Hi there,
First time poster!
Some background, I just turned 26, I live in Sydney, and I'm about to propose to my beautiful girlfriend sometime this week (I'm 99.9% sure she's not gonna see this lol). I have saved about 85k for property investing so I can build a financially secure future for us 8-10 years from now. My current job has a gross annual income of 160k.
I've read some books on both positive cashflow and negative cashflow property strategies (Steve Mcknight vs Michael Yardney) and I feel as though I would probably would like to buy a mixture of both kinds of properties in the future because I like both strategies.
I started to research suburbs in Sydney for both CF+ and CG+ and obviously as most of you know that it's almost impossible to find both. I'm also noticing Median Growth figures which give you the 12 month figures and 24 month figures etc
My biggest question at the moment is, do I buy in areas that have dropped in median price over 24 months or increased?
I know investors say "you make your money in the downturn" and I also know there's much more to research than price movements (like infrastructure, accessibility etc) but in general what have you guys found regarding price movements and rental yield figures?
I'm also looking to set up a trust so I can structure my future investments in the most efficient way before I buy anything, or is this overkill? I do have the income to support this so it could be a good idea and I've seen too many ppl get sued and have not protected themselves with correct asset structures etc
Also, if anyone knows a very good investment minded finance broker in Sydney, can you please refer me?
I'm sure I'll have MANY more questions in the future and hope I can get a helping hand. Thanks for any help and merry xmas!
To answer your question about rising or falling median prices you will need to do your research. Why did the median rise/fall? Was there significant levels of development in an area ie large land release/ several apartment developments built/brought to market/completed? How did the number of properties brought to market this year compare to previous years?
Why do these basic questions matter? It is easy to believe that a suburb is growing and you are achieving capital growth because the median is increasing however all it is reflecting is that several new developments have hit the market and additional higher priced (newer stock) has been sold. Conversely, a falling market may be symptomatic of less newly constructed stock and a return to older or stable stock being sold.
SO when you analyse the market, investigate it first ie are there several ie are certain streets/areas unproportionately represented in the complete sales numbers? Then disregard these sales if they are of like properties which do not conform to the median property you are looking at eg 2 bedroom 1970's houses vs 3/4 bed recently built houses.
The median is just one analyst's take on the sales, it is up to you to develop your own model to suit your investing style.
Interesting, great advice regarding median prices and what they represent. Will keep this in mind! Thanks Scott
Does anyone have answers to my other questions?
Personally for my capital growth properties- i prefer to invest in the dip of an upwards market, meaning not the bottom as such as it's hard to predict where the "bottom" really falls…so i rather invest when the market start to pick up and increase = instant capital growth = equity.
Regarding trust, it will depend on your personal circumstances and the property in question, generally speaking if it's your first IP i would say buy it under your personal name and reap some of the tax benefits + it will allow you to understand and appreciate the investing process more efficiently.
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sanasar, based on your post I can see alot of academic education. You need to get out more, mix with agents, other investors and get a feel of the market. No book will teach you this. Do not get me wrong, I do read few as well
Basically, its like any other business, you try and see IF you can be good at it. Most will fail, very few will prosper.
From the question you are asking, I will conclude that you are better not to part with your hard saved $$$ just yet. Opportunities are out there, investors are purchasing. It's just that you need to know what are you looking for.
No property on the market is truly CF+, even when advertised so as 6-7% rental return. You are actually starting to brake even from over 8% (depending on prop type) when consider day-to-day expenses and property maintenance. You need to make it CF+, here comes the art.
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