Bought 1st property, now what ?

Z

zee

we've finally managed to buy our first property. (PPOR) . Our offer was accepted before christmas and we settled on the second week of January. Now, there are talks about interest rates rising. We didn't do much research on the different loans available. We took a loan with Suncorp with a 1 year honeymoon rate and then the rate will be flexible after 12 months. I am worried that by the time the honeymoon rate period finishes, the rates will be higher. Should we contact Suncorp now and fix our homeloan? WHat are the costs / process involved in fixing the loan ? I'd really appreciate some advice and some links/ books to educate myself on this matter.

Also, this property was valued by suncorp , 10K above the purchase price. We also paid 20% deposit. I vaguely understand the concept of accessing your equity / using your equity to purchase another property but i would love to learn how. How much equity do we need to have on this property before we can use it for buying an IP ?

I guess what im trying to say is, I need some guidance. We have just purchased our first property and the talks about interest rates rising and house prices falling are not very encouraging. WE would like to buy more properties and would like to learn the best way of doing that, in this market situation. I would appreciate all advice on which books/links to check out , or course/ seminar to attend to, to understand RE a lot more.

thanks,
zee
 
Hi Zee

Congrats on the first deal. That is the hardest one and I am thrilled for you.

My thoughts are that you ignore the scaremongering. The media sells more papers and air space for advertising if they have "bad" news and given the number of people who have bought property over the last 5 years in particular they have a captive and eager audience.

Yes, a small increase in interest rates is predicted.

However, have a look at what the banks are quoting as their long term fixed rates. What are they quoting for 3 years? 5 years?

Remember, the banks are here to make a profit for their shareholders and one of the ways they do this is to lock you into a fixed rate that is higher (over the average term) than the variable rates. So, if the bank's are quoting low fixed rates then it should tell you that they do not expect interest rates to rise very much at all.

As for property prices falling....I have no idea. I do not personally expect to see this much unless something significant happens within our markets such as a spike in interest rates or unemployment jumping.

Besides which, if you do not sell your property then it will not matter if prices fall unless you do not pay the bank each month. (Admittedly,a lower value on your home will make it harder to access the equity for future investing though)

You have good equity in your first property. Allow yourselves to get used to the mortgage and pay off as much as you can so that even if rates rise or prices drop you are no worse off. Doing this, you will show the banks that you are a good customer; put yourself in a stronger financial position and maximise your ability to buy property number 2 shortly.

There is no rush.

Good luck with your journey and once again, congrats.

Dale
 
Congratulations Zee on your first property purchase, usually the most difficult emotionally.

I bought my first property 19yrs ago when interest rates were more than 16%! Pretty boring really, the sharemarket collapsed in 87, Collingwood won the grandfinal in 90, the first war in Iraq in 91, and around 93/94 you couldn't give houses away in the area I purchased! Nobody was buying, this was after the Pyramid Building Society and the State Bank of Victoria went belly up. I kept making the minimum repayments and life just went on, I still went out, I still took overseas trips and still sqandered lots of money - I botherd no one and no one bothered me.

But that first property purchase became my greatest leverage machine 10 years on when I actually "did" investing rather than just reading about it.

Zee welcome to the minority club, you have and absolutely fantastic rosource just here! And you have made a fantastic start. Your lesson will continue!

wombat
 
Zee,

Congrats also.

zee said:
WE would like to buy more properties and would like to learn the best way of doing that, in this market situation. I would appreciate all advice on which books/links to check out , or course/ seminar to attend to, to understand RE a lot more.
Click to expand...

Study Somersoft and you'll find it all there.Well almost.
Just start using the search function.
As far as good links on SS go there are too many but a good start could be the "sticky ones".

A86
 
Hi Zee,

Congratulations. I think you've commenced a very rewarding journey.

Dale is right about the media. They like to pretend that property investing is rocket science and that most people are highly likely to fail dismally at it. It's not true. If I were you I would start building up equity in your property (by paying down the loan and allowing time for capital growth). Whilst waiting to purchase more property I would start learning as much as possible about this type of investment. The Jan Somers books are excellent for new investors as is Ordinary Millionaires by Jim McKnight (for some inspiration).

Best of luck
 
Zee,

Congratulations on your purchase.

I'm not sure about the Honeymoon rates but you should either call your mortgage broker (if you used one) or Suncorp and ask them about fixing your loan. There may be costs involved !

Fixing loans may give you a sense of security but can often tie up any equity in your property (please ask about this also).

This may sound boring but I would spend several months reading as many property investment books as possible (and there are plenty out there). This is conjunction with reading the forum will help you 'find your way'

Good luck
 
Hi Zee.

Well done on your purchase. I would just like to repeat what a few others have already said. That is, before you consider purchasing an I/P, get comfortable with your repayments on your ppor. If you can afford to make extra repayments, then fantastic. If your loan was arranged through a mortgage broker, you could possibly speak to him/her about your concerns. If you arranged the loan yourself it might be a good idea to speak to a GOOD mortgage broker who can give you some ideas on possible scenarios for your individual situation.

