A few quick questions from a newbie

On a recommendation from a friend, my wife and I (both aged 27) went to a Knowledge Source event on the weekend (don't worry, we didn't buy the $5k course!).

If you don't know, Knowledge Source preaches buying CF+ properties and properties with good growth potential, instead of putting $ into negatively geared investments.

My parents recently retired quite young by buying good negatively geared properties, and we had planned to do the same. We were accordingly both skeptical about the seminar and didn't expect much.

Luckily, we didn't waste our Sunday, because the points made were valid and logical, and we both came out very interested in looking at CF+ property, such as regional unit blocks.

I had a few questions from the day and also since reading up on this website, and would love some input.

1. They told us yesterday to not have your PPOR with the same banks as investment properties. We have about 100k equity in our home, which we would like to use for a deposit instead of going into our cash savings. What is the process for doing this if we don't refinance through the same bank?

2. Pricefinder looks good, but the only product I could find was $180 a month. Is this just what it costs or is there a cheaper alternative? At this stage I think I could get enough value from the free information available if Pricefinder will cost $2k a year.

3. From experience, is it difficult finding renters in regional Victoria to fill a cheap unit? I saw some threads about people having to drop rents and wondered how that applied across the board.

4. When looking for CF+ property, is it as simple as being in the right spot at the right time to find something that works for you? I found a few properties online that look decent, but it seemed too easy, making me wonder what the catch is!

5. When buying insurance for a block on units on the one title, is the usual to get a separate policy for each?
 
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Why do you think regionals will get good capital growth?

I don't...
I would hope to get cash flow from regional units to pay for properties with better growth potential.

Were you confused by this part? "buying CF+ properties and properties with good growth potential, instead of putting $ into negatively geared investments."
I meant 1. CF+ properties and 2. growth
Be nice to get it all in one property but I'm trying to be realistic!
 
There aren't any hard and fast rules. CF vs. Cashflow depends on each individual's circumstances. Some lean in either direction, some have a mix of both. You need to consider what your position is and tailor the strategy to your needs. These seminars like to make things simple because simple sells. It's easy to package up. It's easy to create buzz words. It's easy to communicate. But the reality is everyone is different and so should be your approach.
 
I don't...
I would hope to get cash flow from regional units to pay for properties with better growth potential.

Were you confused by this part? "buying CF+ properties and properties with good growth potential, instead of putting $ into negatively geared investments."
I meant 1. CF+ properties and 2. growth
Be nice to get it all in one property but I'm trying to be realistic!

Have a look at how mining towns have performed recently.
 
Hi Laxation.

If you don't want to fall into the trap of being easy prey for seminar presenters, I would seriously recommend you do a little reading. Ultimately, you need to find a plan that suits your particular situation, goals and risk profile. There is nothing wrong with negative gearing, CF+ property, and all the rest. Each of them has a strategic place in helping you build your portfolio to achieving your ultimate goals. The trick is to learn when to employ which ones and in what proportion. Usage of different banks at different times is all part of it. This knowledge will only come with reading and discussing with others, and then doing. Forget about seminars until you have your strong understanding of how all this fits in. Then, you can much more appropriately decide what educational seminars to attend and how to organise/discard/utilise the knowledge you learn in a more meaningful way.

Just my own opinion.

Good luck

leo
 
Thanks Leo, good points. I wasn't planning on buying any houses today (I'm no dummy I'll wait at least a week:p) and was definitely going to do a lot of research before jumping into anything.

I don't suppose you'd be able to help out with the questions I asked? I know they're basic and there's a lot more to know - but they are just some initial thoughts I've been having.
 
What's a bad strategy? Why?

Because people forget that property is ultimately all about capital growth.

The cashflow helps you. But I'd question what is going to drive up capital values in regional properties.

If you were purely concerned about cashflow, there are many 5-10% yielding products out there with less effort.
 
Hi Laxation,

Hope this helps.

1. They told us yesterday to not have your PPOR with the same banks as investment properties. We have about 100k equity in our home, which we would like to use for a deposit instead of going into our cash savings. What is the process for doing this if we don't refinance through the same bank?

Ignore everything they say, they are not independent and they have an agenda. You need a good mortgage broker who will listen to your situation and then advise accordingly. A good mortgage broker who understands your plans, situation, goals etc will give you much better advice in this area than I or any stranger could.


2. Pricefinder looks good, but the only product I could find was $180 a month. Is this just what it costs or is there a cheaper alternative? At this stage I think I could get enough value from the free information available if Pricefinder will cost $2k a year.

Personally I don't think you need price finder at this point. You are right in saying you can get enough free info at this stage.


3. From experience, is it difficult finding renters in regional Victoria to fill a cheap unit? I saw some threads about people having to drop rents and wondered how that applied across the board.

I don't know about the rental situation in VIC, but if you do a little research on REA, and call say 5 agents, im sure you will get the answers you need.


4. When looking for CF+ property, is it as simple as being in the right spot at the right time to find something that works for you? I found a few properties online that look decent, but it seemed too easy, making me wonder what the catch is!

