1st Investment property - PERTH, 21yo Mining wage

F

Fraser

Hi there,

I'm a 21yo Male from Perth on a mining income of 250k pa
I've been reading about property investment and taken quite an interest in it for about a year now and believe it's time to enter the market for myself.

My current strategy is a buy and hold, older style properties in the right locations. Areas of high growth, something I can eventually renovate/develop when I have abit more time at home and it is practicably possible.

I have chosen to invest in Perth as it will be my first purchase, although I'm not overly impressed with the current market conditions I think this will probably be the best bet to find my feet considering it is where I'm from.

At the moment with no debts, my current income allows me to save deposits quick smart and my current strategy is to get as many properties as quickly as possible.

Looking to utilise the FHOG for the first property purchase of up to 500k, interest only loan with 100% offset account to lower the interest for the first 6 months to fulfil the FHOG period, after this time change to investment and probably look to get back into the market interstate with the savings.

Current areas I've been looking in are - Morley, Bayswater, Carlisle, Ashfield, Embleton, Rivervale, Wilson, Hilton, Palmyra, Hamilton Hill, Innaloo, within a 15km radius of the CBD, Older style 3x1 houses with a general land size of 400sqm + But am finding myself getting bogged down for choice on which of these would best suit.

I guess what I'm looking for is abit of advice from some experienced investors and just some general help on where I should go from here.. I'm struggling to surround myself with likeminded people because of my Nightshift job role, that's where this forum has really been helping me get my head around my overall plan.

Does anybody else currently own IP's in any of these suburbs?

Would greatly appreciate any advice given

Regards,

Fraze
 
What are you actually trying to achieve from properties? Over what time frame and how active/passive would you like your involvement to be?

The reason your bogged down for choice is because the net you are casting is too wide. The suburbs you've listed are dissimilar. Older 3x1s are fine (albeit vague) but for what purpose? To renovate vs redevelop vs set and forget for 10 years vs what? And how will this purchase help you get into subsequent purchases?

The other thing is your income - are you on a long term contract or stable spot? Do you think you can stay on that level? What are debts do you have?
 
I cant really comment on what you should or should not invest in.

My primary comment is to invest to a level of income that you can generate away from the mining sector

ifthats 100k, invest to the capacity of 100 k

I see many clients that have burdened themselves with golden handcuffs with FIFO and expatriate work.

Then there is the obvious risk of income loss due to redundancy or non insured injury.

ta
rolf
 
Your doing the right thing hanging around here. Some of those suburbs do look promising long term and i also have properties in some of those suburbs. And the rest of those suburbs not so much.

Some questions which will need to be answered to help you further

- deposit?
- time in employment?
- payg?
- swing?

Also be aware the fhog is droping to properties under 430k which will effect the area you choose for the first one.

And if your upto it i would suggest with that income and ability to save is to look at development sites to leapfrog your aquisition phase.

Cheers
 
Rolf Latham said:
I cant really comment on what you should or should not invest in.

My primary comment is to invest to a level of income that you can generate away from the mining sector

ifthats 100k, invest to the capacity of 100 k

I see many clients that have burdened themselves with golden handcuffs with FIFO and expatriate work.

Then there is the obvious risk of income loss due to redundancy or non insured injury.

ta
rolf
Click to expand...

quoted for truth.
 
Fraser said:
My current strategy is a buy and hold, older style properties in the right locations within a 15km radius of the CBD, 3x1 houses with a general land size of 400sqm +
Click to expand...

I would very much question your choice of strategy. It doesn't seem sound at all.

The Banks are going to be falling over themselves with your high income and no debt to throw money at you. I reckon they would allow you to support and pay for at least 5 or 6 residential Tenants who are constantly on the lookout for cashed up Landlords to support their chosen lifestyle of no maintenance headaches and occupying a house that they couldn't afford themselves.

At just 21, and a sky high income, the world is your oyster. Congratulations on choosing a great industry to work in. I would suggest you pour your money into solid dividend paying shares of very large companies....and wind the gearing up to get some volume happening.

