What is the next step in buying an IP?

[Smilla]

Hi there guys. I'm would love some advice on what is should be my next step in investing in property.

My boyfriend and I have spent the last few months learning about PI. I've read the suggested books on this forum to bring me up to speed and we have decided to start looking for a place in our chosen area. We have decided on how much we want to spend and the type of property we want to buy.

We don’t live together (but will be shortly), have a long term secure relationship and a high combined income. We have approximately 100,000 of combined equity.

I would love some advice on what our next step should be.

Do we see a mortgage broker to talk about a loan? Do we need an approved loan before we buy?
Should we see an investment advisor before we start talking to agents?

I want to start calling agents to ask them about properties but don’t know what to ask?
I know I should ask what the expected rental return is.
How old the house is?
What else should I ask?

Also, when calculating ROI, how can I make an estimate on what the depreciation figures should be?

Any help would be greatly appreciated. IF there are any earlier threads that deal with these questions just let me know and ill read them.

 

[Simon]

Talk to a broker and get a relationship going with one you trust. A loan approval is not worth much more than a considered opinion - the approval has plenty of "subject tos" in it and is not watertight by a long shot. tell the broker the truth about your position - be a shame if something cropped up on your CRA that you kept quiet about

So find out what figure is doable and start looking. Make offers with a finance clause and as you get close to buying get your loan application together so it can be sent off the minute you get serious about a property.

by all means do it sooner if you feel comfortable doing so but it will register as an enquiry on your CRA which concerns some investors.

Stay happy - this can be stressful.

 

[BayView]

This is the time when everyone gets frozen with fear. It's normal.
You sound as though you are ready to go, other than having finance approved to a certain limit.

You'll find that once you know this figure, you will magically head down the path of looking at properties around the price-range that suits your finance level.

So speak to a M.B and get that sorted out, then start to research the markets.

You don't need an approved loan before you buy, but if you don't have finance approved, it means you have to make offers "subject to finance" and this can weaken your negotiating position. Better to be ready to go "unconditional' if you can.

There is a great section in the latest book by Margaret Lomas about the '20 questions you must ask'. Her website is: www.destiny.net.au. you can look at the books for sale there.

This relates to what to look for during your due diligence, which involves talking to agents, but applies to the strategy that she advocates.

Calculating depreciation is hard, and is linked to your income tax rate and the construction cost, as well the different "lives"of the various fixtures and fittings in the building.

One more thing; never take what the agent's say about expected rental return as gospel. Do your own research on the actual rents in your area for the type of property you are looking at.

 

[Smilla]

Thanks for the advice.

I read Margaret's first two books. Had a look at the one (I think) you are talking about and ended up ordering it, so hopefully that will help a little.

Am also organising to see an MB.

Off to go to some inspections and auctions on the weekend in our chosen area (for research purposes) so that's exciting!

Thanks again

 

[twobobsworth]

my advice would be to stop reading any more books until you've bought your first property.

 

[Aimjoy]

Hi there guys. I'm would love some advice on what is should be my next step in investing in property.

Buy ONE.........and repeat over and over as you are able

With all the usual caveats about buying property with others who may take 50% or weasel out of paying 50% of the mortgage if the relationship should end in tears.

Aimy

Weasling out of things is what separates us humans from the animals...except the weasel (homer simpson)