All Topics / Help Needed! / Beginner Investor

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  • Profile photo of dkb87dkb87
    Member
    @dkb87
    Join Date: 2010
    Post Count: 25

    Hi everyone,

    My name is Daniel and I am 24 years old and I am very eager and motivated to learn as much as I can about property investment. I do not like the idea of having to work until the age of 65 and would love to be earning passive income so I can take back control of my time and enjoy life as we only live once. I have nearly finished reading Steve's 0-130 properties and its the first book I have read regarding property investment and its absolutely fantastic! It has really opened the door for me to show there are other ways of making (more) money apart from working.

    I do not own any property investments yet and have not even bought my first house yet. My partner and I are contemplating buying our first home as an investment but we are seeking professional advice on this. I was wondering if anyone could share their ideas about what a good strategy might be as a starting point for a beginner investor such as myself? Any feedback would be much appreciated!

    Thanks in advance,
    Daniel.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Daniel

    Welcome to the forum.

    It's an exciting time. I'd continue to learn – read books and frequent free forums like this one.

    Who's providing the professional advice about your first purchase?

    Personally, I have a preference towards buying the first property as an owner occupied. That way, you get to take advantage of the Government incentives. Also, if you purchase a property that's in need of basic, cosmetic renovations then you can start working on your new home while living in it. Once completed, have it revalued and hopefully you'll have some new equity to tap into and purchase your first IP.

    I also wouldn't wait around saving a 20% deposit to avoid LMI. I write about using LMI to your advantage here

    Just my two cents – hope it helps.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Jins13Jins13
    Participant
    @jins13
    Join Date: 2008
    Post Count: 36

    Of course people would say to you also to live at home with parents as long as you can to save for your principal or IP. I agree with Jaime as it means you would entitled to the first home owners grant if you live in it for the first 6 months of the 12 month period. Also, until end of this year stamp duty concession for exisiting homes.

    The first place wouldnt be the dream home but an opprotunity to have your foot in the door.

    I would also look at areas outside of sydney as well if you live in NSW as some areas have alot of instructure being build and may be a blooming area in years to come. For example I laughed years ago when people told me to consider Wollongong and this year when i went there, I was amazed with all the development in the area. I know one friend who is considering the Musslebrook area.  

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Hi Daniel, welcome.
     Jamie makes a good point for your first purchase being you home (PPOR)  as there are certainly advantages. If you can improve and add value that's a great one as there is no capital gains tax (CGT).
     Financially wise it can also be better to buy an investment and rent.
    Depending where you want to live, the rents may be low compared to purchase price. If you buy in a different area (with a high yield) this can reduce your weekly outlay. Every case is of course different and you need to look at your personal situation and preferences.

     What do you mean by "seeking professional advice"? Be careful as there are LOADS of people out to make money on newby investors such as yourself. Keep reading and asking questions here. There is a wealth of knowledge here and people are giving of their time and experience. If you are not sure of something or a company etc just ask.
    Best of luck.

    Profile photo of dkb87dkb87
    Member
    @dkb87
    Join Date: 2010
    Post Count: 25

    Thanks for the advice guys, I will keep doing more research into it to see what the best decision is for us. Regarding professional advice we are seeking, it is from a trusted source whom I have know for quite some time so I am confident in this person giving us the right advice. However I will certainly turn to this forum for additional advice and opinions regarding property investment as I agree there is a wealth of knowledge and experience in here that is very valuable to someone new to the game such as myself.

    Cheers,
    Daniel.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Hi Daniel

    Be sure that your trusted source is actually walking the walk and not talking the talk.  In other words, you want to be getting advice from people who are already doing what you hope to do…. and are doing so successfully.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of dkb87dkb87
    Member
    @dkb87
    Join Date: 2010
    Post Count: 25

    Hi JacM,

    Thanks for your comments, I know they are active investors who have been doing it successfully so I feel I am getting the right information but I will keep doing my own research too.

    Thanks,
    Daniel

    Profile photo of mattstamattsta
    Participant
    @mattsta
    Join Date: 2011
    Post Count: 604

    I'd also suggest to have your first purchase as an owner occupied home – make it your PPOR for a few months or years, and take advantage of the first home owners incentives. Then go from there to buy more investment properties.

    This is what I'm doing for my own strategy. In terms of location, I was originally planning to buy a first home in the eastern suburbs of sydney (for the lifestyle, etc), but recently, due to the affordability of western suburbs and the fact that I can work from home, I am leaned towards buying out west.

    Profile photo of dkb87dkb87
    Member
    @dkb87
    Join Date: 2010
    Post Count: 25

    Does anyone think that its possible to purchase 2 investment properties with 5% deposit each, based on two 400k homes and a total of 45k savings in the bank? How much do closing costs usually end up amounting to? I would qualitfy for FHOG too if i chose to live in one of the properties, which means I would have an extra 7k to add to the 45k right? Sorry if this sounds like a silly question, just wondering if I could potentially do that instead of purchasing just one property with a higher deposit.

    Thanks in advance,
    Daniel.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Daniel

    Hate to say NO not quiet.

    Assume you live in the first property so get $7K to add to your savings which makes $52K

    $400,000 x 5% = $20,000 (Assume you managed to get the Mortgage Insurance capitalised on the first deal you are still going to have your own Solicitors costs, maybe bank application fee etc, mortgage registration, discharge and Title search. Assume $1500.

    So you have spent $21,500.

    Second time round depending on the State you are buying you will have Stamp Duty and all of the above. 
    Unless you Credit score up unlikely to get LMI capitalised a second time so you will have the same costs as above plus LMI and State Stamp Duty.

    I would make sure your mortgage broker is careful in using different lenders so that you split your LMI exposure.

    Cheers

    Yours in Finance

     

    Richard Taylor | Australia's leading private lender

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi there,

    Here's a couple of suggestions:

    1. Play Monopoly and Kiyosaki's Cashflow games. Play for fun, but also look at various strategies.

    2. Attend property networking events. Check out http://www.propertymeeting.com.au to see if there is one near you.

    3. Try to make my next live get together in March next year, if you can.

    In regards to a strategy, I still believe starting cheap and learning with a regional positive cashflow deal is smart. You may not make a lot of money, but you will learn a bundle.

    Good on you for trying!

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of dkb87dkb87
    Member
    @dkb87
    Join Date: 2010
    Post Count: 25

    Thanks Richard and thanks Steve, now I know more of the costs involved!

    Hopefully I can purchase my first and then my 2nd one not too long after :)

    Cheers,
    Daniel.

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