Hi everyone,
My name is Tim. I’m 24 years old, and brand new to this community. Over the last few years, I’ve become very interested in property investing and have made an effort to build up as much knowledge as possible. I’ve read stuff by McKnight, Clitheroe, Lomas and Whittaker, and am convinced that positive cashflow property investing is the best strategy to achieve my goal of becoming financially independent.
So I have two questions. At the moment, I’m a phd student so I don’t quite have the money in the bank or the cashflow to put down for a house (though I’m on my way to being there soon I think). But I’m still hoping to find a way to get more involved. I’m getting a bit tired of reading books and want to move on to the next phase. So my question is what kind of strategies can anyone suggest that would allow me to learn and gain some experience, but still taking into account that I have limited funds available at the moment?
My second question. I’m living in Perth at the moment, and was wondering if there is a group of investors, young people or otherwise, that meet to discuss ideas and would be open to helping newcomers. Alternatively, if there are other young people in the area who are just starting off on the journey, perhaps we could start a group?
Cheers,
Tim
Hi Tim
Welcome to the forum and I hope you enjoy your time here. Great group of people
With your mention of positive cash flow, the following information will help you get up to speed with positive cash flow, vendor finance real estate in OZ.
The three most popular Vendor Finance strategies are:
1. Rent To Own. This is documented with a Residential Lease and an Option. The Lease gives you possession of the property and the Option gives you a fixed price on the property, i.e. overall you get pretty good "control" of the property.
2. Deposit Finance. This is often documented with a second mortgage. This is where the Buyer gets a traditional loan for the property and the Vendor finances the remainder. This strategy has become quite difficult to use due to traditional lenders tightening their rules since the GFC and the new National Credit Code.
3. Instalment Contract. Sometimes called Vendor Finance and at other times, a Wrap. See the links below to see how these operate.We've been operating in the Vendor Finance industry since 2003 and it's worked for us. If you'd like to learn more about vendor finance in Australia, I suggest you do a search for Vendor Finance here and in the Somersoft forum. You'll get an immense amount of reading material in both these forums.
A few web resources that may help in your search for information about vendor finance are:
https://www.propertyinvesting.com/strategies/wraps
https://www.propertyinvesting.com/strategies/lease-options
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/ The Vendor Finance Association of AustraliaThe Vendor Finance Association of Australia has Perth meetings as follows:
The Blue Water Grill in Applecross.
56 Duncraig road, Heathcote Centre, Applecross.
Meeting commences at 8:00 am – 11:00 am.
12th March
11th June
3rd September
3rd DecemberCheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
hi Tim
For a another group of people to catch up with check out http://www.activepropertynetwork.com.au/perth.html I believe it is a very well run group although I've never been myself as I'm in Tassie!
Best wishes as you embark on your investing journey.
Cheers,
Traceytballard wrote:So I have two questions. At the moment, I’m a phd student so I don’t quite have the money in the bank or the cashflow to put down for a house (though I’m on my way to being there soon I think). But I’m still hoping to find a way to get more involved. I’m getting a bit tired of reading books and want to move on to the next phase. So my question is what kind of strategies can anyone suggest that would allow me to learn and gain some experience, but still taking into account that I have limited funds available at the moment?As the others have mentioned – try and meet up with like-minded investors. Learn from their experience. Also, continue contributing to forums like this. They are full of up-to-date information and knowledgeable people who are always willing to help out and answer questions.
tballard wrote:My second question. I’m living in Perth at the moment, and was wondering if there is a group of investors, young people or otherwise, that meet to discuss ideas and would be open to helping newcomers. Alternatively, if there are other young people in the area who are just starting off on the journey, perhaps we could start a group?I guess that was covered off in questions one.
Cheers
Jamie
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]
Thanks for the advice everyone! I just have a few more follow-up questions.
1. Regarding the idea of creative financing for my first IP. Since I’m still a student, most of my income is from a non-taxable scholarship that runs out in mid 2013. This is non-taxable and by ATO standards is not even considered income. My actual taxable income is only around 10k pa. I’m guessing this would hurt my ability to secure financing. Is there any way around this? Or do I just have to wait it out until I get a “real job”.
2. Also, given that my next purchase will be my first, I want to use the first homeowners grant. However, as I understand it, if I use this, I have to live in the property for 6 months. My problem is that I live in the western suburbs of Perth and will need to stay around here while I’m studying. This is not anywhere close to a positive cashflow area. But I don’t want to compromise my strategy of trying to achieve positive cashflow. Are there any loopholes that will allow me to use the first homeowners grant to purchase an IP?
3. I’ve been trying to follow Margaret Lumas’ strategy in the 20 Questions book. I’m finding question number one very time-consuming, She says to do a search within your price range of the entirety of australia, and keep any suburbs or towns within 20-30 minutes of a centre of at least 50k. For the other people out there who are using this strategy, are you all literally just going through the suburbs one-by-one, seeing how far it is from the nearest urban centre and then making the decision of whether or not to keep it? Surely there is an easier way! I’ve been trying to find a real estate search engine that lets you search within a given radius (e.g. 30k) of a city, but have not much luck. What is everyone else doing?
Cheers,
T
1. Yep, pretty much.
2. No, you’d have to live in it for at least 6 months within the first year.
3. I’d just use the book as a guide. Embrace the parts that you feel are useful.
Cheers
Jamie
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]
tballard wrote:3. I've been trying to follow Margaret Lumas' strategy in the 20 Questions book. I'm finding question number one very time-consuming, She says to do a search within your price range of the entirety of australia, and keep any suburbs or towns within 20-30 minutes of a centre of at least 50k. For the other people out there who are using this strategy, are you all literally just going through the suburbs one-by-one, seeing how far it is from the nearest urban centre and then making the decision of whether or not to keep it? Surely there is an easier way! I've been trying to find a real estate search engine that lets you search within a given radius (e.g. 30k) of a city, but have not much luck. What is everyone else doing? Cheers, TI will tackle this question because I have walked exactly the same path.
I don't do the statewide search anymore. I tend to have areas I am already interested in based on accumulated experience and constant reading of trends. I occasionally subscribe to the Ryder report as one example of getting an idea on areas to start looking. However, I haven't bought in an area he has recommended yet.
Specific mechanics of using your browser to search (I recommend firefox over IE);
1. In a second tab, have google maps ready. Very simple way to get the idea of a radius. You can see multiple suburbs at once.
2. In a third tab, have whereis.com.au ready. Great way to confirm and get a different view. Gives you a great way to see amenities, schools, hospitals, main roads, parks etc etc.
3. Have additional tabs open with the following;
investsmart.com.au (suburb profiles)
sqmresearch.com.au (vacancy rates)
rpdata and other sites you need for cross-referencing.In general for your searching;
– I spent many, many hours following 20 questions approach. After a while I found my own short cuts and my own way to do things that vastly cut down the search time.
– The other thing you find is that you get to know many, many areas all over Australia. At any one time, I have about 10-15 areas that I am keeping my eye on. Usually because the fundamentals of the area are great but I haven't found a specific place in the specific area I like yet that passes the detailed numbers test. Even after I find them and make an offer, someone is willing to pay more and my numbers don't stack up. Good for them, I just move on.
– Be patient. It is slow at first and requires lots of "dedicated study". Pay attention and keep your eye on the goal and you will get there.feel free to ask more questions, as I get time I am happy to share my thoughts.
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