Hi All
First post of a very green potential property investor.
I have been browsing the forum for a while now & must say the regular posters are very friendly, helpful & knowledgeable.
I recently looked at refinancing my property & have 60k of usable equity + another 15-20K of my own money so got to think about an investment property. I live & work on the Gold Coast.
I have been educating myself (some what) on the internet & through reading books (my four year old the property investor & from 0-130 in 3 years)
I have quickly come to the conclusion the it is easy to get lost afloat a sea of differing information.
I had a conversation with opencorp who are pushing negative geared new builds in the outskirts of of Bris, Melb & Sydney for a fee of 2% + what ever commission I assume they receive from the developers. I am open to paying for advice but want to be sure that advice is not motive driven or at least totally transperent.
I would love some direction / advice from the forum about education & information about where to start.
I want to build a portfolio with an initial strategy of buy & hold.
I am curious on the forums thoughts on the below…
Option 1
3/2/1 on 308sm under 10y
$370 current rent, potential purchase price 350k$1480 pm rent revenue
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$1200 repayments (interest only 4.4%)
$90 rates
$60 insurance
$120 property managerHow do these numbers look?
Is this property positively geared $30pm? With the addition of maintenance it would drop into negative.
There are two property’s on the same street currently advertised for rent at $410 & $420, only real difference is two car garage & minor cosmetic appearance to the front so I think there is room for a small rent increase but staying under $400.
This property in in a low capital growth suburb of Coomera, very close to the train station & construction starts on westfield this year.
It is in an aria of high density IPs. Further up the road (further away from the train & shopping centre) is the much nicer estates where the same size property’s are selling for 420-450k new. I am aware that there is a lot of land available & I wound never consider a new build.Option 2
Go close to Brisbane with a big loan, high LVR, pay LMI & be very negative geared but have better long term gains.
Option 3
I’m in no rush so open to suggestion?
Thanks
S
Hi Simon,
A few thoughts relating to your post – for your consideration:-
1. Good to see you having a go at presenting the “numbers”. You are off to a good start, as the numbers are what make or break any investment.I would keep looking, for these reasons:-
– Land 308m2 in an area of hi-density IP’s – the former kills any growth (give me bigger land) and the latter keeps you in competition with too many other landlords. Buy in Owner Occupied areas if poss.
– Rates and Ins both seem a bit low to me (those are Monthly figures, yeah?)
– Re positive geared, it seems line ball – depreciation might help the final figure somewhat, but I would want to do better than that first up. The first purchase can make or break, so be sure you get a good one.2. Simon>> “I am aware that there is a lot of land available & I wound never consider a new build.”
Good to hear – OTP’s can work well for Home Buyers (if they are the right OTP that is), but an investor needs to buy better…3. If you buy in your area (GC and even Brisbane) can you arrange, or handle yourself, cosmetic renovations? If so, I would suggest you look to doing something like that (i.e. you CREATE Equity Growth instead of WAITING for it).
4. I like your Option 3 – until you find something that screams out “I’m a bloody good deal”. Opportunities come along “just because” – some authors refer to the “3 D’s” of opportunities (death, divorce, or destitute) and if you are ready to take on work that others don’t want, and/or are “ready to go” with your finances, you can take advantage of such bargains.
5. Do check out your finances with a Broker, just to get inside information that can help you to be “ready”. You mention “usable equity” – and it is good to hear that you know there is such a beast. Have the Broker check your figures, and/or suggest other things that might help you.
6. Keep educating yourself. Look for areas that appeal (what about the Hinterland?) Can you get IP’s suitable for families with amenities nearby at better returns? Who IS your target renter anyway? Maybe NOT families? One area might suit senior cits, another families, another young professionals, etc. Look to structuring your “looking”. Use some ideas from the books you read to find a “way” that suits you.
7. Consider setting yourself up by paying to “fast-track” your education. e.g. look at the Property Apprentice course as a possibility. A few dollars spent now could set you up for life (assuming you were planning on having a portfolio of IPs, that is).
8. Reread Westnblue’s story in the “Big Picture for new investors” thread I sent you. Would something like that appeal?
Keep on reading, Simon, and looking, :)
Benny
Thanks Benny
Yes a broker has looked at my refinancing options & one lender has come back with a valuation giving me the 60K available funds. We are in a strong position to save some more $ over the coming months & are above average household earning so no issues obtaining finance. We are going to look at organising all this next Monday & work out time frames ect.
