Newbie on the North Shore

[Neal]

Hi all,

Right, thought I should finally emerge from the shadows and get involved in the forums. Been actively reading everyone’s posts for a while during lunch at work, but not actively buying property… so there’s the problem!

A brief introduction – I’m 23, currently living with the folks and have just recently finished a university degree. I’m working full-time and although I’m not earning much, while I’m in this position I’m able to put aside a few hundred a week. Last week I came along to one of Rolf’s talks and it was good to see that you all looked pretty normal :rolleyes:

Seeing as I’ve lived in the Lower North Shore for most of my life now, I would feel most comfortable buying here – however, when I found out that a 2 bedroom DUMP of a semi went for 605,000 in the neighbouring suburb I was a little concerned as to my chances of finding anything I could afford.

I guess what I’m saying is that I’m keen to get into this game, but I wonder if the North shore is a good starting point. I’m ok with buying less at higher prices, but if they take too long to go +ve or are beyond my borrowing power then I may look elsewhere and come back when I'm better off. I like to believe the idea that there are opportunities in every suburb, but unless I could get something that was putting money in my pocket from day 1, I wouldn’t be too keen on mortgaging myself to the hilt. Anyone found a positively geared property just North of the bridge? :D

My ‘cunning’ plan (which needs a bit more research/thought/experience behind it to be read in a non-sarcastic manner) has been to buy something close by with a few bedrooms that I could share with friends – perhaps buy through a trust and have everyone rent (DaleGG’s books are in the post..) and if that’s too expensive, it may be better to go for a small investment studio and rent somewhere else cheap while paying that off. What are everyone’s thoughts?

Cheers,

Neal.

[Aceyducey]

Neal,

Welcome to the forum!

While there is a good case to be made about buying in areas you understand, alas the Northe Shore is one of the priciest in the country & could put a major strain on you for quite a long time if you started out buying there without substantial support from family or friends.

I suggest you spend 3-6 months learning about another area in the country - one that you can afford to buy into.

Your knowledge of the North Shore is valuable & you'll find it useful later on, however right now it's probably better for you to look at how you start out in the investing game rather than looking at the middle game, where you have the equity to buy into areas around where you live.

Cheers,

Aceyducey

[geoffw]

Adding on to what Acey said...

Look at Sydney as well as the rest of the country- just look further than the North Shore.

On one side, Sydney is very expensive comapred to the rest of Australia.

On the other side, Sydney is cheap compared to "international cities"- according to John McGrath (18 months ago)- that may be a reason for the growing disparity i prices.

[Neal]

Hi Acey and Geoff – thanks for the quick replies! I’ve gained a lot from each of your previous 3000-4000 posts – well, the ones I’ve had a chance to read, anyway :)

So in terms of learning another area, I guess I would need the following:

of the type of property you’re after:

median price
median rent
vacancy rates

and location-wise:

proximity to transport, shops, schools etc..
proposals for nearby transport links, shopping centres…
what type of people live there – i.e. young, old, rich, poor…
...anything I've missed..

And then I suppose I’ve got to decipher what my findings actually mean..

Is this sort of research something you could document, file and compare, or is there an element of intuition involved as well? Right now I’m just hoping I can find that point between ‘analysis paralysis’ and making a costly mistake. Cheers

[Rolf Latham]

Hiya Neal

Welcome

dont forget that there are some good stat out there, some free, some cost a few bucks, like Residex. wont replace on the groun reasearch but will be quite useful for a broad brush.

ta

rolf

[Aceyducey]

Neal,

When you're investing you need the figures full stop.

Some investors are happy buying in areas without getting a personal feeling for them, essentially just using the numbers. Other use the numbers but then like to get local, meet the people & walk the streets to get an insiders' perspective.

It really depends on what makes you more comfortable...but IMHO you ALWAYS need the numbers ! :)

There is a level of intuition that does come to apply over time, but when starting out you really just have the numbers...and at the end of the day just have to take your best shot.

The first property you buy is rarely the best you will ever buy. Learn & move forward.

