350k for first IP

Hi guys!

This is my first post on the forum so please forgive any contraventions of protocol.

I have unluckily/luckily been awarded roughly $350k from a compensation claim (long story) that I am looking to use for my first IP.

Background: I am currently in uni and have a low income at the moment, so my borrowing power will top about 450k max.
I have been looking to invest for about 8 months now. I have been struggling to get my head around viable areas to buy, with good CG & yields, especially in Sydney (where I live).

My strategy is to buy and hold, so CG is really important to me. Yet, i'm also looking to be positively geared (which in my financial position, is easily attainable), as my income is quite low, so the financial risk + tax benefits of negative gearing wont really suit me.

My options seems to be;

Sydney - buy an apartment out west (Liverpool, Blacktown e.c.t.)

Brisbane - buy a relatively cheap house in areas like Hilcrest, Marsden, Arana Hills. Also have considered inner city apartments for my price range, however i feel like there may be an oversupply.

Melbourne - Haven't really done much research on investing in Melbourne.


I have a fairly limited knowledge in investing, as I am still in my early twenties and have little guidance from anyone. I am unsure of whether to buy an apartment in Sydney (as i know the market), or to bite the bullet and go house interstate.


If you guys were in my position, how would you attack buying your first IP?
 
About 12-18 months ago we helped a student in almost exactly the same situation as yours, find a 1brm apartment in Ashfield. It was just under $350K and with rent in and strata fees out, was virtually cash flow neutral.

Those days in Sydney, are virtually gone for the inner suburbs.

You may get close in areas further out like Liverpool as you suggest.

Other than that, you could try for a 3brm brick & tile house in Logan shire (near Brisbane).
 
In your position I'd buy a modestly priced IP in an area that has both growth and yield potential. As a very broad statement I think Brisbane is probably looking better than most of Sydney or Melbourne for these objectives.

I'd borrow the most I can, but put any surplus cash into an offset account. This would keep the holding costs low and probably make the IP cash flow neutral or even positive - a useful position to be in whilst you're studying. As a secondary benefit a lot of money money would still be available later on once you've finished studying.
 
Hi Schmik,

Good on you for wanting to get in early at a young age and even better that you have funds to back it up.

At your stage, I would suggest reading up on different types of strategies with property investment from negative gearing to positive gearing, capital cities to regional, how to finance a property/portfolio, and different ways to add value etc.

From there you can work out your short and long term property goals and work backwards to figure out exactly where and what you should be buying.

Hopefully by then you will be out of uni and have a proper job/income so you can split that $350k into smaller deposits and purchase a few properties :)
 
Thank you for your help guys! The property market is crazy at the moment for people like myself who are trying to get the first one on the board, and I'm in a very fortunate position over most people my age.

I've also been considering using an 'investment strategist' but I feel like that's money better spent investing.

I guess there's no hurry but while I have been doubting / fearful of making a poor investment, prices have continued to spiral out of my range, particularly in the inner west / st George region where I'm from.

My hesitation stems from decisions such as purchasing a two bedroom apartment in an area like penshurst (17k from Sydney cbd) for around 450-500, or even further out west. Alternatively, I feel like it's a bit of a waste when I can purchase a house in interstate.
 
Hey Schmik

It's normal to feel somewhat overwhelmed and confused about the investment process, it's like learning to ride a bike. I'm a couple years in and there's still so many things to learn.

I'd suggest reading a book or two that cover the basics of property investing, reading the threads on this forum and then planning a short term, medium term and long term strategy. Set a SMART (specific, measurable, achievable, realistic, timely) goal, write it down and stick it up somewhere to help remind yourself of what you need to to achieve your goals.

Best of luck!!
 
Any ideas on where to begin guys, in terms of building a solid plan?

Forgive any ignorance on my behalf, I've been looking around the forum in order to read up on advice given to others however I am still quite confused.

Im taking baby steps so if you guys could help me that would be appreciated.

1: Speak to a broker - I have not consulted in anyone thus far, although I have seen MANY on SS. Can anyone recommend a few?

2: Develop a plan - My head is all over the shop. One half of me is thinking of looking interstate (Brisbane, I'm from Sydney) for CG (affordable on 400$ p/w currently).

Also, the way the market is going, 350k (keeping 30k up my sleeve) is such a big start that im confused whether I invest the whole lot, go for a couple of small ones (as mentioned above), or invest in a property that realistically may be my PPOR in 5 years time (the way the prices are going atm).

3: Read and learn - Any specific things that are must know's for beginners? I have a general perception on +ve & -ve gearing, but what would be something I should really grasp?

Thanks guys!
 
1: Speak to a broker - I have not consulted in anyone thus far, although I have seen MANY on SS. Can anyone recommend a few?

2: Develop a plan - My head is all over the shop. One half of me is thinking of looking interstate (Brisbane, I'm from Sydney) for CG (affordable on 400$ p/w currently).

Also, the way the market is going, 350k (keeping 30k up my sleeve) is such a big start that im confused whether I invest the whole lot, go for a couple of small ones (as mentioned above), or invest in a property that realistically may be my PPOR in 5 years time (the way the prices are going atm).