Hope this helps and good luck

Regards
Marty
 
Congratulations on your purchase! I'm yet to make my first purchase. :p

zee said:
I'd really appreciate some advice and some links/ books to educate myself on this matter.
Click to expand...

There's plenty out there. :)

I would recommend the following:
  • Jan Somer's More Wealth from Residential Property.
  • Anything by Margaret Lomas.
  • Steve McKnight's 0 To 130 Properties in 3.5 Years.
and not necessarily in that order. ;)

I think these books are a good starting point for learning about property investing.

zee said:
Also, this property was valued by suncorp , 10K above the purchase price. We also paid 20% deposit. I vaguely understand the concept of accessing your equity / using your equity to purchase another property but i would love to learn how. How much equity do we need to have on this property before we can use it for buying an IP ?
Click to expand...

That would depend on the individual circmstances. These books, and especially Ja Somer's, will explain this point particularly well.

Hope that helps. Ang good luck on your journey. :)
 
I can shorten Mr McKnights book for you. Buy property where the rent is greater than the mortgage. I guess he would have sold exactly 0 books if he'd cut out all the waffle.

IMHO - Jan Sommers Books are by far the best.

Again this is just my humble opinion - take advantage of the historic low rates and pay off as much of your home loan as possible. In case you didn't read it ---- Wombat "I bought my first property 19yrs ago when interest rates were more than 16%!"
 
Zee,

Congratulations on your first purchase.

In regards to interest rates, you are on a preferential rate right now, so why not take advantage of it?

I took a similar loan for one of my properties not long ago. After the first year, the rate was due to jump by 1%. What I did is to switch to a fixed rate at the end of the 'honeymoon' period. Currently, fixed rates are cheaper than variables rates.

That might be your best option with interest rates. Contact your lender and ask what are the options (and at what cost) at the end of the honeymoon period.

Cheers,
 
In addition to some of the other stuff mentioned, read John Burley's book (some title like 'Wealth Secrets of the Rich' - they have to put these silly titles on to sell, I guess).

In it, look at the sections on automatic investing, debt termination and budgets. Depending on your circumstances, some or all of these could be really helpful. Get yourself on a very firm financial footing, and learn to handle money - it's that inability more than any other that leads to poverty.

Affordig a ppor these days is as hard as it was 25 years ago, when I bought mine, so I know you may have a bit of a struggle ahead. Stay positive and be patient - investing is not a short term occupation and then 'game over'.

Best wishes
 
Couple more books worth getting hold of are Dale's "Trust Magic" and his tax book which I only picked up yesterday (Thanks Dale) but have already forgoten the title of. Along with all the other guys info above, learn about what structure your investment vehicle (trust etc) should take. To my mind I wish I had of learnt about this before I charged in with lots of enthusiasim and not many skills and knowledge. As some others have said there is no rush, just put together a long term (10yr plus) plan and go for it. Dont worry about missing 'bargins' as there is so much money to be made everywhere, you just have to learn how to see it and the books mentioned above and this website are a great start. Spend the time (now), to drink the wine (later). Good luck and welcome to this forum.
 
Thank you everyone for all your fantastic replies!

I have read Jan Somers' "Story by Story" book a year ago and we definitely got inspired by those stories. I will continue to educate myself while we try to pay off our mortage as quickly as possibly so by the time we are financially ready to take on an IP, we will not feel so lost ( like we did when we were first trying for our first RE purchase).

Once again, thanks for all your encouragement and advices, it makes the learning process a lot more comfortable knowing there's always help available.


cheers,
zee
 
zee said:
I guess what im trying to say is, I need some guidance. We have just purchased our first property and the talks about interest rates rising and house prices falling are not very encouraging. WE would like to buy more properties and would like to learn the best way of doing that, in this market situation. I would appreciate all advice on which books/links to check out , or course/ seminar to attend to, to understand RE a lot more.

thanks,
zee
Click to expand...


1) What books / links / seminars etc, are going to tell you whether the market is going to go up or down and when ? And if they knew definitively, why would they tell ?



2) You should also be aware that this thread has been posted to a UK property crash forum, and thery are calling it (this thread) a bit of a sham. Those are not my views - I just thought I'd point it out to you.

Cheers
JP
 
shazza said:
What do you mean by 'sham' JP? Arent you nice letting us know what was written on another forum.

cheers Sharyn
Click to expand...


What's nice / not nice about letting you know what's written on another forum ? I thought the creator of this thread might be interested, but if YOU"RE not, skip it.

Here's the link.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=565

Here's some of the derogatory comments.

- Irony bypass, chaps? It's a blatant wind up.
- You have to be kidding!?
- "We would like to buy more property but we are concerned about rising interest rates and falling house prices"..........?
- Are you having a laugh...

From that, I deduced that they thought it was a bit of a sham (as I said, not my view)


In fact, Sharyn, if I'm not mistaken, I saw some other threads here refering to some other material in that forum. What's good / not good, and what's nice / not nice about that ?

Get a grip, will 'ya

Regards
JP
 
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