Investment property...where to start, please help.

[shay1975]

Hi,
I am at the stage where I want to start investing in property and I am totally at odds where to start. There seems to be so much advice out there and everyone has their own opinion, it is overwhelming to be honest and hard to know who to trust. I am from overseas and don't really have any friends who have invested out here. I own a property in Sydney already, but am now looking to expand into an investment property using the equity.

I don't think wraps or vendor finance really suit me to be honest, so I think an equity line of credit and capital gains is the way I will go. But the hardest thing is where to invest? I went to the property expo in Sydney recently and it ranged from North QLD, to SE Qld, to Sydney to Melbourne to Adelaide etc. as to where to invest...everyone had an opinion. Like I said I don't know any people out here who have really invested so I can't go to them for advice.

Can anyone give some ideas as to the steps they took before they took the plunge in investing? I am thinking I would like to stick to Sydney because I think it is on the verge of a boom in the next year or so as it is the only city that has not in the last few years and it is due for some catch up, but where in Sydney is the thing? I know eastern suburbs, nothern beaches etc are good value and maybe I should stick to what I know. But I don't want to miss out on a different suburb giving me excellent returns just because I wasn't in the know. I read about Chippendale and Whale Beach etc being excellent prospects, again opinions, opinions, opinions from so called experts.

Maybe I should go with a buyers agent?

Any advice would be greatly appreciated.

Thanks

 

[happy]

G'day, and welcome.

I am a novice myself and was thinking along the same lines as you a while ago regarding so called 'experts' telling you where to invest. i have come to realise that these 'experts' all have their own agenda. they are either selling you something or want to sell you more 'education' and everyone has their own opinion on where to invest and how to invest because that is what has worked for them. I was on a never ending search for the 'best' advice on where and how to invest when I came to the realisation that i have to become my own expert and learn how to know what is right for me and my situation.

You are the only person who will look after you better than anyone else. no one has more vested in you, than you. So, my advice is read as much as you can and learn the basics. Then research where you want to invest. A great book that has helped me to do this is '20 must asked questions for every property investor' by Margret Lomas. It details step by step how to research where you want to invest so you can discover areas with great potential before they become hotspots. If you rely on someone else telling you where to invest, it will have already taken off and you'll miss out on CG.

Anyway, there's my two bobs worth. I know it is confusing when all the advice is contradictry, so you have to become your own expert.

Best wishes,
Happy

 

[alexlee]

You’re not going to be able to afford every property in Sydney. Narrow your search. Check how much equity you have, how much you can borrow, and what level of debt you’re comfortable with. Decide on a property type: house, unit, townhouse, etc. Do you want new? If not, how old is too old?

You’re never going to find the perfect property.
Alex

 

[marg4000]

I approach buying an IP as:

Step 1 - organise your finances. Consult your favoured bank or a mortgage broker and find out exactly how much you can AFFORD to borrow (not how much they will lend you, how much you are comfortable with).

This gives you your price range.

I believe in buying in an area I know. Yes, lots of people buy interstate (and even overseas) sight unseen, but that is not for me.

Scour www.realestate.com.au for suburbs with properties you can afford. Check with the rentals on that site to see how many are available and what rents are being asked.

Choose the suburb that is most appealing to you, that you think has the best prospects.

Then you can start inspecting individual properties, keeping in mind the estimated rental income you can expect.

Marg

 

[normailson]

Hi Shay1975,
“Wanting to start” and actually being in a position to start are two distinct positions. The latter requires that you are educated. You must learn as much as you can first. Set your goals. The first goal should be to read some books. I would suggest something along the lines of Jan Somers More Wealth. I find Jan is refreshing real compared to some to the vested interests out there.
There seems to be so much advice out there because there are lots of people who want your money out there i.e. vested interests. These people are selling something so obviously it pays to be educated first so you can make an informed decision. They will steer you their way so they can make a sale.
Some of these people will actually stifle your ability to reach your goals because of overpricing and poor cash flow.
At the end of the day, you can and should do it all yourself (unless interstate). Build a good team around you that you can re-use later. You can pay for research such as Terry Ryder’s hotspots where Terry is not selling anything other than the information itself.
Sydney is a BIG place. Education will give you a better understanding of the cashflow Vs. secure CG spectrum. You might buy a house in Coogee and not be able to buy another IP for a long, long time or you can buy multiples out west and still have a life.
Also wraps are not legal in all states.
As Alex advised, you will not find the perfect IP unless you have a crystal ball so once you have a price, formed an opinion based on known facts and know your ability to sustain it – just go for it.
Finally, I wish I knew about SS when I started. Finding a like-minded community helps me stay focussed.
Educate first, Do it yourself.
Norm

 

[Bandita]

Hi Shay1975,

Welcome to the forum!!

Yes, it is overwhelming, however, most of us find that when starting out at least, the KISS principle can stop your head spinning. Don't worry about wraps, vendor finance, the next "hot spot" etc - keep it simple. You've said you've already purchased a property before (your PPOR I'm assuming?). Has it grown in equity since you've purchased? If yes, you must have done something right? Determining your price range is the first step - talk to a mortgage broker (some great ones on this forum) - try to stay under your "borrowing limit" so that you don't max yourself on the first go - - read all the recommended reading so that you can gain the basic understanding of what property investment is all about - research an area - nothing better than the areas you know - talk to agents, get an understanding of the market - find a property you think you would be a good investment - and ask questions the whole way (this forum will be a great help!). Then make your offer, and if the vendor accepts, you're well on your way!