I have at least learned that throwing a deposit at the nearest negatively geared property is not a wise approach.
Thanks
S
Hi Simon,
Welcome aboard! 😎
Quick question: you said that you want to build a portfolio and have circa $80k to invest.
Let’s say you use that money to buy a CF- property. Then what? You wait until it goes up in value enough to be refinanced so you could buy another? That could take a very long time…
Ethan Timor | Aligned Finance Pty Ltd
http://www.alignedfinance.com.au/
Email Me | Phone MeActive Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)
Hi Ethan
Thanks For the Welcome.
“Then what? You wait until it goes up in value enough to be refinanced so you could buy another? That could take a very long time…”
I have actually been thinking about that very issue while looking at property’s over the last week, “Then what” is a very good question!
I have been spending a few hours each night digesting sales figures of different areas from the Gold coast, Logan & Brisbane while reading books, seeking info on the net & conversing with assorted “Advisers” & “Agents”.
Its remarkable how what “I think” a good investment is or would be has changed over the last two weeks.
This is my plan as of today.
I am looking for a + cash-flow property under market value that has opportunity to tidy it up with out requiring major work. I Work in Hotels but in my youth worked for builders, landscapers, painters & can throw up a fence. While not being a master of these trades I am handy enough.
I found one a few days ago that looked good on 700m2 in Loganlea that went to contract the same day I enquired.
I have just found another that has just come on the market, below market on 600m2, in my estate, It needs some love but it is just cosmetic from what I have seen externally (its probably 5-6 years old). Purchased for the right price it is instant equity in a area of owner occupiers & higher than average rental returns for the aria. That is, I guess, what I will patiently seek out.
My refinance is going to take some time to complete. So I am not Market ready just yet. There is no reason at all for there to be any issues with it. Is it too big a risk to submit a contract with small deposit & “Subject to finance” clause before the refinance is complete? I have an appointment with my broker on Monday where we will be looking at a loan through a different lender to finance the first Buy. I understand not to cross collateralise the property’s.
I also have some “value adding” work to do on my home. So I would be hoping to be ready to go again in 6-12 months.
I would love to hear some more feedback & advice.
Cheers
S
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This reply was modified 7 years, 10 months ago by
Simon.
Is there a point where you can have to much land on a IP, ie you just pay more rates for no more rental benefit? Or will appreciation of the land offset this?
I am looking at some property’s in Logan with 800 – 1100m2. Also can this be off putting to perspective tenants as the upkeep is a lot of work?
Thanks
S
Hey mate,
Totally agree that the step that needs to be taken, in order to avoid long waits for the market to raise the value of the IP, is to manufacture growth somehow (reno, subdivide etc). This creates very quick equity that you can use towards the next purchase 👍😎
No real risk to sign a conditional contract as you’ll get your deposit back if finance fell through, just make sure the wording of the finance clause etc is clear(!). Some vendors wouldn’t agree to a lower than 10% deposit but some will, bought a property recently and during the back and forth of the negotiations, I threw in a “ok, we could agree to that if the vendor agrees that we pay only 5% deposit”.
There are great networking groups in Sunshine Coast, Brisbane and GC led by Matt Jones. If one of them is close to you, I suggest going. There’s a GC one later this month, I plan on going, should be fun 👍😎
Reg Logan: can you do something with the land? Even if not, some tenants prefer more land (privacy, kids can play, garden etc), I guess it comes down to the quality of the property and the tenants prefs in that area. A local PM could be a great help with this matter 😊
Ethan Timor | Aligned Finance Pty Ltd
http://www.alignedfinance.com.au/
Email Me | Phone MeActive Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)
Thanks Ethan
I registered with the networking group & will keep an eye out.
I think I have narrowed down my search to a couple of the less desirable (or at least that’s the perception) suburbs in Logan. I will look to buy well with option to add value. I have found several property’s on good size blocks that are cash flow positive.
I am thinking “how is this going to get me into the next property” every time I look at one.
I will let you know how I go. The refinance is a longer process that I thought so I have had to cool the jets somewhat. This is a good thing, the longer I look & more information I take in the better I realize there is a lot of options out there.
Cheers
S
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This reply was modified 7 years, 10 months ago by
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