Hey Everyone,
I am looking to purchase my first investment property in Perth (because i live here).
I am new at this and would love to get all advice as possible.
I can only afford to spend $200,000 – $400,000 and hopefully a area where someone will rent it.
Does anybody know where to invest that will make a really good capital gain?
I will be taking a mortgage out with my partner, together we earn about 70,000-80,000
Also after the property is bought and someone is renting it, do we sell the property when it's higher than we bought it for and use the profit to invest again and so forth, or do we keep paying off the mortgage and then use the rent as a income? (hence that will take 20-30 years to pay off the rent, so I wont be getting the benefits until i pay it off, right?).
Sorry if these seem like obvious questions, I am just new at this and would love all the help i can get.
Hi Tanh
Welcome aboard.
I think you need to take a step back and invest more time in educating yourself about property investing before jumping in.
Do some reading – there's heaps of good books out there as well as free resources like this forum.
After a few weeks you'll probably be able to answer your own questions.
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 tip Jamie.
But would you know any good suburbs I can look at for investment for about 200-400k?
depends on the terms good and what you are personally looking for.
Higher rents, more capital gains, future potential land development etc.
Saying you can only afford between 200-400K is a big difference.
Go see a broker and see what you can borrow as online calculators dont factor is many things.
This forums has a great source of info, I've nearly read every page!
Hi Thanh,
With all due respect you do need to step back and spend some time learning the ins and outs of property investing. Your questions indicate to me that you are a vulnerable position and could be sold anything by a smooth talking salesperson.
You indicate you are looking for capital growth – if this is the case then look for areas in Perth that have grand plans for infrastructure investment in place either by private holdings, state government or local government. This is a good place to start.
Once you have identified your suburb then look at proximity to schools, transport nodes, shopping centres, recreational facilities become important micro factors for an investor to look for.
Buying and selling is one way or realising profits for further investment. But buying and selling real estate incurs signifciant costs such as stamp duty, agents fees, capital gains tax and so on. These figures can heavily erode profits thus slowing your progress enormously.
Most investors tend to hang on and use the services of a broker to release equity for further investing. This process allows them to hold their properties while adding newer acquisitions to their portfolios.
If you want to buy in Perth and use rental income for retirement then you will need to wait a while, build your portfolio and/or pay down debt to realise this goal.
Hope this helps a little.
Thanks so much Dereck, After reading your post I am vulnerable and would probably bought a property without doing research.
I will do my research and talk to a broker about my borrowing power and I would take your advice "If you want to buy in Perth and use rental income for retirement then you will need to wait a while, build your portfolio and/or pay down debt to realize this goal."
But in saying this, (this is most probably a stupid question) but what is a portfolio and acquisitions?
But with this plan to work, that would mean i would have to pay off the mortgage before retiring and using the rent as an income right? so i would have to be patient and expect 20-30 years to pay the mortgages for this plan to be effective
Hi Thanh,
In many cases retiring on a single property is 'difficult'. For this reason some property investors build a portfolio of properties, that is they own more than one property. Some people also refer to each purchase as an acquisition – so it is just a phrase to describe each property purchase.
Some general statements coming up – so do not accept them as fully factual as exceptions can be found.
Rents in Perth generally hover around the 5 – 6% mark. At this rental return your property will not be paying for itself and you'll be required to put some money into meet your shortfall. On this basis alone it will take some time for your rental income to be sufficiently large enough for you to retire on rental income.
Without knowing the ins and outs of your circumstances it is difficult to provide any more clarity and direction for you.
But paying off the loan is one option – there are better options in my opinion.
Hi Thanh,
I have noted that Derek and others have pretty much answered your questions. Education is the Key to successful investment. I have 2 IPs in Perth in the Canning Vale area. The area grew rapidly the past 3-5 year but has now slowed down. Good research will give you an idea of which areas to invest in.
Before you buy, decide what type of property you need, the area you want and the potential market in that area.
Hope this will be helpful in your search.
EM
Thanks everyone for your help, I guess im just rushing into things like I always do..
Yes I will take this year to educate myself so i can minimize any potential mistakes.
Thanks again everyone
Hi there,
As I am in Perth I thought i would say hello. You could look at the spearwood area as a part of your research. part of the fun of investing for me has been in researching the actual properties available in a given area. The new developments in the close beachside suburbs give this area some good potential long term and there are people who work in the Henderson area that rent there.
Enjoy the process.
V
I don't think there is any issue in rushing in as long as you have performed your due diligence on the area before you do.
Check out the August edition of Australian Property as it had their top 100 suburbs around the Country.
Thee was from memory a few suburbs in the top 20 in WA.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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