First steps to buying my first IP......

S

Shuttergirl

To cut a long story short, we have finally seen the light about property investment and are "mentally" in a position to start the journey to our financial freedom and frankly I'm just beside myself I'm so excited.

Just wondering what the first baby steps are to take?

We've had a mortgage broker recommended to us but would really welcome any suggestions from you experienced IP guru's if there is someone who is just the beez kneez.

We've got a good solicitor, still trying to find out if our wonderful accountant specialises in investment property tax (any recommendations would again be welcome).

We want to use the equity in our home to purchase the first (of many) IP's so should we have the house valued before contacting a mortgage broker? And do we do that by just having several REA's come and value the property?

I guess we need to talk to the broker to find out where we are as far as what we could borrow, what the payments on certain amounts would be??? before we start looking at where and what to buy?

I've just read back over what I've written and I think I am sounding very much like I don't have a clue LOL. Some guidance on the next steps would just be so gratefully received.

Thanks

Lisa
 
Hi.

Congratulations on taking this first step, I have also started my journey, this year with the purchase of 4 properties with my mother, but for the last 2 years i was not in the position to purchase so I di all the reading and rersearch that I could.

1. Know your goal, what are they 1 year, 5 yeras etc.

2. How are you going to get there.

3. What type of investment do you feel most comfortable with.

4. Know the market that you wnat to buy into.

5. Learn as much as you can about the tax treatment of property, deductions etc, you can leanr a lot from this forum if you scroll through old posts.

6. Don't be afraid to ask questions.


Hope this helps.
 
Thanks Letiha.

At this point I have read and read and read on the forum although there's of course many more old threads but I have to say I am thoroughly enjoying everything.

I have read 2 Jan Somers books which has given me a great starting platform I think. I will continue to read though because knowledge is power right.

I guess one goal is to invest in 2-3 IP's over the next 5 years. I believe this is definitely achievable.

Type of investment, hmmm that's a little more difficult to answer. I think I like the idea of medium priced houses although I have seen some lovely townhouses, etc that I would be more than happy to call my own. I guess I don't exactly know yet LOL.

Know the market - this is another one that I found a little overwhelming. I'm not sure whether to buy locally (Canberra) or Frankston everyone seems to be talking about and we are from Victoria and have lots of family spread throughout so maybe somewhere there. We also have family on the Sunshine Coast (an uncle with his own REA). So I can't even decide where to focus my attentions.

Maybe Canberra to start?

And asking questions, I'm sure i will drive you all crazy with them but I know it's the only way to really learn, that and reading reading reading
 
Welcome to Somersoft...

Asking questions won't drive any one crazy.. I've been doing it for a year..

buying locally can be a good first step, because you have the knowledge of the area, and it may help with your SANF factor.
However.. the canberra market is.. well.. ****, from my pov.
Although IF we were to buy here, i'd be wanting to aim for somewhere like page, scullin, higgins.

Page and scullin both are fairly generic, borin suburbs, nothing particular stands out.. but there's starting to be some work appear.. most specifically i'm thinkin of the two developments in page, one close to completion, one not yet started, and another one in scullin that i think is finished.
If it's not gentrifying yet, it will be soon.
PLUs, there is the super school being built on the old GDHS site in Higgins/Holt - so it's going to be a prtty popular place from that point of view as well, considering what Stanhopeless is doing with the schools.

OR, of course, there is West Macgregor.. but that remains to be seen.

As for a mortgage broker, many people suggested Ed Nixon to me - you can find his details on the forum somewhere, I forget how.
He didn't feel he was able to help me at the time..
I have since been dealing with Nunzi at Oracle in the city, and he's been great. PM me if you want contact details...

Can i ask, out of interest, who your solicitor and accountant are ?

I'm using Needhams for my accountant, and while I haven't needed them to do my property stuff yet, they do have active property investors on their staff.

Ask away with your questions, and congratulations on your decision :)
Look forward to hearing about your first purchase.
 
If I were to do it over, I would:
1) Check how much I can borrow (both what the bank will lend me and what I can comfortable afford as -ve cashflow - not always the same thing)

2) Take the lower loan amount in (1) and determine what market price I can afford.

3) Look for a standard home, house or unit (whichever you believe will do better). Figure out what the rough price is (get a rp data report or just follow the suburb for a while and you'll find out settlement prices). Make sure your rent is realistic.

4) Then, just buy it! Hopefully it won't be your last property. Even if you don't buy cheaply (say you buy 10% above 'market'), it doesn't matter much. The important thing is that you start the ball rolling.
Alex
 
I'd echo Alexlee's comments. Don't spend 12 months killing yourself to find that bargain price IP of the century. Just find an average price, decent IP, in what you believe to be a good area.

