Newbie IP seeking for advice

Hi All, first time in property market and seriously seeking for advice and guidance. Any comments are welcome. Thanks :)

About me,
I am 28, single, debt free, have a secured job with 90K +/- based salary, and a deposit of 150K+, currently renting. No PPOR. Newbie in property industry. (I know I am very slow :eek:)

Goal,
I would like to start getting into IP, building up property portfolio & eventually to achive financial independence (who doesn't). No particular strategies here, ideally, I would like to achieve as much yield as possible in short term and CG in mid-long term, as what most investors do. I would like to hold the property first to start with, then extend or exit, 1 by 1, from there based on the later situation.

Problem,
My major issue here is I am not sure where to start. :confused: The first is always the hardest, but not an excuss. I am in the country, limited resources. closest regional city is Newcastle. I would like my first IP is located in the city area, Sydney first then Newcastle/Melbourne. I prefer a house/townhouse, than unit/apartment. A property with decent condition that allows me to rent it out straight would be the first choice. The bank reassures me that I could borrow up to 500K. From that calculation, technically I can afford a 600K property, but can I? do I? I don't feel comfortable of borrowing too much and out of my capacity. Having said that, cost of properties in Sydney region are sky high which 500K seems impossible for a house in closet. I don't have a target location at this stage (welcome any suggestions that is within my budget).

Next,
With the questions above and with my situation as described, what would you recommend? am I on the right track so far?

Thanks for advice. Please :)
 
DREAM
I would like to start getting into IP, building up property portfolio & eventually to achive financial independence (who doesn't).

No particular strategies here

Problem,
My major issue here is I am not sure where to start.

Its great the you are looking at making a start. Dont worry about when you start so much, its the starting that is the important thing!

Ok - I have cut out what I see as the main issues of your post. Firstly, I dont see that you have an end goal. Yes, you have a dream (to be financially independent). However, until you define what this means to you, its just a dream.
So, lets start there. Figure out what "Financial independence" means to you. Is it $100k/pa income? $10m in equity? 100 Res properties? ???

Once you have this, you can then work backwards to figure out how to achieve it. It will make your decision making about which property to purchase much easier and less stressful. Are you looking for strong CF, Stong CG or a combination of the two? This will help you decide which area and which property.
Floating in the wind, making decisions on a whim which sound like a good idea at the time is where you are most likely to come unstuck.
Get your strategy in place first and the rest will kinda fall into place (well, thats the idea anyway).

How can you/we know if you are on track - when you haven't yet chosen a track?

Cheers
Blacky
 
What and where to buy is dependent upon your chosen investment strategy.

You see property is merely the vehicle. The strategy is how you intend driving that vehicle.

Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

Property investing is not about property rather about the strategy and the way you intend to use the vehicle to get to where you are wanting to go. No good buying a small shopping car if you intend driving interstate on a family holiday.

What strategy/s are best for you is determined by where you are wanting to go, the time frame you want to get there in and how hands on along the way you want to be - all based around your personal risk profile.

I hope this provides some food for thought.

What is your chosen investment strategy?
 
Couple of quick points.

1. Set yourself an end goal and then work backwards. A bit cliche I know but it will somewhat tell you how much of your $150k deposit to use in your first buy. Also it will tell you whether to buy say one property for $600k or 2 properties for $300k or one property for $300k and then develop that property.

2. There are massive opportunities in the Newcastle and Hunter areas. I have my eye on a few development sites. Rental market there is also quite good.

Regards

Shahin
 
Rixter & Blacky,

Thank you for your advice, you both have made me think.

I am not sure what ‘investment strategy’ is, I am still very fresh in this industry. Please advise.

Perhaps I shouldn’t mention about ‘financially independent’, it may be a big dream for a beginner.

My current aim or goal is to get my first property (IP) in my life, and I am looking to achieve this in next 6-12 months. I am looking for the IP that has strong CG & CF, which will allow me to create the second, third or more in the later years.

Is this makes more sense? And what sort of strategies I should be playing?
 
Rixter & Blacky,

Perhaps I shouldn’t mention about ‘financially independent’, it may be a big dream for a beginner.

Sure you should! Its not a big dream at all and it is very achievable. You just need to change it from a dream to a goal.

So - start there. What does "financial independence" mean to you? For some it means earning $XXX/year, for others it means having $xxx in equity.
We cant answer that question for you. Its something which you need to decide.

Once you have that, you can then figure out how you are going to achieve it.
Simply saying "financial independence" is not specific enough.

Let me give you an example.
Your goal might be to earn $100,000/pa after tax and interest by the age of 40.
You then need to figure out what you need to do in order to achieve that.
ie - own 6 properties earning $500/week (less tax of $56,000).
Or have 12 properties at $250/week
or 3 at $1,000/week.

Etc etc etc The variables are endless.

Having a goal (not a dream) and a strategy in place will help you to narrow your search down, as you will know what you are looking for. At the moment everything you look at is a possibility, so you are struggling to see the wood from the trees.

Hope this helps

Blacky
 
Before you buy anything you also need to think about how you will structure your portfolio because it is too expensive when you have half a dozen properties all in your own name to pay stamp duty to restructure.

Asset protection is paramount, in my opinion, so you may want to consider setting up a trust. This is also useful for land tax issues, distribution of income etc.

Surround yourself with experts and ask lots of questions and happy investing.
 
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