澳洲Australia property Young, keen investor looking for advice!


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


Hey guys,

A few of the guys at work have been telling me about the wonders of IP's and how to do it. I'm just under 20, and able to aquire funds of around $460k. I live in Gladstone, QLD, so I want to get in before the prices rise too far and I can't afford anything. The whole concept really interests me, and I'm very keen to succeed. I've read a book by Bradley J. Sugars (Real Money Real Estate) and am about to start on a book by Margaret Lomas (Building Wealth IIRC?).

As a newbie, I'm still about vague on a few things, for instance; If I were to purchase a house now for $430k, and in say, 5 years, when the market collapses, is the equity still there on that house that I achieved over the five years? Also, if I start renting it out at $500 p/w, and then when the market starts to come down again, drop to say $300 p/w, how do I afford to keep that property? I've had a read of afew of the Gladstone threads on this forum, as well as the "Beginner" threads, but these questions still remain. I'm looking to get my first house as an IP on interest only. It'll be great at the start, as I'll be able to rent it without any worries, for now. However it's what happens in the future when the market comes down is what I'm not sure about. Tell me even the most basic things, I want to learn as much as I can from successful investors like yourselves.

Thanks heaps guys, I look forward to the replys.

Barletta  

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If the property is worth more than $430k in 5 years then you have equity, if it is worth less then you haven't gained any. You have to take into account any holding costs over those 5 years as well as any buying/selling costs and associated taxes.

If your rent drops by half then you need to cover the costs out of your own pocket.

If you are sure that the market will crash then what is the point of buying now? Would you give me $100 and an additional $5 year if I told you that I will only pay you back $60 in 5 years time?

Do some more reading and work out a strategy, mine is based on much longer than 5 years :)  

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BuildingBlocks said: ↑
If you are sure that the market will crash then what is the point of buying now? Would you give me $100 and an additional $5 year if I told you that I will only pay you back $60 in 5 years time?Click to expand...
Damn, I hate how you make so much sense haha. I won't be holding onto the house for 5 years, I just plucked that number out of my head, sorry. There's a $60 billion expansion/construction that has just started up here, so there's a massive flux of workers etc coming to town, hence prices going up. I'm not sure if the market will crash, or just go back to how it used to be, but if I can buy a house now, and just keep it basically forever, the equity shall build up (whether its next year, or in 10 years, it WILL) and I'll be able to use that equity to obtain yet another house. I'm pretty sure that's the general idea isn't it?.

It's crazy right now, companies paying up and possibly even above $500 p/w rent for a 2 bedroom unit! (with aircon)  

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So you are considering a buy and hold strategy. Now you need to consider where to buy. Are you wanting high returns in the form of rental income or are you more focused on capital gains? Houses, Units, Commercial? If investing in residential in a boom area (such as mining) how long will the investment be profitable, and what will happen if the company builds accommodation?

Some people are predicting a market collapse. Given that they have been predicting it for a couple of years one day they will be right.

Regards

Andrew  

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Bargain Hunter said: ↑
So you are considering a buy and hold strategy. Now you need to consider where to buy. Are you wanting high returns in the form of rental income or are you more focused on capital gains? Houses, Units, Commercial? If investing in residential in a boom area (such as mining) how long will the investment be profitable, and what will happen if the company builds accommodation?

Some people are predicting a market collapse. Given that they have been predicting it for a couple of years one day they will be right.

Regards

AndrewClick to expand...
I find it very unlikely a new-comer would consider buying commercial property  

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Yeah, well see those are the types of questions that I don't know how to answer. I try to tell my parents about this, but they won't listen to me, which makes it all the more difficult. If I bought today (the beginning of the boom) and held onto it, renting it out for amazing amounts of rent, then the tell-tale signs of a collapse/decrease in the market started appearing years later, do I sell and get out, or just hold onto it? My parents ask me all the 'what ifs?'(eg. what happens when you don't have tennants?? I say: if you manage it properly, that won't happen) yet they're still convinced that I'll lose all of my money..  

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Barletta said: ↑
My parents ask me all the 'what ifs?'(eg. what happens when you don't have tennants?? I say: if you manage it properly, that won't happen) yet they're still convinced that I'll lose all of my money..Click to expand...
Hi and Welcome

Im one of the first to say LISTEN TO your parents when talking to my teens and trying to convince them of the obvious.

My hugely succesfyl buisness mentors have always suggested to take guidance from those who are succesful in what you are trying to achieve.

If you parents are succesful property investors, of have generated financial wealth and/ pr residual income via other means, they may well be worth listening to and learning from.

If however, they havent achieved what yu want, its hard to take their advice beyond them trying to protect you from THEIR unknowns, a logical and honrourable thing

ta
rolf  

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Barletta said: ↑
I'm just under 20, and able to aquire funds of around $460k.Click to expand...
I am no expert and I am just really starting my own property journey but I will mention 2 things

1 - just because you are able to access $X doesnt mean you should. Start small, start safe and work with a big safety margin

2 - eggs and baskets. For me I would much prefer to have 2 x $200k investments than 1 $400k investment. Thats a pretty big generalization I know, but if all your $$$ are tied up in 1 property then you are heavily exposed if something goes badly wrong with that property.