Being at the right spot at the right time is not always easy though. Finding something that works for you is one thing, then being able to have an action plan to pursue it and negotiate the deals is something else. That's where the reading and learning more comes in. Developing a team is all part of that. There is no shortcut to all this.


5. When buying insurance for a block on units on the one title, is the usual to get a separate policy for each?

Ring a few insurance agencies and you'll have an accurate answer pronto.

Leo
 
If you don't know, Knowledge Source preaches buying CF+ properties and properties with good growth potential, instead of putting $ into negatively geared investments.
OMG! how long has this strategy been around?

Damn; been doing it all bloody wrong. :p

But seriously; this is the best place to be for the right info and it's free (well; there is an emotional cost attached to being here - see my above sarcastically humorous quip :D)

1. They told us yesterday to not have your PPOR with the same banks as investment properties. We have about 100k equity in our home, which we would like to use for a deposit instead of going into our cash savings. What is the process for doing this if we don't refinance through the same bank?
Use the equity for the deposits and purchase costs, but set up a separate loan using with another lender, with the IP as the security.

2. Pricefinder looks good, but the only product I could find was $180 a month. Is this just what it costs or is there a cheaper alternative? At this stage I think I could get enough value from the free information available if Pricefinder will cost $2k a year.
Don't know much about it, but being here will get you a lot of info you need.

3. From experience, is it difficult finding renters in regional Victoria to fill a cheap unit? I saw some threads about people having to drop rents and wondered how that applied across the board.
Even regionals have renters, and better properties will always fill faster than bad properties.

The worry with regional is the longer term trends for population, employment etc...DD is required of course to establish the factors required

4. When looking for CF+ property, is it as simple as being in the right spot at the right time to find something that works for you? I found a few properties online that look decent, but it seemed too easy, making me wonder what the catch is!
That's a normal reaction, but then you need to do your DD to see if it is worth the bother.

5. When buying insurance for a block on units on the one title, is the usual to get a separate policy for each?
Don't know the answer to that one.
 
I started out in regional, I didn't have the cashflow to fund NG, so I bought something a teeny bit positive. i was lucky to get some capital growth the first couple of years, which I was able to leverage into other properties, both regional and metro.

Id say there is capital growth potential in regional areas, but as a general rule the more potential for capital growth, the lower the rental yield. Obviously, there are always exceptions to general rules, which is what a lot of people love about property.

In regards to your questions, as previously noted, you can take out the equity now from your home, and get further separate loans for the investment properties. Being with a different lender is good advice from a risk point of view, but it isn't game changing. The main thing is to avoid Xcol, have a good plan, and a good team of advisers.

Many brokers have free access to this kind of valuer software, and can generate reports for free by email. In the end they are just opinions, and give you a feel for price, there is no substitute for putting in the legwork.

Regional tenants can be hard to find, depending on the market. 'One horse towns' can be difficult if the horse industry moves into another town. There are lots of strategies to minimize vacancy risk, but this risk is one of the reasons why the yield is higher.

There are always good deals around, but you should always be able to find the 'catch'. Whats the saying in poker? If you don't know who the patsy is, its you.
 
100% agree. Every strategy, approach and buy young, starting out, wealth chasing investors should make is only for the advancement and increasing of 1 thing. CG.

Leo

So I haven't look at sale prices in our area for a few months and just checked - our house could be worth 100k more than I thought if we put some effort into fixing the front yard.

The easy money sounds so easy, but it certainly doesn't come in to the tune of 200k in 3 years like the CG on our home has done.

Back to the drawing board maybe...
 
1. They told us yesterday to not have your PPOR with the same banks as investment properties. We have about 100k equity in our home, which we would like to use for a deposit instead of going into our cash savings. What is the process for doing this if we don't refinance through the same bank?

We went through our PPOR bank for a number of IPs and had the all crossed - cost a little bit to undo this when you finally got educated and used a good broker.
Get a good broker to start with and the path will be much easier for you.



2. Pricefinder looks good, but the only product I could find was $180 a month. Is this just what it costs or is there a cheaper alternative? At this stage I think I could get enough value from the free information available if Pricefinder will cost $2k a year.

Subscribe to the API magazine for 12 months and get 3 months free access to Pricefinder (sometimes goes for a bit longer). When this expires get another subscription - or extend your subscription to get another free period. We had 3 copies of the magazine arriving at one point - but still much, much cheaper.

3. From experience, is it difficult finding renters in regional Victoria to fill a cheap unit? I saw some threads about people having to drop rents and wondered how that applied across the board.

Cannot comment on regional Victoria. We purchase a small "block" of 3 in Brisbane, did a renovation and got around 6.5% yield to start with (on all costs. You can find reasonable yield without going regional.
4. When looking for CF+ property, is it as simple as being in the right spot at the right time to find something that works for you? I found a few properties online that look decent, but it seemed too easy, making me wonder what the catch is!

You are much better off trying to create some extra yield by renovating or adding a granny flat - we have done this on multiple occasions. There is always a "catch" with a high yield straight from purchase.
5. When buying insurance for a block on units on the one title, is the usual to get a separate policy for each?[/QUOTE]

With all our dual occupancies (4 x 2 and 1 x 3) we have separate insurance policies for each occupany. The building insurance is just per property.
 
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