Reflections of an investment newbie

Hi everyone, I've been reading this forum for quite some time now, but never have written a post (apart from PM's). Having just successfully bought and tenanted my first investment this week I think it's time I gave back to the forum and in particular to those who are starting out.

Recently, I decided to buy a true investment property (one in which I had no intention to ever live in). Doing the numbers (and ZERO emotion) I discovered that I had to look outside my local area if I wanted a cheap house that was neutral to positively geared (median <$300K and 6.5%+ gross yield). This was very confronting as I had to face the prospect of buying in an area of which I had NO IDEA about, and to abandon my long held view of purchasing negatively geared apartments (adopted from parents).

Having read widely (including Somersoft) I knew what price and yield I wanted, so the question was 'where?' To start off I used sites like realestate.com to identify areas that matched my price/yield target. After finding a few areas I then used a whole host of sources (sites, forums, tools) to look into: Distance from me (wanted something within easy reach of a capital city), increasing population (increased demand for housing), multiple sources of employment (I find a single source like mining too risky for my appetite) and upcoming infrastructure (speculation on growth).

Once I selected an area, I'd then look into the area's demographic (size, income, etc. to dictate what type of housing would be in demand), median type of property (something easy to buy and if necessary sell), and researching trouble spots to keep away from (eg. crime, flood hot spots). So in a nutshell I had cast a wide net from a state by state level and allowed my research to progress me down to the street/house level. I'm skipping a lot here in the interest of brevity, but each decision was made with my goal in mind, and with what I was comfortable with.

Having found my area and type of house to buy, I then bought flights interstate and hired a car for the day. I had also funded my friend (similar investment philosophy but more experienced) to accompany me to help teach me what to look for during inspections. I took HEAPS of photos and notes, and experienced the full gambit of real estate agents (from woeful to brilliant). Long story short, it took me 2 flights, 25 inspections, 5 offers, and 1 termination of contract (terrible building report) before I settled and successfully tenanted an investment property with 6.7% yield. Mission accomplished! It wasn't easy, but definitely rewarding. I'll be looking to buy again soon and starting to consider strategies to manufacture equity. Exciting times ahead!

Top tips I would recommend to anyone starting out: 1) Find someone experienced that you can trust to mentor you. 2) Determine and write down your goals. Keep yourself to them. 3) Research, research, research! The more you know the less likely you'll run afoul. 4) Action!! Knowledge alone is impotent! 5) Tenacity! Keep trying! Its not meant to be easy the first time around.

Although this seems like a long post, in fact, I've glossed over a lot. Feel free to reply and/or PM if you wish to know more.

Last but not least, I wish to thank Beanie_Girl and Michael_X for sharing their wisdom, experience, and insight in guiding the launch of my investment journey! I give a genuine heartfelt thanks :)

Mr_Jaq
 
Sounds like your seeking praise and reassurance yet giving advice and trying to mentor.. Which one is it?
Hi everyone, I've been reading this forum for quite some time now, but never have written a post (apart from PM's). Having just successfully bought and tenanted my first investment this week I think it's time I gave back to the forum and in particular to those who are starting out.

Recently, I decided to buy a true investment property (one in which I had no intention to ever live in). Doing the numbers (and ZERO emotion) I discovered that I had to look outside my local area if I wanted a cheap house that was neutral to positively geared (median <$300K and 6.5%+ gross yield). This was very confronting as I had to face the prospect of buying in an area of which I had NO IDEA about, and to abandon my long held view of purchasing negatively geared apartments (adopted from parents).

Having read widely (including Somersoft) I knew what price and yield I wanted, so the question was 'where?' To start off I used sites like realestate.com to identify areas that matched my price/yield target. After finding a few areas I then used a whole host of sources (sites, forums, tools) to look into: Distance from me (wanted something within easy reach of a capital city), increasing population (increased demand for housing), multiple sources of employment (I find a single source like mining too risky for my appetite) and upcoming infrastructure (speculation on growth).

Once I selected an area, I'd then look into the area's demographic (size, income, etc. to dictate what type of housing would be in demand), median type of property (something easy to buy and if necessary sell), and researching trouble spots to keep away from (eg. crime, flood hot spots). So in a nutshell I had cast a wide net from a state by state level and allowed my research to progress me down to the street/house level. I'm skipping a lot here in the interest of brevity, but each decision was made with my goal in mind, and with what I was comfortable with.

Having found my area and type of house to buy, I then bought flights interstate and hired a car for the day. I had also funded my friend (similar investment philosophy but more experienced) to accompany me to help teach me what to look for during inspections. I took HEAPS of photos and notes, and experienced the full gambit of real estate agents (from woeful to brilliant). Long story short, it took me 2 flights, 25 inspections, 5 offers, and 1 termination of contract (terrible building report) before I settled and successfully tenanted an investment property with 6.7% yield. Mission accomplished! It wasn't easy, but definitely rewarding. I'll be looking to buy again soon and starting to consider strategies to manufacture equity. Exciting times ahead!

Top tips I would recommend to anyone starting out: 1) Find someone experienced that you can trust to mentor you. 2) Determine and write down your goals. Keep yourself to them. 3) Research, research, research! The more you know the less likely you'll run afoul. 4) Action!! Knowledge alone is impotent! 5) Tenacity! Keep trying! Its not meant to be easy the first time around.

Although this seems like a long post, in fact, I've glossed over a lot. Feel free to reply and/or PM if you wish to know more.