Whatever you decide to do good luck with it, do the research do the math and enjoy the ride :)  

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Barletta said: ↑
Hey guys,

A few of the guys at work have been telling me about the wonders of IP's and how to do it. I'm just under 20, and able to aquire funds of around $460k. I live in Gladstone, QLD, so I want to get in before the prices rise too far and I can't afford anything. The whole concept really interests me, and I'm very keen to succeed. I've read a book by Bradley J. Sugars (Real Money Real Estate) and am about to start on a book by Margaret Lomas (Building Wealth IIRC?).

As a newbie, I'm still about vague on a few things, for instance; If I were to purchase a house now for $430k, and in say, 5 years, when the market collapses, is the equity still there on that house that I achieved over the five years? Also, if I start renting it out at $500 p/w, and then when the market starts to come down again, drop to say $300 p/w, how do I afford to keep that property? I've had a read of afew of the Gladstone threads on this forum, as well as the "Beginner" threads, but these questions still remain. I'm looking to get my first house as an IP on interest only. It'll be great at the start, as I'll be able to rent it without any worries, for now. However it's what happens in the future when the market comes down is what I'm not sure about. Tell me even the most basic things, I want to learn as much as I can from successful investors like yourselves.

Thanks heaps guys, I look forward to the replys.

BarlettaClick to expand...
Hi Barletta

Welcome to the forum.

I wouldn't rush into anything. I would spend the next few months investing in your own education. Continue to read widely and get clued up. Forums like this are an excellent resource (as you would have already discovered).

There's lots of dollars at stake when investing in property. The more informed you are - the better the choices you are likely to make.

Cheers

Jamie  

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Thanks alot guys! Every bit of information I can get is crucial to my journey at the moment. I have another question however. My first property that I buy, should I make it Principle and Interest, or just interest? I had a meeting with an accountant today, just to run through some tax benefits and numbers of owning an investment property. He stated that as I'd only be paying around 31cents in the dollar tax, that I wouldn't get big amounts back, and hence I'd have to use some money out of my own pocket. He told me that going the way of Principal AND Interest would be better for now, and to smash off the loan as much as I could. He also went to say that the more I pay off my loan, the more equity my house would get, but I just don't understand how that works.

See what I'm confused about is that everything (most things) that I've read about, discussed and learnt is that the banks own all the houses, you just keep them happy by paying them interest, HOWEVER alot of older people than myself that took the plunge when they didn't know about Property Investment and got a loan for a house and OWN their house by now, and are able to use that for equity etc. and get into the game. I don't have a house. All I have is my savings and the desire, burning bright as inside.

So, my biggest query is: For my first property, shall I aim to eventually OWN the house, and as I pay it off and gain equity, apply for a loan in a year or so's time for another IP? Or let the bank own it, and just pay interest?

Thanks for everything guys, you've been great  

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Barletta said: ↑
My first property that I buy, should I make it Principle and Interest, or just interest?Click to expand...
All 3 : )

If you can manage to get an Interest only Loan with 100 % offset, then make any and all extra repaymenst to the offset account.

Doing this, provides you with the cashflow benefits if an IO loan, but still allows you to reduce the principal at your option, while still keeping your tax paid cash out of the loan which may be very useful if u need money for a non deductible purpose
ta
rolf  

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So, my biggest query is: For my first property, shall I aim to eventually OWN the house, and as I pay it off and gain equity, apply for a loan in a year or so's time for another IP? Or let the bank own it, and just pay interest?

How about this.. a little bit of A and a bit of B

Get an Interst Only mortgage.
Open an offset account.
Put into the offset account he amount you would pay in principle.

This way, you have access to the $$$ should you need them for something else, you can transfer them into the mortgage and pay off the loan any time you want. The freedom of being able to use the money for other purposes, which you might not be able to do the same way if you paid the loan down instead, can come in handy and help you structure your loans the most advantageous way for you if you do buy more properties etc.

So you have some choice.  

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jaycee said: ↑
So, my biggest query is: For my first property, shall I aim to eventually OWN the house, and as I pay it off and gain equity, apply for a loan in a year or so's time for another IP? Or let the bank own it, and just pay interest?

How about this.. a little bit of A and a bit of B

Get an Interst Only mortgage.
Open an offset account.
Put into the offset account he amount you would pay in principle.

This way, you have access to the $$$ should you need them for something else, you can transfer them into the ortgage and pay off ht loan any time you want. The freedom of being able to use the money for other purposes, which you might not be able to do the same way if you paid the loan down instead, can come in handy and help you structure your loans the most advantageous way for you if you do buy more properties etc.

