Hi,
Okay well, Im currently in my early 20's and Ive been thinking about investing my money into property for rather a few years. I now have some money to put into property. Im not here to make a quick buck, I want to think of property as a long term investment, and have a growing portfolio.
However, as normal, Im going to be starting at the bottom of the ladder. Is there anything wrong with purchasing a low value, run down, terraced house and starting there? and then working my way up the property ladder?
Any general advice would be greatly appreciated.
Wilko
Hi Wilko
Welcome to the forum.
Is property a good investment? I think you'll receive an overwhelming response of "yes" on a pro property investing website.
Starting off in your early 20's is ideal for property. As you've alluded to – it's a longer term investment so starting out early enables you to potentially enjoy a longer period of capital growth.
As for the actual property you're looking at. It's difficult to comment. You need to look at historical growth figures and identify key drivers that will continue to make this particular area a good investment into the future. Also look at comparable sales within the area, scope out the rental vacancy rates…..the list goes on and on.
Here's some handy websites that will help you with your research – http://www.passgo.com.au/property-data-websites.html
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]
It's not only a good investment, it can be a great way to generate money through value adding such as renovations.
Working your way up the ladder is the only way you are going to do it unless you can find someone to lift you higher up the ladder immediately? Perhaps inherit or marry into money? Otherwise start on the first rung and start climbing!
Sorry, said it before and I'll say it again – don't buy in dumps, but don't structure your entire portfolio on the hope of capital gains either – the world's changing – ALOT AND MORE BY THE YEAR – and cashflow (i.e. good rental properties) are the lowest risk you can take in real estate – money comes in today, fast, and without having to resort to gambling.
Go for capital gains and, well, hope you like keeping your fingers crossed for a decade or two.
Just my two bits.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Hi wilko,
As mentioned, you will find YES to be the resounding answer from most if not all here.
Take a step back and look at your options…….managed funds? Direct shares? Likely if you are very clever or lucky you may find the share option works but 'bricks 'n mortar; is a winner hands down in my opinion – and as long as you allow for the highish entry (thanks to stamp duty / govt tax) and exit costs you will do well if you buy with a little research, don't speculate too much, and mitigate your risks – including (no exceptions!!!) landlord insurance, and a good property manager.
People don't make money from saving $50 per week from their income.
The only ways you can make a 'lump sum' of profit and money are below:-
1. Capital gain on the sale of Real Estate
2. Capital gain on the sale of shares (similar to the next point)
3. Winning the lotto
4. A gift or inheritance, usually after someones death.
5. Buying and Selling lots of little things at a profit (art, vehicles, misc crud)
6. Stealing.So……what do you thing? Yep Real Estate is a winner
All the best with your journey
Cheers
Hey Wilko,
Property investing is relatively easy to understand compared to other forms such as a investing in the stock market. Just read a couple of good books, magazines and property forums and within a few months you should have a fairly solid understanding on the basics. The other thing you may find is that you really enjoy property investing and find it really interesting like many others on this forum.
A general piece of advise is to buy the best property that you can afford. If this is a run down terrace so be it – however if you can borrow more and afford a bigger property with another bedroom then buy this. Personally I would prefer to buy a good 600k property rather than 2x300k, although no doubt some people will disagree with this.
Spend the time to do your research so that your first buy is a good one and can hopefully set you up for a long and successful property portfolio.
All the best mate.
DamienHi Wilko
A rundown terrace sounds like a great start. Fix it up – add some value and get it revalued. If you've bought wisely – suburb research – and done your figures, ( renovation analysis spreadsheet) then the new value will see some good equity in the place and you've just made your first gain in property.
Start with what you can afford and move on up from there.
There's plenty of good reading here : Free Property InfoIan
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors … with a Sense of Humour.Damien Y wrote:Hey Wilko, Property investing is relatively easy to understand compared to other forms such as a investing in the stock market. Just read a couple of good books, magazines and property forums and within a few months you should have a fairly solid understanding on the basics. The other thing you may find is that you really enjoy property investing and find it really interesting like many others on this forum. A general piece of advise is to buy the best property that you can afford. If this is a run down terrace so be it – however if you can borrow more and afford a bigger property with another bedroom then buy this. Personally I would prefer to buy a good 600k property rather than 2x300k, although no doubt some people will disagree with this. Spend the time to do your research so that your first buy is a good one and can hopefully set you up for a long and successful property portfolio. All the best mate. DamienI'm one that would disagree with you.
