Hi all, newbie here, I've just been conditionally preapproved for a LOC of $158K and a loan of $304K. I'm 47 and self employed. I have read a couple of books eg Margaret Lomas and been to a couple of workshops. I'm looking at Brisbane area and I'm nervous as hell to take that first plunge. Any suggestions? General guidance in the right direction would be very much appreciated...Cheers
Need to get my first one right...
- Thread starter bojangles
- Start date
Ask yourself when you look at the property, "How will I make money on this?"
It could be through the potential to improve the property, it could be rental income, it could be allowing the market to give you capital growth. If you understand this, you'll have a plan which you can then execute.
Also don't expect to buy on the first day out, you need to get to know the market in order to answer the first question.
It could be through the potential to improve the property, it could be rental income, it could be allowing the market to give you capital growth. If you understand this, you'll have a plan which you can then execute.
Also don't expect to buy on the first day out, you need to get to know the market in order to answer the first question.
First time is always the hardest.
I don't know any investor who isn't keen to get their first or their 15th "right", but you have to appreciate that what is "right" depends on all sorts of factors.
Personally I like properties with fries. That something extra that makes them something other than forgettable pieces of suburbia - be it vista, subdivisability, perhaps some unique character, etc.
In regards to subdividable properties (my personal favourite) - remember - it doesn't matter if you never have any interest or intention in building yourself. You can always let someone else stress over that, after they've paid you a handsome premium for the property, of course.
I don't know any investor who isn't keen to get their first or their 15th "right", but you have to appreciate that what is "right" depends on all sorts of factors.
Personally I like properties with fries. That something extra that makes them something other than forgettable pieces of suburbia - be it vista, subdivisability, perhaps some unique character, etc.
In regards to subdividable properties (my personal favourite) - remember - it doesn't matter if you never have any interest or intention in building yourself. You can always let someone else stress over that, after they've paid you a handsome premium for the property, of course.
What is your investment strategy and as PT mentions how does the property fit into your strategy? What are you looking for the property to do for you?
Passive income
Well my goal..because of my age is to generate a passive income when I retire so I can maintain a decent lifestyle. My aim is to hold enough IP's to support my lifestyle in retirement. I would rather buy brand new to avoid heavy repair costs and get max depreciation.Making a quick buck is not really what I want but steady growth and minimum cash out would be good.
Well my goal..because of my age is to generate a passive income when I retire so I can maintain a decent lifestyle. My aim is to hold enough IP's to support my lifestyle in retirement. I would rather buy brand new to avoid heavy repair costs and get max depreciation.Making a quick buck is not really what I want but steady growth and minimum cash out would be good.
Well my goal..because of my age is to generate a passive income when I retire so I can maintain a decent lifestyle. My aim is to hold enough IP's to support my lifestyle in retirement. I would rather buy brand new to avoid heavy repair costs and get max depreciation.Making a quick buck is not really what I want but steady growth and minimum cash out would be good.
What is that passive income amount to maintain your decent lifestyle?
What date have you attached to obtaining it by?
How do you specifically plan to create that income?
What are your step by step sub goals within your specific plan and what is the time frame you have allocated for each along the way?
Well my goal..because of my age is to generate a passive income when I retire so I can maintain a decent lifestyle. My aim is to hold enough IP's to support my lifestyle in retirement. I would rather buy brand new to avoid heavy repair costs and get max depreciation.Making a quick buck is not really what I want but steady growth and minimum cash out would be good.
May I be so bold as to suggest nearly new instead of brand new. The depreciation is almost the same but you dont pay the brand new premium.
There are a few of us here in Brisbane so feel to bounce ideas / areas around. Im sure you will get lots of strong opinions !
Decent..not extravagant
I dont really know what the cost of living will be 15 years from now but would $60-70K a year be enough?
As for the date well...when I'm 60 I really hope to be able to put my feet up and kick back.
Rixter as for the next two questions..only advice from places like this site could tell me how to get there.
I dont really know what the cost of living will be 15 years from now but would $60-70K a year be enough?
As for the date well...when I'm 60 I really hope to be able to put my feet up and kick back.
Rixter as for the next two questions..only advice from places like this site could tell me how to get there.
Thats an Idea
Thanks boomtown...everytime Ive been to some investment workshop they always push new ..so I guess thats why I thought new would be best..
Thanks boomtown...everytime Ive been to some investment workshop they always push new ..so I guess thats why I thought new would be best..
Thanks boomtown...everytime Ive been to some investment workshop they always push new ..so I guess thats why I thought new would be best..
Of course they do. That's what they are selling.
I'm similar age to yourself. Yeah, I know, I don't look it
I bought my first IP 8 years ago with no real plan or strategy. Last year, put together a strategy that I was happy with and just went for it.
Get all the info you feel you need to, then discard that which doesn't resonate with you. Build a strategy that suits your objectives, circumstances, risk profile and lifestyle.
There wouldn't be 2 people on this forum doing the exact same thing. There's no right or wrong. Only what works for YOU.
Like Bill Zheng says, don't wait for the market to be ready for you, only enter it when YOU are ready for the market. That's good advice.
Of course, like Rick says, the most important thing is to do SOMETHING. You can fine tune and course correct along the way.
