in order).

    Thanks everyone.

    Christopher.

    Profile photo of tony wpbtony wpb
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    @tony-wpb
    Join Date: 2005
    Post Count: 88
    Originally posted by tammy:

    If you use the rebate scenario, in the future when you sell, for the purposes of CGT, do you use the price pre or post rebate?
    Tammy

    Hi Tammy , the CGT implications are post rebate . ie of the price is $350K , you had a rebate of $70K then your net price is $280K lets say in 3 years you sell it for $400K then your gain is $120K not $50K (less allowable selling expenses etc).

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