So you have some choice.Click to expand...
i think that is good advice.

i am in gladdy now and it is crazy, inspecting some properties we bought a few years ago, each of our rental agents said they have zero, zilch, donuts, bagels to rent, a vacancy rate of 0%.

in your situation i would buy two units under $300k , do some small reno's and rent them out and get re-valued ( saw one today rented for $500pw)

then access equity and buy something else far far away from gladdy

good luck  

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You are extremely fortunate to be one of only 40,000 people living in the best housing market in Australia for profits in the next 3-4 years.

I'm a property bear, but a Gladstone bull, selling up in Melbourne to invest more in Gladstone.

If you want to make sure you don't get caught with a house you can't rent, keep an eye on the number of rentals available on realestate.com and the number of jobs in Gladstone on seek.com. Monitor this ratio, if you see a significant drop in the jobs to rentals ratio, time to sell.

Rents are rapidly rising in Gladstone, very low vacancy rates, but many properties to choose from. While the advice to wait and consider carefully is normally appropriate, now is the time to buy in Gladstone before the market moves.

Think through the types of property you could buy based on the income you have, deposit saved etc. Also note that fully furnished properties to corporate renters obtain a significant premium (50%+ more rent). I would suggest including furnishing the property in your budget considerations for maximum rental return.

Do you think you could do a development to add value at some stage, or even just get DA approval for units, then sell to a developer. Research the number of units you could put on the property in various areas. Hint: South, Central and West Gladstone have the best zoning for this.

Get this right and you can set yourself up for life. I am flying to Gladstone this weekend to start my first small development there. Another forumite I was chatting with is in the middle of their first development in Gladstone. At current prices they will walk away with a $3.5 million profit!  

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Thanks everyone so much for your replies, this is the first time I've heard of an 'offset' account, however I asked my parents about it and they filled me in (Both worked in the bank some years ago before shifting into retail) This offset account surely sounds amazing, has anyone else ever done it that way? (I/O with an Offset account, and when finally saving up enough, they repay the bank and officially own the house)

Bigtone said: ↑
in your situation i would buy two units under $300k , do some small reno's and rent them out and get re-valued ( saw one today rented for $500pw)Click to expand...
My problem is, I have a better chance of finding a needle in a haystack than finding a unit for under $300 k -.- ($299k is the going rate, but that doesnt really count as under haha)

Yeah, I have a mate at work who has a 2 bedroom unit, renting it out to Bechtel for $500p/w. The company only looks at properties with a/c, must be what the workers want.

Bigtone said: ↑
then access equity and buy something else far far away from gladdyClick to expand...
Why far away from Gladstone?  

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Barletta said: ↑
Why far away from Gladstone?Click to expand...
I'm assuming BT is alluding to diversifying your portfolio - not having all of your eggs in the one Gladdy basket.

Cheers

Jamie  

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Gday mate

Um I guess I cant say much more than that but I'll try anyway.

Do you remmember whay happened in Queensland it got flooded while I do agree
invest in Gladstone but have you ever thought of what that flood could do to your property just my thoughts.

Another thing on Interest Only/ Principal and Interest, my family is on Ineterest only, have you ever considered the benefits vs disadvantage.
We are paying $2000 per month interest only if it was with principal could be any where around $2400- $2800. While I do agree that paying interest only you dont own the property in the end you have to repay it again ( Im not quite sure on this one). Have you considered the disadvantages vs advantages of interest only.

Having found out what happened in Quesnland I wouldnt even invest a single peny into it. Its great that you are doing it and reaping the profits.

How ever I would like to say that even if you are investing into really so tremendous market such as Gladstone, what I learned from Rich Dads games is invaluable information, such concepts like you money is made when you buy not when you sell.

To me it seems you are making money when you are selling or something along the lines. Banks are only willing to lend you money but its up to you to invest into Assets but not liabilities. Assets put money into you pocket and liabilites take money out of your pocket. Its up to you to find something that puts money into your pocket every month, and I am not saying that thats what I do I am probably just an employee but thats the advice I got out of Rich Dads cashflow games.

Oh and another thing is that your parents are thinking you wount profit that why find a deal that you are making a porofit when you are buying a property but not when you are selling show it to them, if they are still think its bad then its probably the mentality that they have thats actually preventing them from thinking about such a great deal.  

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You make it sound like the whole of Queensland disappeared under the ocean. Yes, there was a lot of damage, but only in certain areas. Many areas, the vast majority, in fact, were not affected.  

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Barletta said: ↑
This offset account surely sounds amazing, has anyone else ever done it that way? (I/O with an Offset account, and when finally saving up enough, they repay the bank and officially own the house)Click to expand...
It's pretty "common" practice now.

It has tax side benefits too if you need to pull the money back out for mixed deductible and non-deductible use. (as opposed to a loan account with redraw or LOC)

The Y-man  

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Man I guess its only me, but from what I saw on the news it doesnt sound like its only hit just afew areas. The whole of the Queensland got under water mate. I sound a bit over the top but it is the case mate, I wouldnt want to live there ever... I dont know who else would.

alexlee said: ↑
You make it sound like the whole of Queensland disappeared under the ocean. Yes, there was a lot of damage, but only in certain areas. Many areas, the vast majority, in fact, were not affected.Click to expand...
 

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