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