Hey fellow property investors!
I just wanted to know what are your thoughts are for my options I have for property investing.
I am considering purchasing my first investment property in Melbourne in Wyndam Vale because of the developing infrastructure and amenities. But I am also contemplating on refinancing my parent’s property and investing overseas in the US because of the prices there is an absolute bargain with high yield, but contains more risk. I may settle for a stable property market in Melbourne, and later borrow against that and invest in the US.
What are you thoughts?
Thanks,
Michael.Depends on your risk tolerance and if you can “afford” to take that sort of risk.
Do you have stable job? cash buffer? family and financial backing/support? and do you have experience etc…
It’s like riding a bike, As a rider for the first time, you may want to spend a bit more and buy some training wheels ( 4 wheels) yes it’s more expensive but it’s safe and you get to “learn”…..But if instead if you wanted to go in the deep end and take the risk and ride the 2-wheel bike, without “help” or support or knowledge you can trust- you will most likely fall, get hurt and fail.
Not sure if that made sense lol…
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Remember there is a reason why high yields look like a bargain.
Why not as Michael mentioned start small and invest in Oz to start with.
At least that way you will protect your parents equity.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I'll weigh in and say get your own equity to gamble with. Leave Mum and Dad alone.
Michael,
Being an investor in both overseas and local markets i will tell you the first bit is to do your groundwork. Even for me .. the first time i crossed borders .. the conditions of occupancy .. the statements of management and the expenses varied terribly from state to state.
Each area … each investment must be first assessed on merits … then understood on conditions in the legal market for the property concerned. I am sure most investors are not aware that in some US states .. they have invoked property seizure through eminent domain for consistantly negligent (or SEEN to be negligent) landlords. In other words .. unless you have a property manager that is competent and on the ball .. with the local legislation and compliance requirements .. overseas investing can become quite a headache. You MUST know what you are doing !!!
I might suggest you learn your local markets first before you graduate to taking on other propositions. Managing a property remotely can become quite a task unless you have competent people doing what they are paid to do. Even locally i'm constantly finding that a good property manager is replaced with an average property manager and all of a sudden a couple of my properties head into neglect. You must run your properties like a business and keep hawkeyed on what goes on. If you arent in charge .. chances are .. someone else isnt either.
In addition to the above, when you're looking at investment property, consider also the vacancy rates in the area of your interest. Check SQMresearch for more info. Vacancy rates at Wyndham Vale are currently sitting at 10.6%, a little too high for my liking.
Thanks for that information guys!
I can either:
1) use the 30k on my personal loan paying 14% and buy real estate in the US that offers 18% return and risk 30k only.
Or,
2) purchase a property in Australia under a secured loan paying 6% on a larger loan, then later build some equity and some capital growth (hopefully) and refinance further to invest in the US and make 18% on with my 6% home loan.
If anyone wants to shoot me with other ideas and suggestions your more than welcome too!
Thanks guys for commenting, it has helped me heaps.
SHales wrote:I'll weigh in and say get your own equity to gamble with. Leave Mum and Dad alone.I agree with this one million percent. The stress of having their home sunk bank into debt would probably kill them.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Michael_Cao wrote:Thanks for that information guys!I can either:
1) use the 30k on my personal loan paying 14% and buy real estate in the US that offers 18% return and risk 30k only.
Or,
2)
Don’t do that. No way would you invest with a loan of 14%.
Paying down your personal loan would be the best advice, it’s effectively a return of 14% risk free.
Hi Michael,
I can't say that it has not crossed my mind to refinance my parents' home and do some investing that way (afterall, I know another couple who have done that and did VERY well for themselves purchasing over 50+ properties in 5 years and are now both financially free).
However, I just couldn't bring myself to entertain that option any further, the risk is too high for my parents who are heading towards retirement….and given my lack of investing knowledge – it's just a bad combination for now.
Right now, I'm focussing on something small for now and being a little more conservative I guess.
From what I can tell when you are starting out, you need to build some capital.
So my current plan is to do some in USA (for +ve cash flow) and will be doing some developments back here in Australia for capital.
I haven't actually physically done any purchasing as yet…..but I do think the strategy and goal setting is imperative and time should be spent on getting those solid first.Cheers, K
Hi Michael,
I'm not against investing in the USA!
I invest there myself.
BUT if you are not very well informed of the costs, risks etc, you stand to lose your parents house for them, as they get ready to retire. Have you even considered what happens if the AUD/USD exchange rate moves against you? Do you know what your accounting costs will be in USA, is it worth investing to buy one $30K investment property there? No, not in my opinion.
DANGER!Pay down any debts, save some money and invest at your own risk, for your own benefit.
You are young and can risk taking a loss (which may or may not ever happen).
But how would you feel if your parents had to sell the house because it didn't work?Please think twice.
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