First time property investor

Hi, for years now I have wanted my husband and I to get into property investing, however for one reason or another, we kept putting it off. I was staggered last night when I read Jan Somers book, More Wealth from Residential Property and thought that in Chapt 4 on Who do you ask for advice? that it must have been us that was interviewed. That was us to a T!

Twice now, I have inherited a small amount of money when each of my parents died. The first time 17 years ago when I was advised by an accountant to put the money in the bank. Interest rates were good at the time. We'd never had any money before and this seemed a good idea at the time. However that proved too tempting and before long my small inheritance disappeared on holidays, video cameras, new car and the like.

Then 5 years ago, my father passed away and another small inheritance came my way. We went and saw a financial advisor and was invited to take out a line of credit, put some money into managed funds and go on a holiday. All of which we did.

Since then however, we have pulled the managed funds, when we could see they were loosing money fast and stopped using the line of credit for personal use. We went saw another 'independent' advisor, thinking this time they would help us reorganise 'all' our finances and advise us how to get some growth towards our retirement.

Here I should state that I am 50, working part time and my husband is 58, full time on a very basic wage.

We were advised to clean up the line of credit and place what money as left into shares and borrow against the line of credit invest in more shares. One thing I asked was that we had no managed funds, however we still ended up with a small fund. The shares have been doing ok, so there has been some growth and my husband has dabbled a little on his own, but no great winners.

I feel we are running out of time, and being 'baby boomers' we will be looking for a pension in the next 7 years for my husband and 15 for me. If only we didn't have to go down that road and working on a retirement ready reckoner we will be struggling.

What am I asking you might say? Well, I wondered if there was anyone else out there who may have been or are in the same predicament as us. No savings, small amounts of super as only basic wage earners, own our own home, own 2 motor vehicles, with our only other debt being a credit card.

Obviously we have no deposit for a property, however from the reading I have done, that shouldn't be a problem.

Who do I go to first? The real estate agent and start looking at what we need to borrow, or a mortgage lender? Will either give us advise on how to get this up and running.

I must add too that we live in a country town on the west coast of Australia.

Looking forward to hearing what others might say on this to ease my anquish.

Regards

Jaymm165

Quite a few years ago we were in a similar situation. We owned our own home with a small mortgage & were earning a pitance from our Business. We had a rip off mortgage reduction company come & show us how much we could "save" by using their services, buying an investment property & using a LOC. When we went to see them we had no idea about property all we wanted was to rid ourselves of the mortgage.

To cut a long story short, we listened to everything they told us, but did our own thing so we didn't have to pay their exorbitant fees. The hardest part was finding a bank that would give us a loan. (things have changed these days, so see a good broker) Then we had to find a house that would pay for itself as we could not afford to be negatively geared.

My advice is, start small if on a low income. Look for something that will pay for itself. Find a good broker to find out how much you can borrow (there are some really good ones on this forum, so do a search). I would also suggest that you PM Karina from this forum as I believe she is very knowledgeable in Geraldton. Most of all read, read, read.

Welcome to the forum.

I'd actually had one Investement Property when I began the journey in earnest- having sold another property after 10 years for 16% gain. But shortly after that, I was slapped with a $53,000 tax debt.

I had caught the bug though- and managed to buy a unit in Brisbane at 5% deposit, with no LMI. I undoubtedly overpaid- but the property paid for itself.

I was very surprised 18 months later to find that our home (borrowed to the max) and investment property (also borrowed to the max- bith to pay off the tax bill) had increased enought for us to buy another property- which we did. And all three properties increased further, allowing us (just) to buy a block of 9 units- the "flock of bats" I've mentioned in other posts.

Obviously, as it happened, it turned out that we bought just at the start of the boom, so our timing was fortuitous. None of the investment properties was bought with a "real money" deposit- though some savings went towards stamp duty and the like. Those properties enabled us to buy a Subway business.

That's one journey- begun in probably slightly a worse situation than yours now.

Don't go to either your lender or real estate agent to start off with- you will not get unbiased advice. Take some time to educate yourselves- I'd suggest Peter Spann's books, "The Richest Man in Babylon", or Jan Somers' other books a starting points. Also spend time looking through this forum- perhaps the richest source of real estate investment advice in Australia.

Unfortunately not many financial advisors advocate investment property (they probably can't earn money from recommending it). Steve Navra does, but I don't know that he's coming over to the west for a while yet.

A mortgage broker can help set up loans etc- you don't need to see them face to face. There's a number on the forum, many of whom deal with clients in other states and even other countries.

A property savvy accountant can also help set up things correctly- again remotely perhaps- like Dale Gatherum-Goss, who has contributed a great deal to this forum.

I agree with Geoff's statements.

As i see it you're in a great position! You have a husband , a home which is presumably mortgage free, you both have paid employment, you are both young enough to kick start your investment and old enough to know a thing or two about life.

It's all upside from here.

It's important that whatever you do, take your time, read the books advised above, read this forum, and set out out a strategy that YOU are comfortable with AFTER arming yuorself with the appropriate knowledge that is available FREE. I feel that given this time in the cycle you do not need to rush into anything - right now, gaining basic investment knowledge is the most critical step to master.

jaymm165 said:

Who do I go to first? The real estate agent and start looking at what we need to borrow, or a mortgage lender? Will either give us advise on how to get this up and running.
Jaymm165

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Hi Jaymm165,

The first and paramount thing I'd suggest you to do is to educate yourself via books and forum reading, talking to investors and going to seminars. At this stage of the property cycle, there is not need to rush. You'd have to be educated enough to recognise a good or a bad deal when you see it otherwise, othesr can take advantage of you... and you may have a worse problem than the one you're trying to solve.