3: Read and learn - Any specific things that are must know's for beginners? I have a general perception on +ve & -ve gearing, but what would be something I should really grasp?

Thanks guys!

1. I've had good experiences with Terry Waugh whose on this forum. Very knowledgeable and qualified, would recommend giving him a call.

2. Some of the questions you might want to think about is why Brisbane for CG? What are the growth drivers?

For your comment on investing in a property to become your PPOR...that's a tricky area as generally you'd like to invest without emotions but a PPOR would usually have a large emotional component. Getting those two mixed up could mean a poorer investment or a poorer PPOR.

3. Search the forum thread where people have recommended books...won't rehash it but there's tons of good info there that'll cover the basics.
 
Try to get yourself to one of the Somersoft meetings. There is one organised for 20 May. It's very helpful for building knowledge on how to go about it.
 
Hi guys!

This is my first post on the forum so please forgive any contraventions of protocol.

I have unluckily/luckily been awarded roughly $350k from a compensation claim (long story) that I am looking to use for my first IP.

Background: I am currently in uni and have a low income at the moment, so my borrowing power will top about 450k max.
I have been looking to invest for about 8 months now. I have been struggling to get my head around viable areas to buy, with good CG & yields, especially in Sydney (where I live).

My strategy is to buy and hold, so CG is really important to me. Yet, i'm also looking to be positively geared (which in my financial position, is easily attainable), as my income is quite low, so the financial risk + tax benefits of negative gearing wont really suit me.

My options seems to be;

Sydney - buy an apartment out west (Liverpool, Blacktown e.c.t.)

.

Im gonna be bias and say stick with Sydney as im a Sydney investor

1. Esp if your looking for CG ( some pockets still has CG ...and you have mentioned one already - Liverpool)

Units that's sitting in the sub $365-400k is a desirable range for Liverpool given your income.

- maybe stay away from Speed street, unless it's dirt cheap
- Riverbank is the desirable street within that price


2. Your a fist time investors + the questions your asking...tells me you will be likely to take action if it's a Sydney buy ( as it's your local market)

==============


You have to decide btw high rental yield ( 6%+) or good opportunity for CG...and i think for you as a first investor and young + giving your at uni...EVENTUALLY within 1-2 years you would have a full time job with a decent/ average income....RY is not that important at this point in time ( presuming your looking at buying 1 property only for the next 1-2 years)

Focus on CG..capital growth is king for your 1st investment- it's your foundation to build a multiple property portfolio....most ppl run out of deposit/equity first compared to servicing.

With $350k...you have a good base- plan the use WISELY!


Regards
 
Thank you for all the wise words!

Its all a massive learning curve at the moment and I'm finding myself wanting to spend every spare moment learning. Im hooked!

I've spent around 6 months searching for a property, with a very limited understanding of all the essential knowledge you must know before investing. My approach was basically 'this fits in my price range, I like this area..' e.c.t.

Im actually so glad I have not invested yet and have stumbled across SS, plus all the other important investor resources.

Right now, its back to the drawing board for me as I start to build my strategy with the help of a good team while utilising the many resources available to me. Its been overwhelming having little support from anyone so far.

Ill keep you guys posted on how the journey pans out for me. Hopefully in many years down the track, ill be a serial pest on this forum (a helpful one of course), throwing my two cents into everything because I have successfully built a solid portfolio!
 
Any ideas on where to begin guys, in terms of building a solid plan?

Start out with the end in mind....why is it you are investing in the first instance?

Then quantify it specifically in dollar terms per annum.

Once you know that, you can then work out what size asset base you need to acquire to generate that income you require.

Then devise a strategy/plan working backwards to present day with steps of what you need to do along the way to build that asset base.

But, and's here's the BIG but and the reason why it never happens for MOST people -

YOU have to Put It In WRITING & COMMIT to it and review it every day to keep focus. Until this final piece happens your sub conscious will always reject it.


Success is 80% mindset x 20% strategy. In other words, How you think is FOUR TIMES more important than how you plan to do it.

There is a wealth of knowledge & tools available here on SS to educate you on the various methods other people are using for you to read up on.

Ill keep you guys posted on how the journey pans out for me. Hopefully in many years down the track, ill be a serial pest on this forum (a helpful one of course), throwing my two cents into everything because I have successfully built a solid portfolio!

It sure beats working for a living schmik. Let us know how you go.
 
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Somersoft Meeting details please

Try to get yourself to one of the Somersoft meetings. There is one organised for 20 May. It's very helpful for building knowledge on how to go about it.

Hi
How do I find the meeting details. I did a search and couldn't find. I would like attend these meetings

Velli
 
It's a great start to get on this forum, welcome :)

I would suggest start from analysing your strength and weakness.

for example, if you have trade background or have friend or family in the trade, maybe you can think about something like reno and hold/sell.
Even with trade background or connection with trademen, start small, like some cosmetic reno. If you are good at analysing at desk, maybe you can do your research on location, area, building, council, state government projects.....

The idea is to use your strength in building up your wealth.
Also connect with the right type of consultants, like solicitor, broker, agent,builder....

good luck :)
 
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