Entering the property game

Hi all,

i have been reading countless topics on here and learnt a great deal, a lot of excellent reading and knowledge gained for sure! anyway i have recently purchased my first property i will tell you about later. My goal/ dream is to once day create a full time income from property investing/ developing. I am currently gaining as much knowledge as possible so i am asking if anyone can reccomend any good books to read.

A little bit more about me:

23 from adelaide. I have recently bought my first property in Morphett Vale, SA. i bought the place for 280,000 with my brother 50/50. i had saved 20,000 for a deposit however got the idea to go traveling which i am glad i did and spent the money i saved on a crazy 4 month holiday around the world. I managed to get my parents to gurantoor our loan so i could go traveling and buy a property also. unfortunately this meant we borrowed about 95% with my brothers contribution also.

The house is a 3 bedroom solid brick home built in 1974, 650sqm & requiring a fair bit of modernisation. we are both electricians employed by a local business. We both have a passion for property, Ive considered becoming a real estate agent but probably not the best move financially, so i have decided i will start my own business (hopefully double my earnings) and my bro will join the ranks once there is enough work for him also.

I am planning on selling my boat (10k) second car (5k) to help with starting up my business and to also have a bit of financial backing for a rainy day. I hope to save approx 25k this year so i can buy our second property. I will be on the look out for large corner blocks ripe for sub division.

I would love to hear from other keen property investors with any tips or advice they have to offer.

Regards
 
Hi all,

i have been reading countless topics on here and learnt a great deal, a lot of excellent reading and knowledge gained for sure! anyway i have recently purchased my first property i will tell you about later. My goal/ dream is to once day create a full time income from property investing/ developing. I am currently gaining as much knowledge as possible so i am asking if anyone can reccomend any good books to read.

A little bit more about me:

23 from adelaide. I have recently bought my first property in Morphett Vale, SA. i bought the place for 280,000 with my brother 50/50. i had saved 20,000 for a deposit however got the idea to go traveling which i am glad i did and spent the money i saved on a crazy 4 month holiday around the world. I managed to get my parents to gurantoor our loan so i could go traveling and buy a property also. unfortunately this meant we borrowed about 95% with my brothers contribution also.

The house is a 3 bedroom solid brick home built in 1974, 650sqm & requiring a fair bit of modernisation. we are both electricians employed by a local business. We both have a passion for property, Ive considered becoming a real estate agent but probably not the best move financially, so i have decided i will start my own business (hopefully double my earnings) and my bro will join the ranks once there is enough work for him also.

I am planning on selling my boat (10k) second car (5k) to help with starting up my business and to also have a bit of financial backing for a rainy day. I hope to save approx 25k this year so i can buy our second property. I will be on the look out for large corner blocks ripe for sub division.

I would love to hear from other keen property investors with any tips or advice they have to offer.

Regards

You realise that if you start your own business you won't be able to get a loan? Well for minimum 1 year I would think

If your income will allow I would buy a second IP before you quit - make sure it's only slightly negatively geared if at all
Then you can start your own business. But leave a kitty on the side for loan and expense repayments
 
Does going 50/50 with another person still negatively affect serviceability these days, in that the bank will see one person as being liable for the whole loan?
 
Hi, cheers for the reply. yes i am aware most banks require 2 years of financial documentation, but others 1. I will be starting by business before i buy my next IP as i believe i will be better of financially long term starting this year as i have a few good job prospects in the pipeline.

the property under both our names but the loan is not split so yes i gather the bank would consider us both 100% responsible for the property.
 
You realise that if you start your own business you won't be able to get a loan? Well for minimum 1 year I would think

If your income will allow I would buy a second IP before you quit - make sure it's only slightly negatively geared if at all
Then you can start your own business. But leave a kitty on the side for loan and expense repayments

That's interesting why would you not be able to get a loan if you start your own business?
 
Does going 50/50 with another person still negatively affect serviceability these days, in that the bank will see one person as being liable for the whole loan?

most but not all lenders still apply a "joint and several continget liability" to future lending,

Means the lender saddles you with all the debt repayments,but only give you half the rental income

ta
rolf
 
Cause banks want 2 years worth of tax returns for any person who runs a business.

OK the reason I ask is that I am thinking of setting up a sideline business but will still have my regular job, just wondering if this will impact upon anything to do with getting a mortgage?
 
You realise that if you start your own business you won't be able to get a loan? Well for minimum 1 year I would think

This is correct. ANZ is one year and the rest are two years and this is providing you have adequate surplus income left after living expenses, mortgages and business costs are taken into account. Money in v money out to simplify and whats left to service the debt inclusive of the lenders margin.

Speaking from experience as an MB and a brother in law who started a business as an electrician you would be doing very well to make a decent profit in the first year out and more than likely to break even without a substantial contract or large client bast to tap into.

Brother in law is in his fourth year and only started to "kick it" in his third and thats because I connected him with a networking group that he now generates a substantial amount of business from.

Ps. I don't take any credit for his success. Ok just a little :rolleyes:
 
Yes I know a lot of people who have gone out on their own only to return to full time employment within 12 months. I have a contracting agreement with my current boss to get started. I'm sure it will pay off in the long run
 
congratulations toff90!

Well done buying your first investment property at 23yo! Sounds like you and your brother have sensible heads on you and you will go a long way in the investing game.

Your strategy of buying subdividable corner blocks is good- particuarly properties where the front house can be retained and renovated and tennanted whilst subdividing off the rear yard. I am currently employing this strategy myself and have had some success (although only one project completed to date and also in the Adelaide suburb of Morphett Vale, and currently looking to purchace the next.)

Feel free to send me a personal message if you'd like to chat about the process/costs/time line/contacts/return on investment etc etc.
 
It's not always the case that you need 2 years, sometimes even less than 1. Who is your current loan and everyday banking with? Often I've had loans approved for recent to self employed if they have stayed in the same industry and everyday banking is with the same bank (CBA).

What is the current situation for the house you purchased with your brother? PPOR or IP and what will be the plan for the house once you purchase the next property. This will have a big impact on how the bank will interpret the 50/50 debt, but again if it's with CBA and it stacks up should be able to have all debt and all IP income apportioned to you. If it's PPOR shared makes it harder.

Best of luck, good to see that you have some goals set, which no doubt will be redefined over time.

As to development blocks in Adelaide make sure you have solid finance in place and ready to act, they sell quick.
 
Hi guys thanks for the replys. Out plan with our current house is to knock a dividing wall down between kitchen an lounge, new kitchen, laundry bathroom. Luckily we have a lot of mates in the construction industry and we will be doing the work ourselves and hopefully bump up a bit of equity. We plan on staying here for a while - until we look at getting houses with our missus' one day I can see it being sub divided down the middle as it has 23m frontage.

As for going starting up my business - been very busy setting up the things I need hopefully ill be set in about 8 weeks.

Erica - sounds like a good development! Was the sub divide a quick process? Did you sell the land or are you going to build? I would love to have the finances to do this now! Still searching at the moment though so when I hopefully am ready in 9-12 months time I will have seen quite a few so I will know exactly what in after.
 
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