If the sharemarket scares you at this stage, get reading and get educated.

I can tell you, gathering a gaggle of loss making rundown old houses with whingy needy Tenants with the law on their side will scare you far more, especially if you lose your job's income.

Fraser said:
I'm looking for is a bit of advice from some experienced investors and just some general help on where I should go from here.
Click to expand...

I was pretty much in your position a few decades ago and chose the same path you are looking at. It took me about 8 or 9 years to wake up to myself. The lure of "to get as many properties as quickly as possible" is a very strong one, and one that I fell for initially....but you need to see past the skiting and self congratulatory phase, and really check out the big drivers that will dictate your strategy, like ;

  • Capital growth rate trends of where you are looking at
  • The rule book for the game you wish to pay (the RTA)....bet you haven't even opened it
  • Future infrastructure plans (have you checked what council and Govt are planning)

Don't go signing big mortgages and hocking yourself up to the eyeballs without really being sure of what you actually wish to achieve.

I can guarantee, standing there after 8 or 10 years and saying "I own 6 negatively geared old houses" will sound extremely impressive to the average punter on the street but won't sound that flash to you or your Banker....you'll know the cashflow reality of what that actually means.
 
I have IP's in Ashfield and Bassendean. Always easy to rent and quality tenants. There is higher demand for rentals in Bassendean than Ashfield. Some people/statistics are reporting rents $ are going down. I feel bassendean won't be affected as such high demand. The cafe's, rail, markets, new shops and re-development of shopping centre around Old Perth Road should keep demand strong also. I've noticed Bayswater around Kenmure Ave is seeing a revival also. Lots of old houses being knocked down near the boat ramP and new quality two-storey being built. Possibly worth looking into also.
 
Sorry to see so much side tracking re your age and salary. I don't even want to know what roster and how many night shifts you are on.

I would recommend you save up a solid cash buffer. Don't look at the gross figure on your contract. Instead see how much you can really put aside at the end of each month. That's where many people miscalculate and end up struggling. In theory, I could save so much. But in reality, everyone needs to get away sometimes - and that costs.

Also, the guys at momentum wealth in East Perth do free initial consultations. Yes they are buyers agents looking to make money with you, but they see a lot of guys like you come through their door and I would think they can tell you what is realistic and what isn't as well as how to address the risk of working in a cyclical industry without getting analysis paralysis. Hegney have a good reputation too.

Some people here caution about mixing PPOR and IP criteria. Personally, if you don't mind too much where you live I don't see anything wrong with using your FHOG for your first IP (if it's below 430k). I did that and it worked well for me. And goodness knows when they'll abolish it

Other resources I would recommend is start reading the various magazines, Australian property investor etc. I like Michael Yardneys blog as well.

Good luck & avoid shortcuts.
 
D.T. said:
What are you actually trying to achieve from properties? Over what time frame and how active/passive would you like your involvement to be?

The reason your bogged down for choice is because the net you are casting is too wide. The suburbs you've listed are dissimilar. Older 3x1s are fine (albeit vague) but for what purpose? To renovate vs redevelop vs set and forget for 10 years vs what? And how will this purchase help you get into subsequent purchases?

The other thing is your income - are you on a long term contract or stable spot? Do you think you can stay on that level? What are debts do you have?
Click to expand...

Hi there,

Thanks for the reply

Well in the long run what im trying to achieve is financial freedom. I'm looking to invest in the long term, for as long as it takes me to achieve my goals.

I believe in my current situation I can be very active and aggressive in terms of investment, I believe my risk profile is high.

My current outlook and the reason behind my strategy was to buy in neighbourhood areas to those going through rezoing/redevelopment. Central areas where demand is high, near local shopping complexes, schools, uni's but blocks were still relatively large.
My way of looking at it was if I could get into these areas now, in the long term land scarcity would be a growth driver. That, as well as my ability to bargain a lower price to buy due to the older style house which in time I would look at renovating or redevelopment (when I have abit more time on my hands)
So I guess it would be both, set and forget for the time being until I am able to spend more time in Perth to organise and undergo renovation/redevelopment .

