Hey everyone. I'm sorry if I've posted in the wrong section or asked a stupid question. I've had a look around the forums but haven't found anything similar to this. Any help is appreciated
I'm seventeen years old, I've just finished high school and I'm planning on going to university for the next three years. Based on what people have told me uni students don't have much of a disposable income. What sort of things should I be doing now if I want to get into property investment? Currently the only thing I think I can afford right now is a beach box going for $30,000, but I'm not that keen on buying it because apart from summer there would be little opportunity to rent it out and "positively gear" it.
I've been talking to relatives and I'm looking for books to read on the topic now, but so far I'm having trouble finding any tips on what I can do to prepare, or even get started while I'm in uni. Basically my goal is to eventually be able (like 12+ years away, after hard work obviously) to live off of rent collected on properties I own (not that I will, but just to have that option open to me) and to be able to afford things like music equipment or a holiday without having to save up for three years.
In short: What can I do during the next three years as a uni student to either prepare for or begin property investing?
Clappy wrote:Based on what people have told me uni students don't have much of a disposable income.I never had so much disposable income in my life! Living at home, mooching of the folks – free food, accomodation. Pity I spent all my cash on all the wrong things. I worked in a sports club pouring beers during my 4 years of uni – the pay was pretty good at the time.
What can you do to prepare? Read, read, read – regularly read and contribute to forums like these – borrow all the investment books in your local library. You could start saving for a deposit now. If you're living at home, you could work part-time and start saving some cash. You might be surpised at how much you could put away over the next three years. If you're living away from home to study then scratch that idea.
Also, you could always scrap uni. Probably not the most politcally correct response but it's another option.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
LOL Jamie, don't let that 'no uni' cat out of the bag!
Clappy, the best thing you have done so far is to join this forum and start getting educated. Knowledge is power and while you may not be able to put ideas into practice for a little while those ideas will stick with you.
Do you have time? If you have time on your hands maybe you can do research for people who have no time, find deals, look at doing options (search on this forum for more detail) look to partner up with people who have money and no time. Tag along with others on their property investing, if you can find people who are buying or renovating or developing and hang out with them, ask lots of questions and look at their deals, talk numbers with them then you will learn a lot.
Good luck, don't get talked out of anything, stick to your guns and don't let media reports or fear bring you down.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeThank you both for the quick replies, much appreciated
Jamie, I'm planning on going to Monash in Caulfield, which isn't TOO far away from where I live (Mornington Peninsula), so most likely I'll be living with my parents, though I think I'm going to be paying board. Either way, I don't think I'll be spending anywhere near as much money as if I moved out. I'll be sure to pick up a few books from the library tomorrow on the way home from work. It's relieving to know I don't have to start straight away. Thanks for the advice (but I'm still hoping to go to uni haha)!
Dwolfe, thanks for the advice. I'm not sure how to feel about teaming up with someone else, not because I hate people or anything but just because I don't like sharing the responsibility. If one partner of the team is better than the other it might create tension. I'd feel guilty if I made mistakes that impacted an investing partner as well as myself, and I'd get frustrated if I teamed up with a person who made lots of mistakes (that and I'd probably feel too guilty to "break up" with that partner and leave him/her by his/herself). I don't consider myself that good at real estate, I didn't even know what a lease was until I asked my dad a few days ago, so I'm still learning, but hopefully a lot of reading will help with that. I've been looking around these forums and talking to family friends and I've learned a bit (stuff like if you own a unit and the head of the units wants to put in new hot water or something you have to pay for it, you know, just little things like that). Luckily I've got a few years ahead of me to get better at this before I enter the property market, so I'll save up during uni and hopefully I'll be able to buy a place in a growth area. Unfortunately I've missed out on Tyabb by a year (prices there are rising heaps now because of the new highway being put in), but I'm sure there are other areas to look out for. Thanks also for your help!
Hi Clappy
What great questions and insight you have. I think the best place to start is with your goals..you already mentioned music equipment and holidays..fantastic! If you can spent time regularly working on your goals, what you want, when you want it, why you want it..if you make them SMART specific, measurable, achievable, realistic and timely then you can work backwards to what you need to do today to achieve them. eg if you want to own your first property by 1 Jan 2013 in …. valued at …. then you can work out a plan to help you get there. Knowing why you want these goals really helps too, this is what will be the driving force. Identify what it is you really want and by when and why and take the action required and you will be well on your way. Go through your goals every week, put them where you can see them, cut out pictures, tell people.The next thing after you work out your goals is a budget, know what you have coming in and going out. If you want to buy a property work on saving a 20% deposit or consider other options…you can rent to buy, go part owners with a friend/family member in an add value property, guarantor etc..there are always options and opportunities, work our want you want and then find a way to make it happen (win/wins are always good).
