150k deposit: what type of property to invest as a young beginner?

[Luckyrooster]

Hi guys,

Been reading the forum for years now and finally saved up a decent deposit get into the property game.

= Main stats: Age 32, 150k saved, earn 80k/yr, single.

Now, what do you think is a good strategy to invest this money?

I was looking at an investment property such as a townhouse in the inner west of Sydney, but it seems to be hard to get in under 700k. Not afraid of reno's - know plenty of tradespeople to assist. Looking to fix the interest at 5 years (5.5% or there abouts) and try and gear the rents to pay off most of the interest and principal each week - making it close neutral if possible.

Not a big fan of apartments due to stata's, but willing to look into undervalued areas of Sydney if you can suggest decent suburbs to keep an eye on.

I am a beginner when it comes to all this, but I do try to keep up with things.

I am open to suggestions and ideas and appreciate any advice/guidance from the old-timers on this forum. I may be able to get together a larger deposit if necessary, based on family borrowings.

Mucho Gratias,

Lucky

 

[Peter_Tersteeg]

Well done on saving what is a substantial deposit!

It looks like to need to think about an overall strategy to employ. Figure out what your goal is, then work backwards to determine the various steps you need to acheive to meet that goal. This will help you to determine what sort of property you need to purchase.

 

[Luckyrooster]

Thanks PT Bear. My main strategy is build a portfolio of investment properties. I guess that's all I know for now.

P.S Can anyone suggest a good mortgage broker to go through? Still need to get the loan part sorted. I wonder what kind of borrowing capacity I would have?

Cheers

 

[scha9799]

what sort of return are you after ?
What sort of time frame are you looking for ?
Are you currently renting ?
What do you do for living ? are you enjoy your current job/business?

You see everyone have different skills and objectives.
Some people may good with reno, development, some people like to buy and hold.

Knowing a bit more about yourself will help you to more success in property investing.

You see with 150k, you can almost buy a property upright in some other state or even some area in Sydney. However, it might not be a best strategy for someone who looking for risky high capital return which some of the JV development can get 30% or more cash on cash return.

Maybe more important question is what are you trying to achieve ?

http://www.heraldsun.com.au/realest...less-than-100000/story-fndcv32g-1226495025628



I hope this will help

Taylor

 

[sparis]

Thanks PT Bear. My main strategy is build a portfolio of investment properties. I guess that's all I know for now.

P.S Can anyone suggest a good mortgage broker to go through? Still need to get the loan part sorted. I wonder what kind of borrowing capacity I would have?

Cheers

Talk to Shahin from this forum - he is currently doing our loan (and my sister's loan) and is highly recommended.

 

[Luckyrooster]

Thanks Taylor for your feedback. Returns = I am leaning towards capital gains, with a healthy mixture of rental yield to offset the mortgage. I'm not a huge risk taker, and would prefer to reno to add value.

I prefer to purchase houses.

Is a cashflow/low CG strategy better than negative gear/high CG strategy?

I want to be able to keep saving for a big deposit every few years to add properties that are well geared and held for medium term capital gains (10yrs) potentially.

I'm sure you guys may offer more advice in terms of strategies.

Cheers

 

[oc1]

Thanks PT Bear. My main strategy is build a portfolio of investment properties. I guess that's all I know for now.

P.S Can anyone suggest a good mortgage broker to go through? Still need to get the loan part sorted. I wonder what kind of borrowing capacity I would have?

Cheers

Aaron C is a broker and a great operator.

PT Bear who has replied to your post is a mortgage broker you can use with confidence too.

Cheers Oscar

 

[Aaron_C]

I wonder what kind of borrowing capacity I would have?

How long is a piece of string? Make sure whichever broker you choose goes with the proper order of lenders so you don't max yourself out before you are finished.

 

[Terry_w]

Hi guys,

Been reading the forum for years now and finally saved up a decent deposit get into the property game.

= Main stats: Age 32, 150k saved, earn 80k/yr, single.

Now, what do you think is a good strategy to invest this money?

I was looking at an investment property such as a townhouse in the inner west of Sydney, but it seems to be hard to get in under 700k. Not afraid of reno's - know plenty of tradespeople to assist. Looking to fix the interest at 5 years (5.5% or there abouts) and try and gear the rents to pay off most of the interest and principal each week - making it close neutral if possible.

Not a big fan of apartments due to stata's, but willing to look into undervalued areas of Sydney if you can suggest decent suburbs to keep an eye on.

I am a beginner when it comes to all this, but I do try to keep up with things.

I am open to suggestions and ideas and appreciate any advice/guidance from the old-timers on this forum. I may be able to get together a larger deposit if necessary, based on family borrowings.

Mucho Gratias,

Lucky

Before considering investing consider a few strategies on how you could add greater asset protection and potential tax savings.

 

[Luckyrooster]

Thankyou all so far for the great advice. Well I definately need to find a mortgage broker, but how do I choose? Is there any criteria how to choose one over another on here?

Regards

 

[Aaron_C]

Thankyou all so far for the great advice. Well I definately need to find a mortgage broker, but how do I choose? Is there any criteria how to choose one over another on here?