I currently have no Debts, although I'm looking to get into the market within the next month or two.

My current position is stable, I'd say I've got another 3 years on this project - but anything could happen. I don't think I'd take much of a pay cut staying FIFO, it would just depend on the roster. For those who were interested I'm up on the Barrow island Gorgon Project 29 and 9.

What do you think about the strategy I have? Any advice is greatly appreciated :D

Regards,

Fraser
 
Rolf Latham said:
I cant really comment on what you should or should not invest in.

My primary comment is to invest to a level of income that you can generate away from the mining sector

ifthats 100k, invest to the capacity of 100 k

I see many clients that have burdened themselves with golden handcuffs with FIFO and expatriate work.

Then there is the obvious risk of income loss due to redundancy or non insured injury.

ta
rolf
Click to expand...


Hi rolf,

Yeah I agree with this, I don't think I'd like to fall into a high negative gearing trap as anything could happen in my industry.

What do you think about a portfolio structured half with high yielding and half with growth properties to keep the negatives low but still benefit from the tax advantages?

Regards,

Fraser
 
HD_ACE said:
Your doing the right thing hanging around here. Some of those suburbs do look promising long term and i also have properties in some of those suburbs. And the rest of those suburbs not so much.

Some questions which will need to be answered to help you further

- deposit?
- time in employment?
- payg?
- swing?

Also be aware the fhog is droping to properties under 430k which will effect the area you choose for the first one.

And if your upto it i would suggest with that income and ability to save is to look at development sites to leapfrog your aquisition phase.

Cheers
Click to expand...

Hi there,

Thanks for the reply,

I currently have 40k deposit although I'm looking at taking on a 95% LVR and capitalising LMI for my first and second purchase.

I've been in my current role for 13 months, although I've worked on a variety of mine sites and refinery's prior - Same job role.

I'm paying huge tax which is something I'd like to look at minimizing

I am aware of the FHOG drop which is why I would like to get into the market before the end of the financial year

26 and 9 roster, I am keen on development the only problem i feel is my roster is holding me back from being around throughout the whole process.. I'm not sure if that would be an issue.

regards,

Fraser
 
Dazz said:
I would very much question your choice of strategy. It doesn't seem sound at all.

The Banks are going to be falling over themselves with your high income and no debt to throw money at you. I reckon they would allow you to support and pay for at least 5 or 6 residential Tenants who are constantly on the lookout for cashed up Landlords to support their chosen lifestyle of no maintenance headaches and occupying a house that they couldn't afford themselves.

At just 21, and a sky high income, the world is your oyster. Congratulations on choosing a great industry to work in. I would suggest you pour your money into solid dividend paying shares of very large companies....and wind the gearing up to get some volume happening.

If the sharemarket scares you at this stage, get reading and get educated.

I can tell you, gathering a gaggle of loss making rundown old houses with whingy needy Tenants with the law on their side will scare you far more, especially if you lose your job's income.



I was pretty much in your position a few decades ago and chose the same path you are looking at. It took me about 8 or 9 years to wake up to myself. The lure of "to get as many properties as quickly as possible" is a very strong one, and one that I fell for initially....but you need to see past the skiting and self congratulatory phase, and really check out the big drivers that will dictate your strategy, like ;

  • Capital growth rate trends of where you are looking at
  • The rule book for the game you wish to pay (the RTA)....bet you haven't even opened it
  • Future infrastructure plans (have you checked what council and Govt are planning)

Don't go signing big mortgages and hocking yourself up to the eyeballs without really being sure of what you actually wish to achieve.

I can guarantee, standing there after 8 or 10 years and saying "I own 6 negatively geared old houses" will sound extremely impressive to the average punter on the street but won't sound that flash to you or your Banker....you'll know the cashflow reality of what that actually means.
Click to expand...

quoted for truth
 
Dazz said:
I would very much question your choice of strategy. It doesn't seem sound at all.

