gooram said:
doozer said:
I'd say that as they're spread out a bit it would be hard to manage.
Just my thoughts.
Young investors - tell all
- Thread starter wallace
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I'd say that as they're spread out a bit it would be hard to manage.
Just my thoughts.
It's a good question Gooram. I would use a property manager regardless whether my rentals were in the same street as I lived in. Yes self managing may be rewarding but I imagine your opinion will change when you get a nasty tenant or a tough legal situation, and believe me something WILL happen (late on a Friday night usually). There are many good reasons to use a property manager that more than justify the expense, here's a few:
1. Do you have access to a tenant's defaulter database?
2. Rent increases are made objectively by managers based on market conditions, it is difficult to increase rent when you become 'friends' with your tenants
3. Do you know the legislation relevant to your state re tenants & landlords e.g. what things can you issue a notice to remedy breach for etc
4. How do you remove tenants if they don't pay rent?
5. Property managers work around agents thus you can increase your network of professionals who can assist in further purchases
6. Do you know the good & bad tradespeople to use for your rental?
7. Property management fees are tax deductable
And the list goes on....
For me it comes down to using my time most efficiently. I have better things to do than the day to day management of my properties. In the end it's a personal decision but I know I sleep more soundly at night knowing I have a good property manager on board
1. Do you have access to a tenant's defaulter database?
2. Rent increases are made objectively by managers based on market conditions, it is difficult to increase rent when you become 'friends' with your tenants
3. Do you know the legislation relevant to your state re tenants & landlords e.g. what things can you issue a notice to remedy breach for etc
4. How do you remove tenants if they don't pay rent?
5. Property managers work around agents thus you can increase your network of professionals who can assist in further purchases
6. Do you know the good & bad tradespeople to use for your rental?
7. Property management fees are tax deductable
And the list goes on....
For me it comes down to using my time most efficiently. I have better things to do than the day to day management of my properties. In the end it's a personal decision but I know I sleep more soundly at night knowing I have a good property manager on board
I would also use a prop manager even if all my IPs were within reach. In addition to Doozer’s reasons, I’d also say that once the number of IPs increases it becomes impractical to manage everything yourself. My goal is to have enough investments to do whatever I want, so managing properties myself would be ‘work’ that I have to do. It also gives me much more choice in terms of selecting properties since they don’t have to be within travelling distance.
Alex
Alex
doozer said:
1. Yes - Private landlords associations have access to this data.
2. I think if your rent increases are justified, it doesn't matter who tells your tenant, they will move out regardless if they don't think it's a fair increase. There's enough public data out there for property owners to determine market rent.
3. Yes - regardless of whether you manage yourself or not, I think it's important to know yours and your tenants rights. How will you know if your manager is doing a good job?
4. The man with the badge
Seriously though, see 3.5. This is a good point.
6. Getting there, I tend to use the same ones for my own home and my investments.
7. With 2 IPs I'm saving myself about $2500pa, after tax about $1500. To me this is worth the few hours I spend on management. Granted as our portfolio grows, time to do this could be an issue, especially if things go pear-shaped.
This is an interim measure for us, while we are in the process of building our portfolio, any extra cashflow we can squeeze out is a bonus. So long as risks are mitigated, I too sleep well at night
Cheers,
Gooram
Gooram,
If you are comfortable self managing then keep doing it. However do you know any of the property investment authors, some of which frequent this forum, who advocate self managing? You would be lucky to find one. I can understand if there is one or maybe two IPs but once the portfolio starts to build self managing is fraught with dangers regardless of how much you may be 'saving'. Even with a couple of IPs I still wouldn't risk it.
Re your responses to my points, yes perhaps you may have access to market information and rent defaulters but there's nothing like industry contacts that property managers have.
Would you rather spend time on selecting tenants, organising repairs, checking relevant legislation, keeping accurate rent records, being called up by your tenant on a Sunday morning because a drain has burst or spend $1500 on a quality property manager so you can spend time with your family, watch TV, take the dog for a walk, go out with mates or whatever and not have to worry about any of that.
It's a no-brainer for me.
If you are comfortable self managing then keep doing it. However do you know any of the property investment authors, some of which frequent this forum, who advocate self managing? You would be lucky to find one. I can understand if there is one or maybe two IPs but once the portfolio starts to build self managing is fraught with dangers regardless of how much you may be 'saving'. Even with a couple of IPs I still wouldn't risk it.
Re your responses to my points, yes perhaps you may have access to market information and rent defaulters but there's nothing like industry contacts that property managers have.
