Hi everyone!
I've been watching this forum for a while now, and I have some questions. I've known that this is what I want to do for some time, and thought it would be a good idea to bounce ideas off some of you guys to learn a bit more and get more of an idea about where to start.
Here's my plan: I've been saving up for a little bit (I have about 15k in the bank), and I thought it would be a good idea to get a full time job after I finish school (end of next year), take out a loan after I've saved some more, and buy a solidly built, but kind of run down property in an area like Goulburn, Bathurst, etc that I could fix up. Then, renovate, sell (hopefully for a profit!), and work my way up from there.
From what I've read, it's all about starting small and building a good credit history with the banks to gain their trust, but I may be wrong here.
What does everyone think of this? Are there any really major flaws in what I'm thinking? Obviously, while I've read quite a lot, I probably still have pretty much no idea of what I'm talking about, so any advice would be much appreciated
Thanks!
I would suggest that you should get a job in the industry and learn as much as you can. Just reading will not be enough. After a while experience will often provide you with the answers. What I would suggest is firstly pin point and area then get to know the values like the back of your hand. Once you have done this then you at least understand the values.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Thanks for your reply. 2 out of 4 members of my family work in real estate already (as agents) so I have the means to access professionals in the area and talk to them about where I'm going.
When you say working in the industry, do you mean anything relevant to property development, or specifically within a property development company?
Thanks again for your help!
There's an old saying and it kind of relates to newbies who are sometimes overawed by the shear amount of knowledge they need to acquire to become functional at investing.
How do you eat an elephant? One mouthful at a time.
Start small and simple. Your first reno should be a simple facelift. Paint, clean, tidy yard, fittings and fixtures, maybe a door or two… basically simple stuff. You're first investment should be simple and straightforward enough to walk you through the process.
This is where you begin to establish relationships with brokers, accountant, mentor(optional) and legal. These relationships will the form the hub of your investment team and picking the right people ensures your team is already seeded with substantial intellectual capital.
Of all the investments you ever make in life the most important will be in these people.
From there you build slowly. And who knows. In 5 years you might be another young Engelo Rumora.
Hello CCMaxwell,
I would suggest running around a couple of open homes with your dad and getting an idea of what works and what doesnt. The most important thing will be of course .. understanding what makes a genuinely nice kitchen .. and a genuinely nice bathroom. Outside of that its knowing when people have spent too much for a result .. and when they have underspent to achieve the desired result.
This doesnt happen overnight. It will take looking at many properties before you start seeing every issue that can occur .. or every problem that will at first not be apparent. Gain that experience and stop your development from being a dud.
Gain work experience from builders. Get an idea of what sort of products can be purchased and at what sort of price. Get the numbers for construction into your head so you can literally walk out onto a blank canvas and map out a solution in your head.
Walk through floorplans in open homes (this is what i was referring to before). Notice renovation trends .. materials used .. why one carpet makes a property look cheap .. another may work for presentation and sale .. and another will attract a live-in owner.
The idea is at the end of all this .. you can do half of the figures onsite .. or punch up what you need on a spreadsheet.
Banks love preparedness when it comes to development. They like to see developers who know their stuff and have a track record of proving it. That last part may take a bit of thinking as how to create a body of proof. Once you have it however .. they deal with you a lot easier.
Hi, thanks for your reply. Would you say that the best way to get an idea of construction costs is to talk to the builders/construction workers themselves? Are there any other ways to research this as well as how you mentioned, so that I can explore multiple avenues?
Again, thanks for your help.
if you have a passion for property development go and knock on some doors tell them what you want to do ask if you can attend meeting hang around, maybe do odd jobs. If people see your passion they will give you a go..
Do not let anyone tell you that you cannot achieve your dreams.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Goulburn is a great area to get started – go returns and properties with good scope for CG.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Get a trade, or university/tafe qualification in project management, construction or building etc
Work towards getting a building license. The sooner you get one of the them the better off you will be as a property developer if you know the building and construction side and are licensed to supervise works. Because not only will you be able to do your own work, you'll have other people, other investors who once they see your success will want in. You will have something they want and that is the knowledge of how to build and develop property cost effectively.
Your old enough to do a cert 4 of building and construction in Tafe could be a good start.
And then save as much money as you can. Put yourself a goal perhaps 50k by 18.
16 i think that is an excellent starting age but remember you need to be 18 before you can legally enter into a Contract.
I purchased my first property and 18 and have never looked back.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:16 i think that is an excellent starting age but remember you need to be 18 before you can legally enter into a Contract.I purchased my first property and 18 and have never looked back.
Cheers
Yours in Finance
Actually kids can enter contracts before 18 under a number of circumstances such as if they will benefit from the transaction. There is legislation on this. I forget the name of the act now, but state based..
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
First, good job on saving money at your age! Second, when you graduate try to get a job in Real Estate Market. Go to school to get a business degree or anything related to Property Investing. Attend conferences, seminars, read books and I am sure you will be successful in PI. Good luck!
I think that I can get a loan if I have a beneficiary (e.g. Parents) who will enter into it with me as they have assets that will cover the cost of the loan if I go bust and cant pay my repayments. This is because, as a minor, I technically don't know what a contract means when I sign it and am unaware of the repercussions if I cannot fulfill it, so the bank can't ping me if I cant repay the money, hence the beneficiary who can pay.
While I'm sure my parents would be supportive, I wouldn't ever ask to do this because it would put them in an uncomfortable financial situation if I didn't succeed. I would much rather wait until I am 18, saving up money in the meantime and banking more and more knowledge so that I can provide myself with a better chance of success.
CCMaxwell, I respect your decision to wait. Am in the same boat as you now. Let us spend the next one or two years learning more and we will get that first investment property through a well-informed decision. Cheers.
How old are you? I'm currently 17 and its good to see young people like myself all so motivated about setting themselves up for the future !
To the op, i think it would be good for the next 2-3 yrs to just do as much research as possible, knowledge is power. You will be more confident and additionally have a bigger deposit to use.
That's a good call. I just took up a second job, so hopefully by the time I need it I will have a decent sized deposit to use, maybe with some left over.
I agree, it's great to find some other people who are in the same boat as me. Do you have any idea as to where you would like to start?
I would like to start when I'm 20-21, although I'm not sure if i could get finance without a guarantor as I would still be attending uni studying Commerce and completing a accounting cadetship simultaneously. Most probably 22, starting small and finding a positive cash flow property and then repeating a few times. When I'm more experienced I would like to do developing such as townhouses, units etc but for now I'm just focusing on learning as much as I possibly can and having a good sized deposit.
Yeah, same sort of thing here. I would like to get out of school and then start off with small run down places and flip them, then, after I've saved enough cash, move up to townhouses/units, and then eventually all the way to apartment complexes and what not.
I've researched a lot into Harry Triguboff, and how he got started, and it is a very similar concept, save for the fact that he had some money to start with, as he was older, so he started right off the bat with small apartment buildings.
CC i admire your enthusiasm as i mentioned earlier but hate to say financing has changed a lot since HT's days.
2013 is not conducive to flipping cheap properties with minimal deposit because of some of the entry, exit and ongoing costs.
Then you have the potential issue that it will be considered as trading income and not CGT so do your research throughly.
Don't let this put you off but read carefully and learn from others.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
