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I want us to have the oppurtunity to buy another IP in the next 2 years. I know that westpac give 95% LVR to existing customers of 6+ Months but isn't there more risk with borrowing this sort of money and paying MI?
I am after peoples opinions, help and guidance. Are we looking into IP too soon? Currently I have great motivation to get into real estate and begin our IP journey but when I look at our funds, I can't see how we can do it?
Sorry in advance for the long post, and all the information is all over the place!!!
Regards,
Andrew (Confused Soul )
P.S. Our Plan is to have 10 IP's by 2016...
Hi Andrew,
My advice to you is to ensure that you get a great grounding on finance and cashflow.
This above all is where people fail to build a large enough portfolio....your current property lets for $350 and worth about 345K...this is only a 5% return. You will find it difficult to get past 2-3 properties as they net negative cashflow will start to bite.
You have a high level of leverage....you will either need to find a way to being this down quickly or buy property that only has a small shortfall...rent increases over 1-2 years will bring it down.
Being young...you are probably in a hurry...ensure that you take time to think things through. Interest rates are rising....so factor that in.
In my opinion slow and steady always wins the race....it took me 10 year to build up to 12 properties (I sold 2 over the lasy 2 years).....as a result I know have a 45K pa positive income from my properties and have a 34% LVR.
...another tip in life be careful about people who claim to have done this or that...ensure you that you check their achievements out before taking their advice.
The problem I am seeing at the moment is finding properties that are going to give me a rental yeild of over 5%. I have a few suburbs in mind that I want to move onto with my next IP but yeilds are around the same, 5-5.5%. Do I just keep looking, searching for a bargain price in these areas?
Do you usually just search and search until you find rental yeilds of 6-7%?
Have a read through all the posts on this thread:
http://www.somersoft.com/forums/showthread.php?t=53662
Also if you use http://www.investsmart.com.au/property/
you can sort by yield for single tenancy properties. There are about 2 dozen suburbs in Sydney that you can buy under $300K and get over 6.5% yield.
You're welcomethanks Propertunity that sites look really interesting!
Yes & No. Yes I worry and then No I don't worry because we select good Property Managers to do tenant selection. PM's hate going to Tribunal so it is in their best interstes to put good tenants in your property. PMs hate chasing late rent payments.I know that this question diverts from the subject here, but do you ever worry about what kind of tenants you would be attracting if you purchase in some areas?
You just have to take people as people I think. You check their credit history, rental references, employment etc. There a dodgy rich people, there are dodgy poor people. A rich person that loses their job today and can't find another job within 3 months can turn bad - as can a poor person. In many respects poor people on welfare could be seen as having a steady income stream (government benefits). They also can be very house proud and treat the place better than you or I would.i don't mean to discriminate and i am mainly asking this question because of comments that have heard made by others time and time again. i am fairly new to Sydney myslef and cannot judge.
Thanks for your opinion. I think you’re right though but having no experience yet its hard to look at it from all angles! But it sure makes sense.
much appreciated!
They're out there, they're often tenanted, and a lot of the time they aren't advertised as having X yield. I hit one the other day in Snowtown - 4br house, massive stone and brick thing, $140k, has a tenant in. Given a 2br house in Snowtown rents for $160pw you'd hope this one is going for more. That would be a good start, and the house has horrific dated decor that if it was redone it would be worth near $200k. There was no mention at all of the tenant, the agent accidentally let it slip in passing that someone was living there.Do you usually just search and search until you find rental yeilds of 6-7%?