澳洲Australia property First time investor | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi,

I am just starting out, and looking to purchase an IP. Obviously there are many different options out there, however I was interested how other people started out, and what your thoughts are?

I ultimately want to build a portfolio of IP up over time, with the end goal to be financially independent.

I am considering 2 options.

1. Purchase a 2 bed unit in Syd for less then 500k. Live in for the first 6-12 months so I get first home owner benefits, and do a few renos to try and add value in that time.

2. Purchase a house & land package in the lower hunter or Central coast area for less than 400k.

Your insight would be appreciated.

Cheers  

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Hi Pickles,

Have you decided on an investing strategy ie negative gearing, cash flow positive properties etc? I think determining your strategy is one of the first things you should look at & this will then determine what sort of properties you'll look to purchase & where.

Regards,
M&M  

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How long do you want to keep working? What's your plan for retirement at this point?  

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RE: First time IP invester

Hi Guys,

Thanks for your reply. I guess I am still trying to work out what my strategy is. I have saved a reasonable deposit, and am am keen to do something with it, but a bit lost. I am unsure as to where to buy and what I should be looking to get out of my investment.

I am finding it difficult to work out how to make a long term plan work. any information you can share or websites you can direct me to would be great.

I'm sorry if this is a bit vague - i am just starting out. Do let me know if this isn't the place to be posting these types of things.:)

Cheers  

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hi Pickles,

Perhaps start reading up on cash flow properties versus capital gian properties...obviously both is the ideal, but this will give you a starting point.

These seem to be the 2 most obvious schools of thought for property investing.

There are a number of great books on both strategies so start reading :)

You will get a gut feeling for what is right for you.

Perhaps in the meantime you could consider putting your savings in a high earning (online?) account or into a managed fund?

Have a look at Rixter's threads on here & others who have thread titles like 'From 0 to 25 properties in 5 years' etc.

Regards,
M&M  

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Also worth to read the interview section on this forum:

http://www.somersoft.com/forums/forumdisplay.php?f=4

Lots of interviews with experienced investors who post here regularly.  

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Pickles_59 said: ↑
Hi Guys,

Thanks for your reply. I guess I am still trying to work out what my strategy is. I have saved a reasonable deposit, and am am keen to do something with it, but a bit lost. I am unsure as to where to buy and what I should be looking to get out of my investment.

I am finding it difficult to work out how to make a long term plan work. any information you can share or websites you can direct me to would be great.

I'm sorry if this is a bit vague - i am just starting out. Do let me know if this isn't the place to be posting these types of things.:)

CheersClick to expand...
mary&mat said: ↑
Have a look at Rixter's threads on here & others who have thread titles like 'From 0 to 25 properties in 5 years' etc.Click to expand...
Thanks M&M. Here you go Pickles_59. This post describes my chosen Investment Strategy that involves Villas & Townhouses.

The capital growth averaging (CGA) strategy I employ utilises a regular purchasing cycle similar to what Dollar Cost Averaging is to the share market. The major underlying principle to its success is it relies on your "time in" the market, NOT "timing" the market, and never never sell. So in other words it does not matter whether you buy at the top of a boom or at the bottom, just so long as you purchase good quality, well located property in high density areas ( metro area capital cities), at or below fair market value, on a regular basis as fast and as quickly as you can reasonably afford.

I've basically been purchasing an IP per year. Currently we're in our 10 year and to date we've built a multi $million property portfolio spread across Australia with another villa about to settle next Tuesday in Sydney.

We've been purchasing new or near new property over older style property for several reasons, the main ones being (in no particular order) -

1/ To maximise my Non-Cash Depreciative deductions
2/ To minimise my maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential vacancy rates
4/ Ask a higher rent - thereby Maximising yields

Without getting into the "which is better debate, houses or Units??", I prefer to purchase Townhouses & Villas with a 30% or greater land component thereby eliminating multi story units or high rise apartments, for several reasons. The mains ones being (in no particular order) -

1/ lower maintenance & upkeep for the tenant
2/ lower purchase or entry level into a Higher capital growth suburb area
3/ rapidly growing marketplace (starting both now & into the future) wanting these type properties. This is due the largest group of people to ever be born (being the Baby boomers and Empty nesters) starting to come into their retirement years. They will be wanting to downsize for the following main reasons - lifestyle & economic.
4/ greater tax advantages & effectiveness thus maximises cash flow.
5/ able to hold more individual properties spread across your portfolio - thereby minimising area over exposure risks by not holding all your eggs in only a few baskets, so to speak

I look to buy in areas with a historic Cap growth of 7%pa and/or are under gentrification. I look to where the Govt, Commercial, Retail, private sectors are injecting money. This ultimately beautifies and uplifts the area. People like the appearance / feel so move in creating demand.

I have found this lends very well if you are looking for short to medium term capital growth so as to leverage against to build your portfolio faster.

Getting back to CGA, as the name suggests it averages out the capital growth achieved on individual properties with in your portfolio throughout an entire property cycle, taking into account that property doubles in value every 7 - 10 years. Thats 7%pa compounding.

The easiest way to explain what Im meaning by this is to provide a basic example taking into account that all your portfolio cash flow will be serviced via Wages in the acquisition stage, Rental income, the Tax man, an LOC and/or Cashbond structure, and any other forms of income you have available.

For ease of calculation lets say we buy a property for $250k, so in 10 years its now worth $500k. Now lets say we do that each year for the next 7-10 years. Now you can quit the rat race.

So in year 11 ( 10 years since your 1st Ip) you have 250K equity in IP1 you can draw out (up to 80%) Tax free to fund your lifestyle or invest with. In year 12 you do exactly the same but instead of drawing it from IP1 you draw it from IP2. In year 13 you do the same to IP3, in year 14 to IP4, etc etc etc. You systematically go right through your portfolio year by year until you have redrawn from each property up to year 20.

So what do you do after you get year 20 I hear you say ?? hmmm..well thats where it all falls into a deep hole - You have to go get a JOB - nope only joking!

You simply go back to that first IP you purchased as its been 10 years since you drew upon it first time around and its now doubled in value ($1M) yet again - so you complete the entire cycle once again. Infact chances are you never drew each property up 80% lvr max , so not only have you got entire property cycle of growth to spend you still have what you left in it first time round that compounded big time. Now you wealth is compounding faster than you can spend it! What a problem to have.

Getting back to what I said in my opening paragraph about it does not matter where you buy within a property cycle just so long as you do buy, This is because you will not be wanting to draw upon it until 10 years later after its achieved a complete cycle of growth.

Well that’s the Basic Big Picture of CGA. Once set up & structured correctly it’s a self perpetuating source of tax free income indexed for life!

If you require any clarifications just ask.  

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