Last but not least, I wish to thank Beanie_Girl and Michael_X for sharing their wisdom, experience, and insight in guiding the launch of my investment journey! I give a genuine heartfelt thanks :)

Mr_Jaq
 
Good to see that you were able to take the emotion out of it and do your due diligence step by step. It can be a long process but hopefully has meant a safer deal for you.
 
It's great you had a goal, took action and followed through.
Only time will tell if you'll be rewarded for your actions, let us know in a few years.
Either way, the experience is where the real value is.
 
Sounds like your seeking praise and reassurance yet giving advice and trying to mentor.. Which one is it?

I imagine Mr jaq's post would help a number of people that are just starting out.

Plus he acknowledged those that helped him.

Your post, IMO, does nothing but try to put someone down that has put themselves and experiences out there.

Well done Mr jaq.
 
Top tips I would recommend to anyone starting out: 1) Find someone experienced that you can trust to mentor you. 2) Determine and write down your goals. Keep yourself to them. 3) Research, research, research! The more you know the less likely you'll run afoul. 4) Action!! Knowledge alone is impotent! 5) Tenacity! Keep trying! Its not meant to be easy the first time around.

Alth and insight in guiding the launch of my investment journey! I give a genuine heartfelt thanks :)

Mr_Jaq

Sounds like a plan,and prices up or down are just short-term distractions while true face to face value is built up over time,and over the past 2 years have also been driven up by low interest rates and anyone can borrow on the very low side and use that quickly for short term gain,some new investors work on a one year cash flow projections,,myself work on a 3 year projection,because eventually interest rates will rise,,and money will not be cheap anymore and another cycle begins:),and it's always the same the only difference is the price..good luck and welcome to the site..

BTW,there was a post by one of the Accountants the other day based in bayside Brisbane,"Mry",maybe just have a read for the next 2-3 years..imho..


Quoted from Mry..

""Generally speaking, the low interest rates at the moment make the cashflow considerations on buying a trust vs an individual minor. If interest rates go up, that could change. I did the calculations for someone today on a rental property at $400,000 at 100% leverage with an interest rate of 5.1% vs 7.1% and their out of pocket expenses before tax went from $7,516 per year to $15,836, with the potential refund going from $3,486 to $6,648. Missing out on that refund if that ever occurs because you bought in a trust could be painful""

And btw I hope your new ip in logan goes well..
 
Top tips I would recommend to anyone starting out: 1) Find someone experienced that you can trust to mentor you. 2) Determine and write down your goals. Keep yourself to them. 3) Research, research, research! The more you know the less likely you'll run afoul. 4) Action!! Knowledge alone is impotent! 5) Tenacity! Keep trying! Its not meant to be easy the first time around.

Although this seems like a long post, in fact, I've glossed over a lot. Feel free to reply and/or PM if you wish to know more.

Last but not least, I wish to thank Beanie_Girl and Michael_X for sharing their wisdom, experience, and insight in guiding the launch of my investment journey! I give a genuine heartfelt thanks :)
Mr_Jaq

Excellent work Mr Jaq. A brilliant mix of study, reflection, due diligence and generous employment of knowledgeable and trustworthy people. Thanks for coming back to share it with the rest of us.
Not everyone is so generous and a few take any opportunity to patronise, as you can see.
Your post reinforces for me the importance of taking time and doing it one step at a time with as many mentors as you can get . :)
 
I imagine Mr jaq's post would help a number of people that are just starting out.

Plus he acknowledged those that helped him.

Your post, IMO, does nothing but try to put someone down that has put themselves and experiences out there.

Well done Mr jaq.

+1. No idea why some feel they need to have a go at this bloke.
 
Awesome stuff Mr_Jaq!

Kudos for pushing past perceived boundaries. I am sure you learnt alot about yourself during the process :)

Can't wait to hear more about your journey as it unfolds.
 
Congrats on your first ip. They say the first one is the hardest and it only gets easier with experience. Good luck with your next purchases and all the best. Ignore the people trying to put you down, they are probably already successful and are just on a power trip.

I am yet to purchase my first investment property because I have to finish Reno before I get ppor revalued. I am also still learning since I am new to this and I find your tips helpful so thank you.
 
So Mr Jaq, where did you end up buying?

Went looking in the Logan area, and bought in Browns Plains. Yeah I made sure I did enough due diligence to be comfortable. Particularly as this was an interstate purchase in a lower social economic area, which contrasts against my 'buy local and buy affluent blue chip area' upbringing.
 
Went looking in the Logan area, and bought in Browns Plains. Yeah I made sure I did enough due diligence to be comfortable. Particularly as this was an interstate purchase in a lower social economic area, which contrasts against my 'buy local and buy affluent blue chip area' upbringing.
How long did it take you to (a) find an area (b) the rest of research including shortlisting the properties?
 
Thanks for sharing the experience with us, may I ask what you mainly take picture and notes of? I am going through the property purchase process myself and I am not sure when is a good time to take pictures and/or notes.
 
Went looking in the Logan area, and bought in Browns Plains. Yeah I made sure I did enough due diligence to be comfortable. Particularly as this was an interstate purchase in a lower social economic area, which contrasts against my 'buy local and buy affluent blue chip area' upbringing.

Good that you broke away from the expensive and probably very negatively geared is good mindset, Browns Plains is surrounded by more expensive suburbs to the north and should do reasonably well long term.
Some of the comments in this thread are a little disappointing, thanks for sharing your journey so far.
 
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