Would you rather spend time on selecting tenants, organising repairs, checking relevant legislation, keeping accurate rent records, being called up by your tenant on a Sunday morning because a drain has burst or spend $1500 on a quality property manager so you can spend time with your family, watch TV, take the dog for a walk, go out with mates or whatever and not have to worry about any of that.
It's a no-brainer for me.
doozer said:Gooram,
If you are comfortable self managing then keep doing it. However do you know any of the property investment authors, some of which frequent this forum, who advocate self managing? You would be lucky to find one. I can understand if there is one or maybe two IPs but once the portfolio starts to build self managing is fraught with dangers regardless of how much you may be 'saving'. Even with a couple of IPs I still wouldn't risk it.
Re your responses to my points, yes perhaps you may have access to market information and rent defaulters but there's nothing like industry contacts that property managers have.
Would you rather spend time on selecting tenants, organising repairs, checking relevant legislation, keeping accurate rent records, being called up by your tenant on a Sunday morning because a drain has burst or spend $1500 on a quality property manager so you can spend time with your family, watch TV, take the dog for a walk, go out with mates or whatever and not have to worry about any of that.
It's a no-brainer for me.
Im with you doozer. The whole point for me to build a large property portfolio was to replace my income but also just as important to provide me more time in order to enjoy my passive income and spend it on the ones closest to me....IMHO self managing defeats my purpose for investing in the first instance.
But each to their own. There is no right or wrong way - just a personally preferred way.
Rixter said:
I'm with rixter and Doozer. My purpose in investing is to have money to do what I want to do, and avoid what I don't want to do. I certainly don't want to have tenants call me in the middle of the night about plumbing, and I'm willing to pay people to do this for me.
Alex
My situation -
I live at home and earn around $550 a week after tax - I have $284 left after I pay things i need to pay - car,insurance,phone,petrol etc.
I have no savings whatsoever as up til now i have lived a very carefree lifestlye, but now at the old age of 19 and after reading some books i really have decided this is for me.
should i be saving for a deposit or jumping straight in on a 100% loan?
how did everyone here buy their first IP and was it NG or PG?
I live at home and earn around $550 a week after tax - I have $284 left after I pay things i need to pay - car,insurance,phone,petrol etc.
I have no savings whatsoever as up til now i have lived a very carefree lifestlye, but now at the old age of 19 and after reading some books i really have decided this is for me.
should i be saving for a deposit or jumping straight in on a 100% loan?
how did everyone here buy their first IP and was it NG or PG?
dwlakeshores said:
I borrowed 106% of the IP purchase price secured against my PPOR.. ie 100% of the IP puchase price + 5% to cover the puchasing costs & legals + 1% as excess funds to use as a piggy bank. This covered any unexpected repair/Maintenance or if I was taking vacant possession covered the vacancy period between settlement & find the first tenant.
The purchase was negatively geared and Cashflow neutal/positive after tax.
Hope this helps.
Hey dwlakeshores.
In this market i would never ever suggest you borrow 100%. Especially if it is your first purchase. This is the time to save now. If i was you i would re assess your budget and save at least half of your wage. If you are keen on purchasing an IP then do not over commit and make sure the rental yield is good too. It is very hard to buy a positively geared property these days in the capital cities of the states. You may get close in the bush but i find they are very very hard to come by. You will have better chance converting it to positive geared (ie granny, subdivision etc..)
I bought my first property at 22 and i borrowed 100%. Take it from me do not do it. Not in a steady or falling market. My first property and my only one at the moment is negatively geared but after doing my tax return and paying hecs it isnt too bad.
I think you should read more on negative gearing in relation to property and save, save , save and read , read , read. You are still young so that is good.
I had your attitude untill i was 22.
I have now saved hard and paid down that loan to about 85% and have some money saved up on the side for another purchase.
save, read , dont borrow 100% and u will do fine
this is all only my opinion, im not an experienced investor 'yet' but aiming for it...
Good luck mate
In this market i would never ever suggest you borrow 100%. Especially if it is your first purchase. This is the time to save now. If i was you i would re assess your budget and save at least half of your wage. If you are keen on purchasing an IP then do not over commit and make sure the rental yield is good too. It is very hard to buy a positively geared property these days in the capital cities of the states. You may get close in the bush but i find they are very very hard to come by. You will have better chance converting it to positive geared (ie granny, subdivision etc..)
I bought my first property at 22 and i borrowed 100%. Take it from me do not do it. Not in a steady or falling market. My first property and my only one at the moment is negatively geared but after doing my tax return and paying hecs it isnt too bad.
I think you should read more on negative gearing in relation to property and save, save , save and read , read , read. You are still young so that is good.
I had your attitude untill i was 22.