The Banks are going to be falling over themselves with your high income and no debt to throw money at you. I reckon they would allow you to support and pay for at least 5 or 6 residential Tenants who are constantly on the lookout for cashed up Landlords to support their chosen lifestyle of no maintenance headaches and occupying a house that they couldn't afford themselves.

At just 21, and a sky high income, the world is your oyster. Congratulations on choosing a great industry to work in. I would suggest you pour your money into solid dividend paying shares of very large companies....and wind the gearing up to get some volume happening.

If the sharemarket scares you at this stage, get reading and get educated.

I can tell you, gathering a gaggle of loss making rundown old houses with whingy needy Tenants with the law on their side will scare you far more, especially if you lose your job's income.



I was pretty much in your position a few decades ago and chose the same path you are looking at. It took me about 8 or 9 years to wake up to myself. The lure of "to get as many properties as quickly as possible" is a very strong one, and one that I fell for initially....but you need to see past the skiting and self congratulatory phase, and really check out the big drivers that will dictate your strategy, like ;

  • Capital growth rate trends of where you are looking at
  • The rule book for the game you wish to pay (the RTA)....bet you haven't even opened it
  • Future infrastructure plans (have you checked what council and Govt are planning)

Don't go signing big mortgages and hocking yourself up to the eyeballs without really being sure of what you actually wish to achieve.

I can guarantee, standing there after 8 or 10 years and saying "I own 6 negatively geared old houses" will sound extremely impressive to the average punter on the street but won't sound that flash to you or your Banker....you'll know the cashflow reality of what that actually means.
Click to expand...


Hi Dazz,


I understand I am an easy target for banks and i feel that the only way i will truly know the hardship behind being a landlord is to actually go ahead and become one for myself.

I totally agree with what your saying and I think it should be important for me to increase my knowledge on the share market which to be honest at this stage is very minimal and diversify my investment funds into a variety of long term stable companies.
I have had a lot of good feedback in regards to Energy shares and i do feel that if i don't get in on the action i will be missing out.

Do you have a diversified portfolio of shares and property?

Historical growth rate trends I've briefly gone over although i think because of the strategy i was considering i was counting more on gentrification to create new growth that has yet to be seen

The RTA you're 100% right i haven't even opened it :D

I have also done abit of research into infrastructure projects but nothing major, I was inclined to look in places like Hamilton Hill, Spearwood and Coogee due to the new marina and residential outlook + transport to Fremantle that the council had for the area down there but in saying that I've never actually been down there and had a look for myself it's all just information I've been gathering from behind my desk..

Cheers for the reply mate,

Regards,

Fraser
 
heroine said:
Sorry to see so much side tracking re your age and salary. I don't even want to know what roster and how many night shifts you are on.

I would recommend you save up a solid cash buffer. Don't look at the gross figure on your contract. Instead see how much you can really put aside at the end of each month. That's where many people miscalculate and end up struggling. In theory, I could save so much. But in reality, everyone needs to get away sometimes - and that costs.

Also, the guys at momentum wealth in East Perth do free initial consultations. Yes they are buyers agents looking to make money with you, but they see a lot of guys like you come through their door and I would think they can tell you what is realistic and what isn't as well as how to address the risk of working in a cyclical industry without getting analysis paralysis. Hegney have a good reputation too.

Some people here caution about mixing PPOR and IP criteria. Personally, if you don't mind too much where you live I don't see anything wrong with using your FHOG for your first IP (if it's below 430k). I did that and it worked well for me. And goodness knows when they'll abolish it

Other resources I would recommend is start reading the various magazines, Australian property investor etc. I like Michael Yardneys blog as well.

Good luck & avoid shortcuts.
Click to expand...


Hi there,

Ahh it's fine, the money is good and everything but what people don't seem to take into account is the 3/4 of your quality of life spent away from civilisation :cool:

Thanks for the sound advice, I have heard Momentum wealth employees speak at several seminars and they seem to be quite reputable. Have you ever used them personally?

The FHOG I just feel that it's free money I may aswell be using while it's there and seeing as it's slowly diminishing I will probably go ahead with it while I can.


Regards,

Fraser
 
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