Cheers,

Aceyducey

[Neal]

Thanks Rolf and Acey,

Just came across domain (http://www.domain.com.au/UserServices/searchAPM.aspx?mode=subsell) which looks quite informative - obviously I'd need more than just the numbers provided there :) but it poses another question:

What do good investors spend most of their time doing? Thinking outside the square? :D I mean, supposedly if the right BA can find and negotiate an appropriate property for you, the right mortgage broker can sort you out with the best loan and the right PM can look after your tenants, then would your time be better spent researching who to use rather than how to do it, and playing more of a managerial role? I’m sure that there are many people out there who know more than I’ll ever know about each specific of property investment – it’s just a matter of finding them and trusting them enough to handle large sums of my money.

Don't get me wrong - I don't want to take a back seat in all this - far from it, I'm desperate to get my hands dirty but am not quite sure what to direct my enthusiasm at. :D

Cheers,

Neal

[geoffw]

Neal,

I'd start with the newspapers in the area you are looking- or with the net equivalents.

Domain (I think) is the same as the SMH ads. Spend at least a few weeks with the classified RE ads. Get to know the rents as well as the prices. Use it to determine a target area- and then get to know that target area (or areas) well.

When you've got a target area in mind, you will then be able to look at things you've mentioned- and use those to hone in more specifically.

[G&G]

Neal,


It really depends on what makes you more comfortable...but IMHO you ALWAYS need the numbers ! :)

Aceyducey,

What are the specfic numbers you research when finding desirable investment properties?

Cheers
G&G

[Aceyducey]

G&G

We look at (not a full list, or indeed what we always consider, just top of mind)

CG Growth rates over last 20 years (by type of property)
% owners vs renters
Rental yields
Breakdown of dwellings % by type & prices
New building/renovating going on in area
Demographics of area
Number of people moving into vs out of area
School attendence numbers (increasing/decreasing kids)

Cheers,

Aceyducey

[simonjulie]

Hi Neal

I was born and raised on the North Shore. In my thirties (in a moment of madness) I moved away. After several years I realised the error of my ways and busted my guts for years to buy back in.

I love travelling to beautiful places and do so as often as I can but IMHO there is no place as beautiful as Sydney's North Shore. It is God's own country and with 1,000 people a week wanting to move to Sydney the pressure will always be on the real estate prices in this glorious spot.

Like the song says "You don't know what you've got till its gone". I sold out but now I back and if the results of my live expectancy test hold true I'll be buying in Sydney's North Shore for some time to come.

I know you are probably just looking for an investment property but don't rule out your own back yard when it is such a beautiful one.

Regards
Julie
Audentes Fortuna Juvat

[Ecogirl]

Neal
Have you checked out this thread here (http://www.somersoft.com/forums/showthread.php?t=14903) It's full of great tips on where to start.

Have a look in the Where to Buy Section and you'll get a feel of where some ppl invest.

Good luck
Ecogirl

[Glebe]

I love travelling to beautiful places and do so as often as I can but IMHO there is no place as beautiful as Sydney's North Shore. It is God's own country and with 1,000 people a week wanting to move to Sydney the pressure will always be on the real estate prices in this glorious spot.

North Shore is nice, almost as nice as Sydney's inner west ;)

[Neal]

Julie – I love the North Shore too, but to be fair I’ve never lived anywhere else in Australia (Born in the UK – came out when I was 5). So I’ve nothing to compare it to properly. That said, PPOR would still be here if I could actually afford it, but I’m thinking I'll continue to rent here and buy when I'm better off...

Thanks Ecogirl – thought I’d read that thread, but it seems I’ve only checked half the links within it… Looks like you get a lot of young’ens keen to get started like myself, although I wonder how many of us will actually take that first step? I seem to remember in one of Jan’s books she said that only about 10% of the people who got through the book would actually go and get started.

Just gotta make sure I’m not part of the other 90%!

[Steven P M]

Aceyducey,

I am new to property investing and have learnt a lot after purchasing my first IP earlier this year. I am keen to follow your advice but wanted to know where you obtain the information you listed before purchasing.

[Aceyducey]

We get it from real estate agents, from published statistics online - often at local council sites & from Real estate sites.

However the sources vary by area.

Start by looking at the relevant council sites, at the suburb snapshot in Domain, talk to the local agents & look at copies of API. Calling local schools can give you attendence numbers (hi I'm thinking of buying in your area, tell me about the school), etc

Cheers,

Aceyducey