I have now saved hard and paid down that loan to about 85% and have some money saved up on the side for another purchase.
save, read , dont borrow 100% and u will do fine
this is all only my opinion, im not an experienced investor 'yet' but aiming for it...
Good luck mate
dwlakeshores said:
I saved during school, etc. and bought my first IP with a 90% LVR loan. Slightly positively geared, but this was a time when the property had a 6.6% rental yield.
My suggesiton: develop a savings habit first (which you've said you don't have). IMHO property investment is about consistent buying and holding long term. To do that, you need to be able to ride out the inevitable downturns, vacancies, repairs, etc. Currently I'd say the chance of a downturn is higher than another immediate boom. Save 15% or even 25% of the price of the property. Get used to saving before you buy because if property is the vehicle to wealth, cashflow is the petrol.
Falling prices won't kill you (my properties could halve tomorrow and I wouldn't go bankrupt. I'd cry, but I won't go bankrupt), but negative cashflow you can't service is LETHAL. There's nothing wrong with negative gearing (or even negative cashflow) if the capital gains justifies it and you can comfortably afford the negative cashflow.
Alex
dwlakeshores, I was in the same situation as you were at your age. Im 22, and earn the same take home pay as you, and bought my first IP at 21. I had a $40k deposit / used the FHOG for fees (live in Vic), and took a loan for $160,000. Im quite comfortable paying it off through my own wages when I was 'living' in it for 6 months, but now with a renter in it eases the cost very much.
Im in the process of using the equity in my first IP to buy another IP. My advice is to save up as fat a deposit as you can.
However reading some of the stories here, I can see how some people will become mega rich through their decisions...I also want to be mega rich, but am still quite conservative, so it make take a few more years!!
Thanks to everyone for your inspirational stories!
I do identify with other forumites with convincing their partners to think the same way. My boyfriend is not a reader, so getting him to read Jan's books is like pulling teeth - so in many of my 'lectures' he has asked me to give him a presentation of the facts...Im in the process of preparing a PowerPoint presentation, and whilst it may seem a little silly, i guess i have to look at it like a business proposal. I wouldn't pitch something to my clients in my normal 9-5 job without research and with all the bells and whistles!
Im in the process of using the equity in my first IP to buy another IP. My advice is to save up as fat a deposit as you can.
However reading some of the stories here, I can see how some people will become mega rich through their decisions...I also want to be mega rich, but am still quite conservative, so it make take a few more years!!
Thanks to everyone for your inspirational stories!
I do identify with other forumites with convincing their partners to think the same way. My boyfriend is not a reader, so getting him to read Jan's books is like pulling teeth - so in many of my 'lectures' he has asked me to give him a presentation of the facts...Im in the process of preparing a PowerPoint presentation, and whilst it may seem a little silly, i guess i have to look at it like a business proposal. I wouldn't pitch something to my clients in my normal 9-5 job without research and with all the bells and whistles!
Haha. That's awesome. My wife would look at me like I'm stupid and tell me to sit down and shut up, in the sweetest kind of way of course.warrioress said:
BR
Warrioress
That's a great idea! My partner is a visual person, and you've hit the nail on the head here I think. He needs flow charts and pie graphs to make him tick and get enthused about a project.
Although I'm lucky in that he's into investing/making money etc, he is still quite close minded and I feel is still stuck with the belief that all debt is bad. I'm currently trying to get him to consider borrowing a small amount (<$10k) to make major renovations to our shoe box which I think would make our house value go through the roof. (Increasing house from one storey, 2 br 1 bthm, to a 2 storey, 3 1/2 br, 2 bthm)
I'm going to have to log off and prepare a presentation right now!!!!
That's a great idea! My partner is a visual person, and you've hit the nail on the head here I think. He needs flow charts and pie graphs to make him tick and get enthused about a project.
Although I'm lucky in that he's into investing/making money etc, he is still quite close minded and I feel is still stuck with the belief that all debt is bad. I'm currently trying to get him to consider borrowing a small amount (<$10k) to make major renovations to our shoe box which I think would make our house value go through the roof. (Increasing house from one storey, 2 br 1 bthm, to a 2 storey, 3 1/2 br, 2 bthm)
I'm going to have to log off and prepare a presentation right now!!!!
1st Home Owner said:Warrioress
That's a great idea! My partner is a visual person, and you've hit the nail on the head here I think. He needs flow charts and pie graphs to make him tick and get enthused about a project.
Although I'm lucky in that he's into investing/making money etc, he is still quite close minded and I feel is still stuck with the belief that all debt is bad. I'm currently trying to get him to consider borrowing a small amount (<$10k) to make major renovations to our shoe box which I think would make our house value go through the roof. (Increasing house from one storey, 2 br 1 bthm, to a 2 storey, 3 1/2 br, 2 bthm)
I'm going to have to log off and prepare a presentation right now!!!!