If you buy the $600K property there's a big chance your portfolio will stop there (unless you have lots of disposable income).
Just the outgoings alone will limit you.
Talking average here (and of course there are places that vary). A friend has a $500K property that rents for $550 pw. 2 of my properties that cost less than $230K rent for $350 + $365. So I'm already in front $175pw (take away $30pw for extra rates etc). I see both areas as having good CG.You really need to take all the advice in and then sift through it to find what suits you. In the beginning I made the mistake f taking it all in and trying to get it all. I passed up a few good deals because of this. Find a strategy that suits YOU then go for it.
Hi Wilko,
Keep reading this forum.
don't rush yourself.
I personally believe property is a better option to make big money.
however, you really need to find the best strategy for your situation.
also be very careful there are a lot of spuikers and sharks out there !!!don't believe anyone, do your own number, only you understand yourself the best.
if someone's advice is not making sense, don't be afraid to walk away .
good luck
happy investing !While there are some good returns from real estate, be aware that there are of course some risks of real estate.
For instance, you must stay on top of your cash flow, especially when you are going to finance your property portfolio.
Catalyst wrote:Im one that would disagree with you.
If you buy the $600K property there's a big chance your portfolio will stop there (unless you have lots of disposable income).
Just the outgoings alone will limit you.
Talking average here (and of course there are places that vary). A friend has a $500K property that rents for $550 pw. 2 of my properties that cost less than $230K rent for $350 + $365. So I'm already in front $175pw (take away $30pw for extra rates etc). I see both areas as having good CG.You really need to take all the advice in and then sift through it to find what suits you. In the beginning I made the mistake f taking it all in and trying to get it all. I passed up a few good deals because of this. Find a strategy that suits YOU then go for it.
You make a very good point that you personally need to develop a strategy that suits your lifestyle, risk appetite and financial situation. If you have bought two cheaper properties with high rental yields and experiencing capital growth then great for you – you clearly researched your area well and it has paid off.
However I prefer to aim to buy properties within a close proximity to major cities where 230k cannot buy you another except studio apartments which I cannot see myself ever owning.
Give me a quality 600k property in a good location with a future development potential any day compared with 2 cheapies in a less desirable location further out.
The real wealth from property is created through CG not rental yields – so even though you may achieve a couple of hundred extra a week in the long run this doesn’t amount to much, investing in areas for the highest capital growth is my choice. Unless you need this extra money to continue your serviceability – this is a different story. As Cat has mentioned you do not want to buy a property that you will not be able to afford repayments and continue to build your cash up for further purchases. I still feel 5-6% yield as well as contributions from your salary you can build this way – not to mention borrowing against the equity of your property once you have experienced some capital growth.
Even though I expect we will not see the levels of CG from the past in the short to medium term – my outlook is the long term. 20 years +
As a general rule I will look for areas with expected CG over the medium to long term with a rental yield of 5-6%. Anything above this yield is most likely to be in regional and/or mining town.
Sure some CG can follow rental yields increasing but again this is not enough justification to believe significant CG will follow.
I am a fan of borrowing as much as the bank will loan you and you are comfortable with – do your research and buy a quality property where you can expect significant capital growth in 5-10 years (with enough of a cash buffer in an 100% offset account for the unforeseen).
As Cat has mentioned, make your own decision as either one or even both of us can be completely wrong on this topic – it is just our opinions.
All the best
Hi Damien you are correct that CG is essential but I don't aspire to the old notion of Yield OR CG.
Nor do I have "hope" as a strategy. I'm to impatient (and getting too old) to wait for Cg so I make my own. I buy under value, reno and in doing so create 20% increase in equity in a month and increase yield to 8-9%. So I have good equity (to withdraw for the next purchase) and my deals are CF neutral (at worst). If the purchase doesn't put me closer to my goal (increased equity AND cash flow) I don't buy it. I want to retire VERY soon.
A $600K purchase would have to have equity potential or development potential for me to consider it. Losing money each year while hoping for CG is not my strategy. Mines working for me but it's not for everyone.
But as we both said. Everyone needs their own strategy.
Agreed.
You seem to have a clear strategy of your own and appears to be working well for you.
So I wish you all the best and hope that you can achieve your retirement goal ASAP
A mix of CG and cash flow is the best strategy for me. Thats my personal opinion
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