Welcome to the forum and whatever you do, make sure it's fun and you enjoy doing it!
That's my theory on dinosours.
Rob
Rixter as for the next two questions..only advice from places like this site could tell me how to get there.
Bo, as Rob says "Get all the info you feel you need to, then discard that which doesn't resonate with you. Build a strategy that suits your objectives, circumstances, risk profile and lifestyle. There wouldn't be 2 people on this forum doing the exact same thing. There's no right or wrong. Only what works for YOU."
This is a recent post that describes my chosen investment strategy that involves Villas & Townhouses. It may be of interest to you.
The capital growth averaging (CGA) strategy I employ utilises a regular purchasing cycle similar to what Dollar Cost Averaging is to the sharemarket. The major underlying principle to its success is it relies on your "time in" the market, NOT "timing" the market, and never never sell.
So in other words it does not matter whether you buy at the top of a boom or at the bottom, just so long as you purchase good quality, well located property in high density areas ( metro area capital cities), at or below fair market value, on a regular basis.
I've been purchasing an IP per year and currently into year 8 of this 10 year plan.
I've been purchasing new or near new property over older style property for several reasons, the main ones being (in no particular order) -
1/ To maximise my Non-Cash deductions
2/ To minimise my maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential
vacancy rates
4/ Ask a higher rent - thereby Maximising yields
Without getting into the "which is better debate, houses or Units??", I prefer to purchase Townhouses & Villas with a 30% or greater land component thereby eliminating multi story units or high rise apartments, for several reasons. The mains ones being (in no particular order) -
1/ lower maintenance & upkeep for the tenant
2/ lower purchase or entry level into a Higher capital growth suburb area
3/ rapidly growing marketplace (starting both now & into the future) wanting these type properties. This is due the largest group of people to ever be born (being the Babyboomers and Empty nesters) starting to come into their retirement years. They will be wanting to downsize for the following main reasons - lifestyle & economic.
4/ greater tax advantages & effectiveness thus maximises cashflow.
5/ able to hold more individual properties spread across your portfolio - thereby minimising area over exposure risks by not holding all your eggs in only a few baskets, so to speak
I look to buy in areas with a historic Cap growth of 7%pa and/or are under gentrification. I look to where the Govt, Commercial, Retail, private sectors are injecting money. This ultimately beautifies the area and people like the looks so move in creating demand.
I have found this works well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.
Getting back to CGA, as the name suggests it averages out the capital growth achieved on individual properties with your portfolio throughout an entire property cycle, taking into account that property doubles in value every 7 - 10 years. Thats 7%pa compounding.
The easiest way to explain what Im meaning by this is to provide a basic example taking into account that all your portfolio cashflow will be serviced via Rental income, the Tax man, an LOC and/or Cashbond structure.
For ease of calculation lets say we buy a property for $250k, so in 10 years its now worth $500k. Now lets say we do that each year for the next 7-10 years. Now you can quit the rat race.
So in year 11 ( 10 years since your 1st Ip) you have 250K equity in IP1 you can draw out (up to 80%) Tax free to fund your lifestyle or invest with. In year 12 you do exactly the same but instead of drawing it from IP1 you draw it from IP2. In year 13 you do the same to IP3, in year 14 to IP4, etc etc etc. You systmatically go right through your portfolio year by year until you have redrawn from each property up to year 20.
So what do you do after you get year 20 I hear you say ?? hmmm..well thats where it all falls into a deep hole - You have to go get a JOB - nope only joking!
You simply go back to that first IP you purchased as its been 10 years since you drew upon it first time around and its now doubled in value ($1M) yet again - so you complete the entire cycle once again. Infact chances are you never drew each property up 80% lvr max , so not only have you got entire property cycle of growth to spend you still have what you left in it first time round that compounded big time. Now you wealth is compounding faster than you can spend it! What a problem to have
Getting back to what I said in my opening paragraph about it does not matter where you buy within a property cycle just so long as you do buy, This is because you will not be wanting to draw upon it until 10 years later after its achieved a complete cycle of growth.
Well thats the Basic Big Picture of CGA. Once its set up its a self perpetuating, TAX FREE Income Money Machine.
Bo, I hope this has helped provide you with further info you could possibly work with.
Hi again Rixter, your strategy seems quite logical and even suited to someone my age!! Although he have next to no debt( we owe 8K on our PPOR) our combined gross income is around $70K (I'm self employed). Assuming this income goes up just by CPI can I service 10 IP's in say 10 years without being overly burdened? Tell you what though that post of yours made my heart jump a little with anticipation!!
Hi Bo, Im basically your age too.
Over time rents increase as well as your own income/s. To give you an idea ,my earlier purchased property rents have doubled and all my properties (bar the 2 purchased last year) have either doubled or tripled in value.
The number of properties you require will depend upon what your lifestyle requirements will be. That determines the asset value of your portfolio you need to build over time. 7-10 good capital growth properties I believe will provide $100k per annum - a very comfortable level of income for myself.
Hope this helps.
If you would like to chat live I am available on MSN Messenger. You can add me from my profile page by clicking on my nick,then contacts or click on MSN symbol in the top right hand corner of my posts.
I network with quiet a few other somersofters this way.
Hope to chat soon.
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