If you spend too long looking for a "bargain" you'll not only drive yourself crazy with doubt at every property you look at, you'll miss the growth you could have in the mean time while you were doing all the searching. This is where I believe a lot of people get caught up unnecessarily.
 
TheCamel said:
As for a mortgage broker, many people suggested Ed Nixon to me - you can find his details on the forum somewhere, I forget how.
Click to expand...

Google 'Loans Approved' and their website will come up, there are contact details there.

If your looking for names of solicitors, agents or brokers in Canberra PM me, I deal with alot of them.
 
buying locally can be a good first step, because you have the knowledge of the area, and it may help with your SANF factor.
However.. the canberra market is.. well.. ****, from my pov.
Although IF we were to buy here, i'd be wanting to aim for somewhere like page, scullin, higgins.
Click to expand...

This is why I was hesitating with the market here but do agree with your comments about Page, etc. The superschool etc could make me lean towards those suburbs. I appreciate your comments

Solicitor is Les Klekner in Mawson - we used him for the last 2 PPor's we bought and he was pretty good.

As for a mortgage broker, IP investor friends of ours swear by Mike McGettrick from Mortgage Choice so I thought I might give him a call
 
1) Check how much I can borrow (both what the bank will lend me and what I can comfortable afford as -ve cashflow - not always the same thing)
Click to expand...

This is exactly what I thought our first step should be. Thanks for confirming that.

So should we get our home valued first to see how much equity we have?

Alexlee you have made some wonderful suggestions, thank you so much

If you spend too long looking for a "bargain" you'll not only drive yourself crazy with doubt at every property you look at, you'll miss the growth you could have in the mean time while you were doing all the searching. This is where I believe a lot of people get caught up unnecessarily.
Click to expand...

I am definitely the type that could get analysis paralysis so I think this is wonderful advice that I PROMISE to follow
 
I'd get some local agents through to ballpark your PPOR's worth. Later on when you decide to apply to borrow that equity you will have a good idea of what the bank valuation should come back as. This is a good thing to know.

Last valuation we had on our PPOR came in $45000 under what we thought it should (after having spoken to agents + our own gut feel). This happened as the bank did a book valuation or a drive by valuation (they don't actually come and look) but cost it based on surrounding property sales etc.

Coming in so low we asked our broker to organise the bank to do a full valuation and we got our missing $45k equity when they did.

Doesn't hurt to talk to the local RE's either. Can be an interesting experience.

Cheers,

Arkay.
 
Here's something else to confuse the issue for you.

.Stamp duty on a property purchase of an IP in the ACT is tax deductible in the year you purchase it. This is becuase you do not actually purchase the land, you purchase a 99 year lease. That can save you a lot of $$ in tax.

.However, land tax is payable on investment properties in the ACT. There is no threshold as in other states.
 
I can highly recommend Michael Searle at The Home Loan Centre as a decent broker... and I've had no trouble with John de la Torre/Stacy Cave at Conveyancing Canberra for the solicitor side of things as well. Always quick and efficient, even under pressure when I need to exchange unconditionally 3 days after seeing a property and making an offer :p

Mark Larmer at Independent Property Group is a nice guy to deal with as well... has a passion for being an REA and puts a lot of effort into his work.

Bought about a million dollars worth of property through then in the last month or so.... were properties 20% under market value (compared to recent sales in the suburb... got valuations to keep the bank happy)... so I'm happy with the Canberra market :D
 
I know Michael, but I haven't arranged finance through him...

I also have a personal preference to stay well, well away from IPG where ever i possibly can.
 
Thanks Hexa, I'll look into Mark Larmer especially. Thanks for sharing so generously and can I just say woohoo to 1mill worth of properties in the last month.

So why were the properties 20% below market value do you think?
 
DHA properties... hard to shift while the leaseback is in effect... so they are undervalued to sell. Valuations came in 10-15% more than the asking price... and those values were conservative with recent sale prices being another 5%+ on top of that.

Also had a fair bit of us being in the right place at the right time :)

Like TheCamel hinted at, be careful with IPG as a whole... they are a bit big for their own good and with agents selling any property on the books, it can make for a headache for hot properties. Bought two places where Mark was the selling agent... trouble free... just had to be quick on the last property as another IPG agent had an interested buyer :)

Noticed quite a few "noob agents" on their training wheels in the last 3 months... attend a few open houses and you will soon work out which agents strike you as actually being competent and not living on a shoestring waiting for the next commission. :p

Allhomes will keep you busy researching prices, etc.... very useful tool. You may find it easier to focus on suburbs and/or a particular type of property when starting off (so the ol' brain doesn't get too overloaded).
 
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