1st Home Owner, I can also relate with that. Whilst he is interested in investing, its the old good debt vs. bad debt debate that he doesn't understand.
I think I've finally come through to him though because he just rang me and organised a meeting with our MB to talk about our next project!!! I think we can buy 2 more IP, but I don't want to freak him out completely!!!!
Good luck with your presentation - let me know how it goes
my name is Lozza. i am 28 years old, and i own 3 properties.
i have been working with a man for over 3 years who is an expert property investment. he owns over 50 properties, and i always trust him for the best advice as my philosophy is to always speak to someone who has a large property portfolio rather than someone who thinks they know what they are doing, but dont own many I.P's at all.
He has real unique views on how to get the most tax back and how to retire early. i plan to own over 10 properties within the next 10 years, and with the strategy my boss has shown me, i have no doubt that i will get those 10 properties, and i will be earning a passive income of over $100k annually by then. If anyone wants to chat about my strategies , feel free to PM me
Cheers
Lozza
i have been working with a man for over 3 years who is an expert property investment. he owns over 50 properties, and i always trust him for the best advice as my philosophy is to always speak to someone who has a large property portfolio rather than someone who thinks they know what they are doing, but dont own many I.P's at all.
He has real unique views on how to get the most tax back and how to retire early. i plan to own over 10 properties within the next 10 years, and with the strategy my boss has shown me, i have no doubt that i will get those 10 properties, and i will be earning a passive income of over $100k annually by then. If anyone wants to chat about my strategies , feel free to PM me
Cheers
Lozza
looks like i'm a bit late to the party anyway...
i'm 25, own 2 ips and just signed contract on a 3rd last weekend. after 5 years of uni, i started my first full time job Jan 2005.
IP1. purchased 4th quarter 2005, in Ipswich. it's a small, low set, 2 bedroom postwar on 600sqrm block. Paid $142K, spent $8k on renos and repairs. Currently rented to a good tenent for $175pw. Evaluated by the bank in Jan this year @ $150K. The UCV has actually droped from $97K to $92K, ouch. i still believe it will do fine in the long run, 'cos it's very close to Ipwich CBD, walking distance to train and school.
IP2. purchased 1st quarter this year for my parents, they need to live there for work reasons, so didn't buy purely for the returns. it's a well maintained lowset postwar with 3 bedrooms on 800sqrm block. less than 10mins walk to Lawnton train station and the local primary school. paid $235K at auction, it's currently worth $240K to $250K. The market rent is around $240pw, but my parents are paying me $220pw (with no PM fees).
IP3. this one is bit more serious, involves subdivision, reno and building new house. The location is northern Brisbane (around 10KM from CBD). Signed contract for a small lowset 2 bedroom postwar on 809sqrm block. The plan is to subdivide block into 2 x 405sqrm, reno and move exiting house into one block and build a new dwelling on the other. i'm still in the due diligence stage of this project, still may choose not to go ahead.
that was my story.
oh, my long term goal/dream is to retire at 35 then spend the rest of my life travelling around the world
cheers,
nex
anyway...i'm 25, own 2 ips and just signed contract on a 3rd last weekend. after 5 years of uni, i started my first full time job Jan 2005.
IP1. purchased 4th quarter 2005, in Ipswich. it's a small, low set, 2 bedroom postwar on 600sqrm block. Paid $142K, spent $8k on renos and repairs. Currently rented to a good tenent for $175pw. Evaluated by the bank in Jan this year @ $150K. The UCV has actually droped from $97K to $92K, ouch. i still believe it will do fine in the long run, 'cos it's very close to Ipwich CBD, walking distance to train and school.
IP2. purchased 1st quarter this year for my parents, they need to live there for work reasons, so didn't buy purely for the returns. it's a well maintained lowset postwar with 3 bedrooms on 800sqrm block. less than 10mins walk to Lawnton train station and the local primary school. paid $235K at auction, it's currently worth $240K to $250K. The market rent is around $240pw, but my parents are paying me $220pw (with no PM fees).
IP3. this one is bit more serious, involves subdivision, reno and building new house. The location is northern Brisbane (around 10KM from CBD). Signed contract for a small lowset 2 bedroom postwar on 809sqrm block. The plan is to subdivide block into 2 x 405sqrm, reno and move exiting house into one block and build a new dwelling on the other. i'm still in the due diligence stage of this project, still may choose not to go ahead.
that was my story.
oh, my long term goal/dream is to retire at 35 then spend the rest of my life travelling around the world
cheers,
nex
