Help needed! First investment, $250k deposit, 90% LVR Want to get it right first time

[ss16]

As the thread title mentions, I am currently looking to purchase my first investment property and hoping to get a good idea of some things to consider when it comes to property investment. I currently work in banking but need a little guidance in regards to how to best utilise the funds I have available. As I think this is a good opportunity for me to get off to a good start, I would like to make sure that I'm making the right decisions now to set me up for the future. I guess the place to start is here and hopefully learn a thing or two. A little about my current scenario:

• Melbourne based
• Deposit: $250,000
• LVR: 90% (LMI is not applicable given my current employment)
• Age: 24
• Currently live at home with family
• Main objective: Get in the wealthiest position possible within 10-15 years so I then have the flexibility to do what I want.

Questions/clarification required:

• What strategy should I go for? Growth, Income, Reno, Development????? I would definitely consider higher risk strategies at this stage as long as the returns justify it.
• What types of properties should I buy given the applicable strategy/how many properties should I buy given my capacity (Depending on how many properties I buy and the rental returns, I can lend anywhere between 1.2 - 1.5 mil. which would mean total purchases prices between 1.3 - 1.6 approx....
• Where in Melbourne should I buy given the types of properties I should be looking at....
• When its time for me to move out e.g. 4-5 years, I will probably be happy to rent if I have the right investments going, would this be the ideal scenario or should I look at maybe just purchasing an investment property now and pay that down as much as possible and move into that and make it my PPR?

I would also be interested in what data people look for when purchasing in particular areas, suburbs, streets and types of property given the applicable strategy e.g. high income suburb, high owner occupied concentration, ageing suburb etc...

Sorry if some of the questions are a little vague and open ended but I would be interested to hear what some of you would recommend in this scenario....

I welcome any advice, opinions or criticisms.

Thanks!

 

[ZachAnSel]

As the thread title mentions, I am currently looking to purchase my first investment property and hoping to get a good idea of some things to consider when it comes to property investment. I currently work in banking but need a little guidance in regards to how to best utilise the funds I have available. As I think this is a good opportunity for me to get off to a good start, I would like to make sure that I'm making the right decisions now to set me up for the future. I guess the place to start is here and hopefully learn a thing or two. A little about my current scenario:

• Melbourne based
• Deposit: $250,000
• LVR: 90% (LMI is not applicable given my current employment)
• Age: 24
• Currently live at home with family
• Main objective: Get in the wealthiest position possible within 10-15 years so I then have the flexibility to do what I want.

Questions/clarification required:

• What strategy should I go for? Growth, Income, Reno, Development????? I would definitely consider higher risk strategies at this stage as long as the returns justify it.
• What types of properties should I buy given the applicable strategy/how many properties should I buy given my capacity (Depending on how many properties I buy and the rental returns, I can lend anywhere between 1.2 - 1.5 mil. which would mean total purchases prices between 1.3 - 1.6 approx....
• Where in Melbourne should I buy given the types of properties I should be looking at....
• When its time for me to move out e.g. 4-5 years, I will probably be happy to rent if I have the right investments going, would this be the ideal scenario or should I look at maybe just purchasing an investment property now and pay that down as much as possible and move into that and make it my PPR?

I would also be interested in what data people look for when purchasing in particular areas, suburbs, streets and types of property given the applicable strategy e.g. high income suburb, high owner occupied concentration, ageing suburb etc...

Sorry if some of the questions are a little vague and open ended but I would be interested to hear what some of you would recommend in this scenario....

I welcome any advice, opinions or criticisms.

Thanks!

Welcome, not that many 24yo with $250k. You doing great stuff there.
I recommend you to find out your goal, then from there write your plan.

You may know all the details, that will come along the way. Experience will guide you. This is why I recommend you to start small and learn every single thing. Nothing beat the way we learn from experience. We may know by read, but when we do it ourself, we learn so much more.

Find your "why"/motivation from within, how is easy.. You can learn by asking, or from other people experience. Without why, is hard to get there

Once again, welcome and enjoy the adventure..

 

[Rolf Latham]

Welcome

Cant really help you with the specific strategy for your end goals.

What I can suggest is 3 things .


Get your end to 10 year goals as clear as you can get

250 k even at 90 % isnt a bunch when looking to build a portfolio from scratch

Get your finance structure worked out LONG before you make your first purchase. In a lot of ways, your financial surviveability and capacity to grow from challenges and capitalise on opportunity will come from or fail from your finance structure and subsequent psychology.

Im hopeful that you are medical or allied, and not an engineer or accountant, so that you can get a decent spread of lenders to make wider use of that 90 % no lmi.

ta
rolf


ta
rolf

 

[Coota9]

After spending time today speaking to a broker that is a regular on SS I can't see how anyone can start their investment journey or indeed have an investment plan unless they work out how much they can borrow/service..

 

[ss16]

Thanks for the information guys, it is much appreciated....

@Coota: In regards to my serviceability, the maximums are as follows:

• One property purchase @ $950k if its rented at $400 p/w
• Two property purchases @ $630k each if rented at $400 p/w
• Three property purchases @ $530k each if rented at $400 p/w

As such, I do have a few options, either put it all into one property, good location, and sit and hold, or maybe diversify a little but then have to cut back in terms of location, quality etc....

@Rolf/Zach: As mentioned, my goal is to purely maximise my capital gain/net asset position within a 10-15 year period. I don't like to put a cap on my objective as I don't want to say I am happy with earning $1mil in 10 years when I could've potentially exploited other opportunities to earn up to $2mil.

I have been told in the past to start slow and take it easy however my point of view is to get in early and secure as many properties as possible now rather than wait another year when prices have appreciated and be behind the 8 ball.....

 

[Rolf Latham]

Thanks for the information guys, it is much appreciated....

@Coota: In regards to my serviceability, the maximums are as follows:

• Three property purchases @ $530k each if rented at $400 p/w

Basedon those ratios Im guessing there is 5 or more 530 k places in there.

What happens if you buy Logan Style stock at 280 k renting at 320 ?

ta
rolf

 

[Moneyman_85]

Wow those properties would have terrible yield!

Good for negative gearing though?

 

[esh]

Yeah but you can definitely get better yields. The brokers may be looking at the minimum return. It's achievable. Starting from scratch with $250,000 deposit is amazing. Why don't you get something with a big land size so eventually you may be able to knock down and possibly build townhouses, or even on sell to someone who would. Just some ideas , I'm beginning the journey myself.