Hi my name is EJ,
For the past months I have been researching and reading up on strategies on how I can secure my first IP. I am a newbie and am currently reading through Steve’s book.
Right now it seem that taking the opportunity to use government incentives as a first home buyer with an investment mindset is a good approach. This means that I will have the property as my primary residence for 6 months before being able to rent it out. I have been looking and many different approaches and I wanted to ask for some advice. On if there is another approach or direction I can take.
Right now I am still going to different areas around Brisbane, Ipswich and Logan areas so I can gain more understanding and to loose a bit of the first property buying emotions. I want to secure a property/land before August.
I have set a budget of 400k and I am looking at newer houses (for depreciation benefits) or land to build. I am open to locations in NSW and VIC as I have seen the capital growth potential in some areas in these states. However, I have been analysing QLD primarily – in particularly Brisbane’s southwest. I don’t know if it is feasible to do a duplex build with my current budget which is why for the first IP I am currently looking at residential homes. The second IP will most definitely be a duplex which I aim to develop within 2 years of my first using equity and so on.
The approach with finance will be a 90% LVR as I am looking for locations with capital growth potential and cash flow. I would really like to know whether this strategy has potential and if there are some other factors that I should also be considering.
Hi Onex,
After reading your opening post, my first thought was to advise a bit of caution. This post (linked below) from a few years back shows why I wanted to do that for you. https://www.propertyinvesting.com/topic/5027637-need-advice-with-regards-to-property-investment-in-noble-park/#post-5027647
Now, I realise you may not be looking for a 1 bedder, but (as you had asked) there are MANY ways to go in property investing, and choosing which path suits your purpose is the first thing to decide. As I pointed out in that link, do go reading in the Training Centre – one topic that is in my mind relates to buying OTP. Developing is one thing, but buying without even seeing a finished product is fraught with danger, and can cruel any chances of Capital growth perhaps for several years. So, softly, softly !
The idea of having your first buy as a PPOR has some merit – if your lifestyle can handle that, it can pay dividends down the track. Other ideas come from other folk’s stories. e,g, did you check out Westnblue’s story in the link I sent you in the Welcome PM? His story could provide some worthwhile ideas for you. Check it out here – https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697977
Could you do something like that? i.e. buy, reno, hold, re-finance, repeat? And his purchases were low-end where he could add the most value. If you instead bought new, your capital growth could likely be stagnant for some years. Depreciation/tax benefits don’t help that much in reality. Better to be paid each week for an investment rather than negative gear.
You appear to be quite sensible in checking out markets to get exposure to the possibilities, and Logan and Ipswich can certainly provide lower-cost entry.
Do also check out Ian Ugarte’s “HMO” style of investing – where one house provides accom for more than one group, thus more than one income. With the rise in divorces etc, there are many more single-party households these days, and many of them would prefer a lower rent for part of a house rather than renting a full 3 or 4 bedder that they can’t use, and even can’t afford. That option is worth a look too.
Anyway, there are a few thoughts to ponder. Welcome to this place, and I hope others also step in to add their side of the story for your consideration,
Benny
Thank you Benny,
From your response and looking into those other posts I now realise there are many options I could take. I was recently listening to a podcast and one of the things mentioned was for a property to be an investment grade property there should be land scarcity in the location as well as demand. I think I will now have to do my own analysis to determine if I will be able to go in the Reno direction.
As renovations are one way to add equity it is now an option I will consider. This was the reason I was also planning to build a duplex in the next stage of my investment journey. However, by going in the Reno direction would there be any resources you can suggest to better understand the approachs when renovating? And where can I find Ian Ugarte’s “HMO” style of investing¿
The only thing that kept me from looking down that direction was that you lose out on receiving the government incentives from my understanding. However, I am open to explore if Reno option is suitable for my situation. I will be sure to reach out to some MB’s as so far I have only been in contact with some major and minor lenders to determine my borrowing capacity which the highest was around 370k. I want to start with a positive geared property so that is some great suggestions you’ve provided.
Cheers,
EJ
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