Regards

Just talk to the ones whose posts you like and go from there. We are all civil .

 

[oc1]

Thankyou all so far for the great advice. Well I definately need to find a mortgage broker, but how do I choose? Is there any criteria how to choose one over another on here?

Regards

I'd call a couple and see who you feel comfortable with. The brokers on the forum would do the job, no doubt about it. Don't let a broker based interstate affect you either.

Oscar

 

[Luckyrooster]

Okay looks like finding a mortgage agent will be the easy part. Now, I'm still confused about which strategy to take.

1) use the whole deposit and buy a more expensive property (house)
2) use the deposit to buy 2 smaller priced units.

Rental cashflow vs. CG

Medium term growth hold.

So many options....lucky this forum is so helpful

 

[Terry_w]

Okay looks like finding a mortgage agent will be the easy part. Now, I'm still confused about which strategy to take.

1) use the whole deposit and buy a more expensive property (house)
2) use the deposit to buy 2 smaller priced units.

Rental cashflow vs. CG

Medium term growth hold.

So many options....lucky this forum is so helpful

Whichever you think will make the most money.

 

[nhg]

Okay looks like finding a mortgage agent will be the easy part. Now, I'm still confused about which strategy to take.

1) use the whole deposit and buy a more expensive property (house)
2) use the deposit to buy 2 smaller priced units.

Rental cashflow vs. CG

Medium term growth hold.

So many options....lucky this forum is so helpful

Strategies adapt over time as you realise all the little rules as you go on this journey.

As for LVR it all comes down to the level of risk you’re comfortable with.

I learnt 4 important lessons since I started a year ago.

1. The importance of undertaking effective Due Diligence (DD)

2. Importance of a good team, accountant, lawyer, tradies (a good mortgage broker is worth their weight in gold)

3. Not understanding trusts and leaving it till too late. (TerryW is very knowledgeable on this one)

4. Purchasing at 80% LVR. Tax headache. If I was to do it again I would push for 90% LVR and keep the rest in an off-set. Many reasons for this. Some would even argue 95% LVR.

 

[Shahin_Afarin]

Okay looks like finding a mortgage agent will be the easy part. Now, I'm still confused about which strategy to take.

1) use the whole deposit and buy a more expensive property (house)
2) use the deposit to buy 2 smaller priced units.

Rental cashflow vs. CG

Medium term growth hold.

So many options....lucky this forum is so helpful

Think long term and have a plan a and plan b. Plan a you try and manufacture CG by developing, or subdividing or whatever the strategy is. If you cannot achieve plan a for whatever reason then have a plan b. Plan b would be to create a neutrally or positive cashflow property. A lot of people are doing this via a Granny Flat (as an example) or renting out rooms (this is common for properties close to major uni's).

If I was trying to achieve the above then I would opt for option 1 in your options above. I do not think you will get this via option 2. In fact I think you will amputate any ability to manufacture CG or create dual incomes.

Units are not bad (I have 2 in my portfolio) however they have to fit in your strategy and I can't see it fitting in with yours.

Regards

Shahin

 

[nhg]

1) use the whole deposit and buy a more expensive property (house)
2) use the deposit to buy 2 smaller priced units.

You can purchase several houses for that amount.

Personally don't like apartments, though you should let the numbers speak.

As eluded to in a previous post. Perhaps look outside simply investing in property and look at 'active' investments such as JV in development (lot's of caution here).

It is quite difficult to make money from simple purchase (even incl reno) of resi IPs.

 

[Luckyrooster]

The wealth of replies has been excellent thus far. I am learning lots. Could someone chime in on the idea of using trusts?
cheers

 

[Luckyrooster]

You can purchase several houses for that amount.

Personally don't like apartments, though you should let the numbers speak.

As eluded to in a previous post. Perhaps look outside simply investing in property and look at 'active' investments such as JV in development (lot's of caution here).

It is quite difficult to make money from simple purchase (even incl reno) of resi IPs.

I'm not sure wat you mean by several houses for that amount. I am based in Sydney, where houses don't trade for much less than 500k and that usually means a 1.5hr commute to the city. I am looking at growth corridors within 15km of Sydney, ideally.

 

[Luckyrooster]

Think long term and have a plan a and plan b. Plan a you try and manufacture CG by developing, or subdividing or whatever the strategy is. If you cannot achieve plan a for whatever reason then have a plan b. Plan b would be to create a neutrally or positive cashflow property. A lot of people are doing this via a Granny Flat (as an example) or renting out rooms (this is common for properties close to major uni's).

If I was trying to achieve the above then I would opt for option 1 in your options above. I do not think you will get this via option 2. In fact I think you will amputate any ability to manufacture CG or create dual incomes.

Units are not bad (I have 2 in my portfolio) however they have to fit in your strategy and I can't see it fitting in with yours.

Regards

Shahin

Thanks Shanin, sound advice. It's a mixed bag on these forums: some day it's better to have one top property that makes value, others say its better to diversify risk and play monopoly with it all and buy as many cashflow positive properties as possible, even if they cost 100k or less. Food for thought, but goodness me there are so many possibilities.