You'd have to change the way you perceive debt and money in general, etc. You’d have to learn how to source funds, how to use and set up financial and legal structures that will assist you creating and protecting your wealth. You have to understand and legally use the tax system in your favor, etc.

Regards,

James.

Jay,

Your waiting time is up.

Now that you're both in your fifties you have no more margin for error.

If you do not begin acting now you'll be retiring destitute.

It's good that this time you've gone so far as to post on a property forum, but only YOU can turn that into action.

Use the fear to motivate you to move forward and not repeat your ingrained bad habits.

It's your last chance to make a difference to your own lives, don't blow it.

Do NOT rely on the advice of real estate agents, financial advisers or brokers. Educate yourselves.

If you're not willing to put the time into learning enough to secure your own future then you will get what you deserve.

Read this forum, look at the books - then ACT.

Cheers,

Aceyducey

Jay,

Acey summed it up pretty well, so I don’t have much advice to offer.

Only thing I would like you to be aware of, is that past performance of any asset, stock, commodity, etc is not a guarantee for future performance, that being said in my opinion, property is not the way to go right at the moment or in the next few years.

The trick to wealth is spending less then what you earn (being through work or investment), and this has not been the case with you. Or you have been braking even for many years. So this is the first lesson ... discipline, "don’t buy the unnecessary plasma TV".

Lastly, identify area of investment. Property, business, stocks etc, and learn all there is about it, know every detail and option. Then you will have the best position to decide for yourself with your own reasoning if that investment area is feasible at that moment.

Thx
V

I have been reading all your replies in earnest and have taken on board everything you have been saying.

I can see we certainly need to discipline our spending. Recently a friend has helped me set up a budget on computer, so we can watch where our income is going. No plasma TVs in this house. Who watches TV anyway

Reading is good, however I find I'm more an auditory/visual person so if anyone knows of any visual DVDs that are good, I'd be more than keen. However, not the DVDs one listens to on the computer, I find them very time consuming. Reading is fine, however find my mind wanders and I haven't absorbed what I've read and find myself rereading a whole page because I've gone off on a tangent somewhere.

Seminars would also be great too, however most of these are in the city or over east, so once again I like the idea of watching a DVD and learning this way.

I'm glad I've found this site so will be checking out all the forums and taking note of what is being passed on.

Many thanks to everyone who is willing to offer their advise.

Regards
Jaymm165

Jay - look for books on tape. That way you get the auditory.

There's plenty around if you do your research.

DVDs - not much out there and there's none that I've seen that are much good anyway.

Try live events with other investors - they are well worth travelling for. Or set up a local 'chapter' where investors can meet & chat.

Cheers,

Aceyducey

There is a free DVD available from WA based Craig Turnbull which is not too bad- it is a teaser though for the full course.

It's never to late to start

My wife and I started into property just over 3 years ago, and have never looked back. I am currenlty 51 and now have 5 propeties worth well over 1 million dollars and have all double in value and are nearly all postively geared except for one. The main reason's we started was we where not getting any younger and to have the sort of lifestyle we where looking for when we retire was not going to be there on suppernauuation. However we are will on the way. It looks like I will be able to fullfill my dream at the age of 55, which is only 4 years away.

There are alot of hurdles to get across when you start to get to a certain size which we both discovered with the purchase of our 5th property. We kept hitting a brick wall with the banks and MB's because of our income. However we found the most brilliant financial strategists who have helped us buy our 5th property. We are both well on the way to an early retirement. We learn something new everyday. Life is wonderful.

So it's never to late, the main thing is that you start. Before you know it you will be walking in our shoes.

Regards

Colin Boddy
0437 841 322
[email protected]

Acey is right

I agree with Acey about getting to chat with other investors. Nothing better than to sit back and have a discussion here in Coffs Harbour monthly with like minded, intelligent people who are happy to share their tips trials and contacts to get your property portfolios buzzing.

If you loose enthusiasm, the monthly dose of "you can" from those around you is very uplifting.

Never be afraid even in your 50's. I have encouraged and assisted my sister and her husband who started 2 years ago and now have 3 ip's. In their first 12 months they have increased their equity in these three by $ 90k and this is great news as you edge towards retiring.

With these investments nudging along, they can look forward to selling these down and buying that dream home near the beach in Port Macquarie they have always wanted in a few years. A hell of a lot sooner and with little or no debt when they do.

As they have some super to generate an income for them, this is a comfortable and achievable goal for them so its all steam ahead.

It can be done so start soon to end sooner, with some better retirement options than you currently have.

Good Luck

DD1

Thanks Colin and DD1 for your replies and encouragement. These past few days I've started to give up hope that we can do this. However, I'll keep reading and learning as much as I can and something must gel sooner rather than later. Perth is having a money expo on in a few weeks and I've arranged to travel down there and check it out. Unfortunately where I'm from in the country, we don't have access to other investors and opportunities to go to seminars are always extra costly due to time and travel.

I'm determined to see this through so watch this space.

Jay