You can read every strategy there is out there, but once you gain some actual practical experience it will make much more sense. You're first purchase will be your hardest. The upside is that it only gets easier

Cheers,
Jen

 

[peastman]

If you stay with mainstream property (house or unit in a capital city) that suits your budget, its not a matter of right or wrong, just how much right. All the suburbs will increase over the long time scale. I tend to do a lot of research but sometimes I dont think it matters that much for a long term investment. Your chosen suburb might grow just after you buy it, but the others will catch up.

 

[Rixter]

Shay,

1/ Where and what to purchase is determined by your chosen investment strategy.

2/ Your chosen investment strategy is determined by what you are wanting to ulitimately achieve (from using property as your investment vehicle) and the time fame you want to attain in it, according to your own individual risk profile.

Do you have answers to the later?

By having answers to these questions you will take away all the uncertainty and frustration. This is the catalyst in working out your purchasing criteria for what you are looking for.

Most people (newbies & others who have been around for a while) don't know what they are looking for because they have not identified answers to the above questions beforehand. If they dont know what they are looking for how will they ever know where to look, what it looks like and know when they have found it!?

Hope this provides you some food for thought.

 

[TheBacon]

What rick said.

 

[Rixter]

New call for action on Blue Chip
By DAVID HARGREAVES - The Dominion Post | Wednesday, 07 May 2008

The barrister acting for about 300 clients of Blue Chip is renewing calls for the failed property investor to be put under statutory management so a "coordinated investigation" can be conducted into the collapse.

But while that is going on, the former Blue Chip parent company has been touting for business from Australian investors, with a proposition that looks similar to that previously sold to clients by Blue Chip in New Zealand.

Auckland barrister Paul Dale wrote to Commerce Minister Lianne Dalziel yesterday, asking her to rethink her rejection of statutory management.

About 3000 Kiwi investors are owed about $84 million through the collapse of 21 Blue Chip-related companies.

The Blue Chip business is the subject of Serious Fraud Office and Commerce Commission inquiries.

Mr Dale said that the Blue Chip affairs were extraordinarily complex.

"I understand why statutory management may not always be appropriate, but I suspect this case is, and I'm just really asking the minister to have another think about it.

"Some real money needs to be spent on this, and people at the moment are struggling. Someone has to round everything up."

Meanwhile, the former Blue Chip Financial Solutions - renamed Northern Crest - has been making good on promises made a month ago to trade on in Australia by establishing a website under the name Barkley Walsh and offering Australian investors an investment scheme that appears to be very similar to that previously offered under the Blue Chip name.

"It just seems to me rather frightening that all of this may happen again in Australia. Because the losses and the impact on the public have been just extraordinary."

After media publicity about the website in New Zealand yesterday, the site could not be accessed yesterday afternoon.

But it was not clear whether that was a temporary problem or if the site had been removed.

Northern Crest chairman Julian Gosse could not be contacted for comment yesterday. A mobile phone number previously given on Blue Chip media releases by the company's founder Mark Bryers was giving a "number inactive" message yesterday.

The liquidator of the 21 failed companies linked to Blue Chip, Jeff Meltzer of Meltzer Mason Heath, said yesterday that investigations into the collapse of the companies were continuing.

"It's all in the very early stages. We are working our way through what is a fairly complex investigation."

What tha

 

[Rixter]

Rixter-open you eyes and learn:
Check out the highlighted words on www.nzherald.co.nz or "www.stuff.co.nz"
You and others will be amazed at what you read about a business coming soon to a town near you .

Hmmmmm now why didn't I think of that

.....and I thought you were just trying to pull the 'wool' over our eyes - we all know what kiwi's are like

 

[TheBacon]

Rixter-open you eyes and learn:
Check out the highlighted words on www.nzherald.co.nz or "www.stuff.co.nz" or "www.propertytalk.com"
You and others will be amazed at what you read about a business coming soon to a town near you .

What exactly does that have to do with the question asked at the start of this thread?

 

[ziggy2214]

What exactly does that have to do with the question asked at the start of this thread?

I think it means don't get conned into one of those schemes.

 

[airguard2]

I own a property in Sydney already, but am now looking to expand into an investment property using the equity.

I was like you and had no idea where to start. Here in NZ I used an agent/advisor that set up everything from lawyers, accountants, bank loans, the works. I had written guarantees of rents with increases every year, maintenance, and even a buy back at a prearranged price.
I used the equity we had in our home. We now could lose it because all the companies we were involved with collapsed leaving no money only debt.

If it is the equity in your home that you are thinking about using, ask yourself this very real question.... How will I feel if/when I lose it all?

Just my 2 cents worth (that's about all I have left).

 

[normailson]

If it is the equity in your home that you are thinking about using, ask yourself this very real question.... How will I feel if/when I lose it all?

Just my 2 cents worth (that's about all I have left).

Airguard,

I'm so, so sorry to hear of your plight. My heart goes out to you.

However, I don't think you can attribute this to investing - it's getting in with the wrong crowd and outsourcing your knowledge. Your story serves as a reminder to all the beginners to be vigilant, arm yourself with knowledge and do it yourself.

If you have paid off a mortgage or are paying a small mortgage, I believe there is little risk in extending credit to buy well-targeted property i.e. there is very little risk that you will lose it all as a result. In fact, I think people are attracted to directly owned PIs because it is lower risk asset class.

I stress to people to educate and do it yourself. I warn people of potentally collusive actvity. There are bad people out there pretending to be good just to get your money. Some of them might even be here on this forum.

However, if you focus on the negative, you will never invest. And if you put in all the checks and balances, instead of blindly trusting others, you will be rewarded like the many on this forum.

I sincerely hope you get the opportunity to get out of this mess and one day try again; this time you will know what to do.

Norm