Reading – Steve McKnight's First Book, a great read, inspirational, easy to read, definately read his first one first a much easier read than the second. Rich Dad, Poor Dad, The Real Deal, Stephen Covey 7 Habits (Long but main habits worth knowing), Agents of Action (havent read it but heard its great) and many more that I cant think of right now. Another thing you could consider is starting a passive income business (eg internet based) to help you to get into property if property is the way you want to go.
If you know what you want and why and are willing to take the action required then you will get there. There are plenty of opportunities and always will be (if you could work out right now how to come up with a lump sum of $20,000 then you could go to NZ or US or some places in AUS and buy a property that would bring you in income every week).
I wish you every success, Michelle
I think the advice to look at US property is a good one. At your age as a long term investment, some of the rental returns are great for cashflow and who knows what a US$30k property could be worth in the future.
It is very hard to save enough money in Australia to purchase property,especially with stamp duty and the value just isn’t there like it is in US and other places.
Hey Clappy
Can I *clappy* my hands at you, for starting at your age?? I am so impressed.
The comments Michelle had above are really worth considering. If you go back a few squares, and work out what you actually want, in really specific language, the "how" seems to fall into place much easier.
Just to feed your imagination… there are opportunities called "bird dogging", which means that if you find a great deal, you "sell" that information on to someone else who is ready to invest, and make some money for your efforts … which can be saved to get started yourself.
There is a lot to learn about and lots of information available. For getting your eyes opened to the types of opportunities available, I would really recommend the Rich Dad series of books on real estate… The ABC's of Real Estate Investing; Advanced Guide to Real Estate Investing; The ABC's of Property Managment, and the Real Book of Real Estate Investing. The first three are an easy read – the last one more like a text book of different ways of doing things.
If you want someone to work with, and bounce ideas off, I love working with younger people who have a desire to invest, so feel free to mail my inbox. I can help you go step by step through a process that will help get you more focussed and help identify your next steps.
Best of luck!
MarthaHi Clappy
You are starting your property investment education at the best possible time. With what is going on in the world at the moment and the fact that finance has become harder to get the amount of strategies that are appearing are fantastic. What I would suggest is to look at all types of deals weather you have the funds or not. Involve yourself with other investors and absorb as much information as you can.
I have been investing in Perth for the past few years and due to the down turn in the property market I have had to re educate myself and look at other options. I am now investing in Texas USA because the properties are more affordable and they provide a positive cash flow.
With the cash flow I am able to continue buying and learning. Any deal you start with, no matter how small, is a good deal as long as it provides income.
You can get into the market in the US for under $30,000 USD. With the purchase you will need to do some rehabbing to get a good tenant. The market is suppressed so it is relatively easy to get into. There is a lot to learn, but as far as I am concerned it is the best job in the world.<moderator: delete advertising>
Read as much as you can, talk to people who have common goals and interests and take no notice of any one who says it cant be done, or you are to young.
Start nowTake no notice of any one who says it cant be done, or you are to young.
Other than it is illegal to enter into a Contract to purchase Land under the age of 18.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Clappy,
I just graduated from university last year, and I hardly fit the poor uni student profile.
From the second year into my 5 year uni degree my mates and I were earning almost the Australian average income and our marks were NOT anything more than a pass.I wish I was a bit more switched on then, I have good savings but it could have been triple.
I spent about 2-3 months a year overseas and had steak dinners at posh restaurants almost every second day.
Granted I didn't pay for accomodation as I lived at home, however my parents charged me quite a large amount for the new cars they bought plust other expenses. I also ate out everyday for all meals so I didn't get any freebies there.So long story short, don't buy into the poor uni-student lie, university has got to be the best excuse to find flexible well paying jobs (depending on your industry), you do have to make sacrifices thou, I don't think I ever attended class due to work even though classes were compulsory, and had 5am-11pm days everyday. Just have a good chat to your lecturers, after first year they are fairly flexible as you have shown commitment to your future.
