Hey all,
I have decided to create this thread so that all the questions i have about investing in property can be asked and (hopefully) answered in the one location. It will also act as some sort of a guide on how i shall go about things in the future. As it is exam time for me there wont be too many questions to begin with, but i hope to contribute to this thread as time progresses, and will also write about my experiences in investing as they begin to arise. I know some of the questions will be a bit vague or general, but i will try to limit that as much as possible.
Firstly, do prices of CF+ homes, generally, have a lower growth rate than non CF+ homes. I know that it depends on the property, but im not talking about a property that you have bought, and then subdivided and built another house on to then make it CF+ or properties that need a big reno or anything like that, just a house that needs little to no work done and it will be CF+ instantly. All im talking about is, in general, does the average CF+ property have a lower growth rate than the average non CF+ property?
Also, generally speaking, are CF+ properties found mostly in the outer suburbs and country towns, or is it common to find them in inner city suburbs. I’m sure it is possible to find them in inner city suburbs, but im saying with the exception of apartments, or the random ridiculously low price for a property here and there, is it possible to consistently find CF+ properties in inner city suburbs?
As for looking for property, in Steve’s book he says that it is useless looking for property online as there is a lot that is not put up by real estate agents and the like. Is this still the case as the book was written close to 10 years ago. Do you still have to go the the real estate agents and ask all the questions to let them show you a few of the ‘bargains’ that they have on offer, or are almost all the properties for sale now put online?
Finally, how do YOU go about selecting a property. Is it a case of picking a random area with a certain type of house (ie. brick 4 bedroom home in a random area) and then try suss out which are of the suburb to buy into. Do you pick a random suburb that and then analyse it to see if there is any potential. Do you do an analysis which then leads you to a certain suburb. Also, why do you do what you do, how do you come to your conclusion and what are the 5 or so basic/important/first/favorite analysis that you undertake when first investigating an area.
I know that the answers to these questions may be quite in depth so feel free to have a crack at just one the the questions because im sure you have better things to do than sit at your computer for an hour answering these questions.
Thanks a lot for your (future) inputs, I hope that I may also be able to assist others, maybe not now but once i get my head around a few things, and keep up the good work with the forum.
matt_decat wrote:I know that the answers to these questions may be quite in depth so feel free to have a crack at just one the the questions because im sure you have better things to do than sit at your computer for an hour answering these questions.you hit the nail on the head there.
The answers to a lot of your (good) questions have already been answered on this forum in many places. I suggest you search this forum first (use the search box top right), then rather than ask lots of very verbose open-ended questions on the one thread, break it up into small bits and ask bite sized questions as separate threads. A lot easier to respond to.
Otherwise welcome to the forum.
yeah answers to most of these are out there, but ill give a few quick answers.
the CF+ houses that are CF+ as is without any extra dealing required are often in the outer suburbs because they are cheaper out there, and cheaper means less mortgage repayments.
CF+ and Capital Gains are a bit separate in that Capital Gains happen due to demand in an area etc, so if the area that the CF+ house is, also has other things that will increase demand in that area…. then CF+ houses can have HIGHER growth rate then other areas…. but areas that have low demand, might be CF+ but LOWER Growth rate…. take for instance a mining town VS the outer ring of a city. Mining is rent based so can get CF+..but demand for purchases are lower, so you can get growth but the base rate is lower then say the outer ring of a city where there is infrastructure growth etc boosting housing demand.
In the inner city its possible to find CF+ places… but they would disappear quick, hence why most people learn to MAKE something CF+ now, rather then find it. the higher prices generally will kill CF+, on a standard place… you have to add something or do some sort of deal to make it work more efficiently and hence MAKE the CF+ instead in inner suburbs.
before you are known as an investor who is serious by the agents, then look online, the paper, and talk to the agents. the more places the look the better chance you will find something. But once you have a reputation, agents will approach you with properties, if you let them know you are looking.
the last question you asked about sussing out a property or area is a massive one….. so i wont even try go into that also it HAS been asked many times, search around for that one. also the answer varies depending on what your looking for, a renovator, developer, buy and hold, CF+, all these people might be looking for different things in different areas. so unless you know what you want to do, we cant exactly advise on how to find it.
OH and that last questions is answered EXACTLY in the 0-260 book, where steve gives the top analysis formula, and the first 3 he always uses, etc etc. so maybe read up on the forums, and read that book. and most of these things should become clearer.
matt_decat wrote:rFinally, how do YOU go about selecting a property. Is it a case of picking a random area with a certain type of house (ie. brick 4 bedroom home in a random area) and then try suss out which are of the suburb to buy into. Do you pick a random suburb that and then analyse it to see if there is any potential. Do you do an analysis which then leads you to a certain suburb. Also, why do you do what you do, how do you come to your conclusion and what are the 5 or so basic/important/first/favorite analysis that you undertake when first investigating an area.The FIRST thing you need to know is how much money you have and how much you can borrow. This will eliminate many suburbs.
Decide if you want to buy a unit, villa, house. That will again limit your suburbs. THEN start your research into the areas you can buy in.
Number 1 criteria for me is I must have equity straight away. ie buy under market value. Sometimes part of the equity boost will be in the form of a reno.I only buy if I know I can sell it without losing money (almost straight away). Bugger waiting around for "possible" growth. Also LVR must be decent. I don't want negatively geared properties for years after I buy them.
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