Hope that dispells any concerns about uni being hard.
Qlds007 wrote:Take no notice of any one who says it cant be done, or you are to young.Agree with Richard – I always liked the quote "If you're good enough, you're old enough."
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Clappy, congrats on thinking ahead before heading to university. I'd suggest plugging yourself into some literature on your home state. Learning from a mate how to paint, plumb and what good and bad electricals and houses look like. The first step is learning the good AND the bad. And that only comes thru experience. I'm sure there are deals to be made and had in the US right now. But you would have to be up with what the whole deal is in America. Americans are MUCH more litigious and both tenancies and management can be very difficult over distance. I should also mention that there are areas that are more than willing to use and abuse EMINANT DOMAIN on neglected properties in the US. Its a very different market.
Start by going to properties that need work, that are open for inspection. Maybe 60s flats or deceased estates. Work out what can be done to the property. Grab the brochure and see what you could do to the property. WORK OUT COSTS ! Even if you arent doing this yet .. its training and knowing what is possible and how its done that is the priceless training you can use later. How much a kitchen? Is it necessary? what will it cost to repaint a wall? A whole room? This is invaluable experience. The faster you can collaborate this knowledge in the future makes deals quicker and easier to organise. Plug in figures based on existing interest rates and various levels of borrowings. You'll learn what can be done.
Aim to make your first deal solid with at least an 80/20 borrowing level. I know its a lot to have saved but its also a secure foundation for future investing. The first deal you always scrape for .. the rest are usually a lot easier.
Grab a property in Australia. Somewhere close enough for you to visit within the same day should problems arise or you want to inspect. Know your tax laws and deductions. There are so many people who get in under one scheme and get out on another. Tax laws and concessions with property is always changing. Its a must to keep on top of this.
The most important thing regardless of where it is remains to KNOW YOUR MARKET. If you are an expert on your market and know how to deal with tenants and property managers properly, you can invest just about anywhere with a degree of success. As long as you can fulfil the above criteria, you should be enough of an expert to take on any property.
Wow, thanks so much everyone for all your advice. It's definitely given me a lot to think about. I'm especially liking the idea about US property investment, but I'll reply individually:
Michelle, I'll make sure to read those books, thanks for the suggestions. I've read Rich Dad, Poor Dad before, but I was ten and didn't really understand it, so hopefully now it'll make sense. Since I first started working last year, I've put 10% of everything I've made into a separate account. Currently it's not that impressive, with about $230 in it, but I'm planning to start working more than just weekends on school holidays soon and start seriously saving. That 10% was originally for the stock market on the advice of my grandfather, so I think I'll keep that there and then put 20% towards a deposit on top of that. Thanks also for opening my eyes to investing in other countries, the US is definitely something I'll look into. If I can somehow manage to buy something over there and rent it for more than whatever I'm paying monthly, I might even try and do it while I'm still in uni (I'm probably being extremely naive though
, I'll start getting familiar with laws and costs). Thanks for your advice about goals as well, much appreciated mattnz, I'm really excited about the whole idea of buying property overseas. I was reading a thread on this same forum where somebody wanted to start getting into the US property market and some people replied saying it was a bad idea, just because of things like having to replace the roof every ten years because of the snow. I personally like the idea of US property, like it's cheaper and everything, so thanks for the suggestion (like obviously I'll research beforehand, but it does seem like a very good opportunity the way I see it). Positive cashflow is the main thing I'm concerned about and apparently the US is really good for that. Even if it takes longer to get to where I eventually want to be in property investing, I'd be more comfortable buying properties where I'm making money (however little) straight away rather than paying and only having money in equity or in the value of the property I own and not available to spend if I wanted to. Thanks for the reply!
Marthamel, everyone makes that joke about my surname hahaha, thank you
Bird dogging seems like an interesting way of doing things but as a way of making money to begin investing I don't think I'd do that well at it because my knowledge of real estate at the moment is pretty empty. I don't think I'd be able to spot a good deal from a bad one, and I'd be more likely to be one of the people using the services of bird doggers instead of doing it myself! But once I get experienced it's definitely worth considering as a way of making money. Thanks for the book suggestions, it just makes it that much easier to find useful information and to be sure I'm not wasting time reading random property investing books. Also, thanks heaps for your offer to help me out! I don't have anything apart from very basic ideas at the moment, but after a bit of reading I'm sure I'll have a lot to talk about. Thanks again Dale Harmer, thanks for the advice. You're right, the best thing I could probably do along with reading books is to hang around other property investors and get a feel for how to do things. I'm assuming by rehabbing you mean renovating or cleaning or something similar to that (I'm not familiar with the term, sorry if I misunderstood you). But yeah, Texas seems to be the best place to invest in the US at the moment from what I've heard. I'll definitely keep all my options open and look up San Antonio and send you an email if it's not too late (it might be a while before I'm confident enough with my knowledge to make any moves, but I'll send an email regardless). Unfortunately I'm not eighteen until April, which is well after your trip in February, but if you're still willing to help or discuss properties in Texas later on that would be great. Thanks for the advice!
Qlds007 and Jamie M, thanks for the reassurance
NHG, thanks for the info about university, it's definitely instilled some confidence in me. I'm planning on saving a lot throughout uni, so hopefully I end up with a lot to show for it by the end of it. Thanks for the response, very helpful!
xdrew, thanks for your response, I'll definitely weigh up the arguments for and against buying in America. I've got an uncle who does painting and my grandfather used to teach electronics/mechanics at an Air Force base (and my dad did a lot of renovating on our old house), so I've got a few good people to learn from, but I'll try and meet some people that aren't family, just because more people means more perspective. By 80/20 borrowing level I'm assuming that means that I'm only borrowing 20% of the cost of the house from the bank and paying 80% of it from what I've already got (sorry if I've misunderstood you here) – definitely a challenge but it does seem like a smart way of doing things. Thanks for all your advice!
This took a bit longer than I expected (it's one in the morning), but I'm extremely greatful to be able to receive so much advice and support from complete strangers. It's good to know that there are still people looking out for each other. Thanks again to everybody.
Hi Clappy
What is your email address?
Tim
Hey Tim. I'll send you my email address through a message. Not that I don't trust the people on this forum or anything, but I don't want to start getting spam from any adbots that might be looking at the website.
Just to clarify on my previous post .. 80/20 is 80% from the BANK and 20% of your own money. Its conservative as a starter block but the banks dont need LMI (Loan Mortgage Insurance) on that. And the market needs to go down by at least 20% before they call their loan in or ask for extra money. Its a reasonable safety net.
just do it!!…..scrap uni and become a real estate agent and maybe learn the game inside out…or if u really want to go to uni get a transfer to miami or texas uni (09' and 10' US party uni's of the year as per Playboy haha)…flip burgers or something will work out and start buying/managing foreclosures….will meet u over there in 2011!!…goodluck…u only live once.
As mentioned don't let people tell you you are too young.
Nathan Birch (he's 25 years old now) bought his first house at 18. He used a credit card to get his first deposit. He now owns 30 properties. Self made millionaire. Amazing young man. No-one helped him, he just used his initiative and went for it. He's got a book coming out soon. Can't wait to read it.
Utube videos of some of his purchases.
http://www.google.com.au/#q=nathan+birch&hl=en&safe=off&biw=1016&bih=541&prmd=ivnsofd&source=univ&tbs=vid:1&tbo=u&ei=An0STcy9A8XIcc3tgKsK&sa=X&oi=video_result_group&ct=title&resnum=5&ved=0CEgQqwQwBA&fp=19436dfea8718869Clappy,
you can still find cashflow positive properties in large regional areas that only require a relavtively small deposit. This can then allow you to earn an income to put towards purchases in larger towns or cities.
I think the one most important part of training that you need to take on board is .. LIABILITY vs ASSET. If you are paying mucho dollars out of your back pocket in the hope of great capital gains or increased cashflow, thats a losers game. If you can find a property that with a short amount of input from yourself can be held and work for you regardless of the amount of time you will hold it, thats classed as a workable asset. You would be surprised at how many people i see who start with the DUNK CASH mode and then find that however they work it property becomes a losing game for them.
Land can be subdivided, Units can be refurbished (even strata'd), Old houses can be given a lick of paint, a new kitchen and a funky fireplace. Each one of these produces a better class of asset and cash for you in the long run. Budget for extras and overrun and you should be doing fine. And get a swag of honest tradies in your back pocket .. they are more valuable than gold bars.
, I'll start getting familiar with laws and costs). Thanks for your advice about goals as well, much appreciated 
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