How do I become a Property Invester?

Hi Guys,

Im interested and would like to become a property invester, however my knowledge is not up to scatch.
I have a property west of melbourne which I renovated and am about to lease.

What books or website's would you recomend??

Not to be upfront or ask for answer where to buy, what would be a good way to start. Im now ready to purchase the second home...
would I look at inner city outer etc. high/low price? would sticking to one city a better way to start off, In my case Melbourne.
 
Hope someone can help.

Thanks,
Peter Pith.

Hi Peter

Another golden rule is to follow the infrastructure.  ie build where new infrastructure is going in (rail stations, freeways, shopping centres etc).

Peter you might want to check out this thread

http://www.propertyinvesting.com/forums/property-investing/help-needed/4330324

Pete, I'd recommend reading Steve Mcknights books for a start. He'll have you convinced of buying cashflow positive properties from day one, and avoiding negatively geared properties as much as possible.

I plan on never buying a negatively geared property, ever. I still plan on buying many positively geared properties. I'm going to do it through dual occupancy houses. It feels almost impossible to find a positively geared property that is a single occupancy.  So, if I can't find a house that does the job, I'll build one.

This is what I have recently done.

I built a dual occupancy house, taking advantage of the first home owners grant of 21k. (yay!) I am renting out the second half of my house, and living in half on my side. But it doesnt stop there. I'm also going to be renting out 2 bedrooms on my side to japanese exchange students. This means, that I will be getting $300 rent from my granny flat, and a further $400 rent (after expenses have been paid.. they pay 290 per week EACH tax free) for the two rooms.  So I will be in a very unique situation where my house is cashflow positive... even though I'm also living in it!  It's a springboard to get me started onto my second, third and fourtieth property. Minimise expenses, maximise passive income.

Don't forget, that you can also buy investment property using your super fund if you know how.

flick me an email and I'll fill you in.

benc@cbpd.com.au

Benjamin Csikos

I help people learn how to use their super to invest in property. Ask me how.
benc@cbpd.com.au
0401 054 793

Hey Jac,

My property is in Sunshine.

Income of partner and me $90k

Owe Bank $245k

and am I choosing the correct area?

Nice work getting something in Sunshine before it got expensive!

Yes I think you can purchase another property.  For the deposit you will probably have to use equity in your current property, because all of your $20k savings will be eaten up by stamp duty and solicitors fees.

Suitable areas to look at would include Werribee, Hoppers Crossing and Ballarat (Ballarat has a uni and a hospital which makes for ease of rentability, so you'd want something within suitable commute of both, and also a train station to Melbourne).

With regards to Hoppers Crossing, avoid the Birdsville Estate, which is bordered by Heaths Road, Tarneit Road, Railway Avenue and Derrimut Road.  With regards to Werribee, avoid the area north of Werribee Station bordered generally by Market Road, Shaws Road and the river.  Werribee is older than Hoppers Crossing and as such tends to offer some property that needs a bit of a cosmetic makeover (carpets, paint, perhaps a kitchen makeover) to add instant value.

While Werribee is not without its fair share of weatherboard properties, you'll probably find that the norm is brick for Werribee and Hoppers.  I don't think I'd consider weatherboard unless I was looking in an area like Ballarat, or Yarraville where it fits in with the surroundings.

Both Werribee and Hoppers have plenty of families with children in school (so be near a primary and high school, but not right across the road), and have a family member commuting to Melbourne each day for work either by rail or road.  So make sure train station and road passage is conveniently placed.

Does this give you somewhere to start hunting?

Thanks JacM.

Should i find a place with 600+sq for future development. At the moment im only considering propertys that are set on a larger block. What do you think?

If you can afford to do so, absolutely.  Check Wyndham Council for the current regulations for Werribee and Hoppers.  Last I heard it was minimum 300m2 per dwelling.

And remember - cover your IPs with landlord insurance WITH tenant protection :-)

Hey Jac, I've never even thought about landlord insurance or tenant protection, whats the general gist?

Benjamin Csikos

I help people learn how to use their super to invest in property. Ask me how.
benc@cbpd.com.au
0401 054 793

OK picture the scenario.  You put a tenant in your property and they stop paying rent, or damage your property. You have a bond (deposit).  Yay.  That'll be what, $1000?  That does not go far.  Landlord insurance with the "added extra" of tenant protection pays for lost rent while the tenant is not paying, or while the property is vacant due to need for repairs post-tenant.  It also covers much of the damage or theft to the property.

Here's a link to one such insurance offer;
http://www.aami.com.au/home-insurance/landlord-insurance.aspx

brilliant. thanks. learn something new everyday.

Benjamin Csikos

I help people learn how to use their super to invest in property. Ask me how.
benc@cbpd.com.au
0401 054 793

It's a must-have.  God help you if a tenant trashes your house and you don't have suitable insurance.

Hi Peter

Think your biggest issue could be income and proving serviceability.

Remember lenders dont like full time renvoators or developers and the bar is a lot higher to jump.

Get your mortgage broker to set you up before you go and you should be right.

If the deals are to buy, renovate and sells then you might want to look into the world of Trusts.

More flexibility, more asset protection and done properly not an issue to finance.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Ph: 07 3720 1888
richard@tayloredfinancialsolutions.com.au.
Email me for your free Residex Property report Australia wide

hey richard,

i think i just want to hold on the property no more reno's unless required.

Hi Richard

How would I start to look into the world of trusts as you put it? I am new to property investment but am interested in buying renovating and selling.

Thanks

Karen

Hi Karen

Yes a DFT can be an effective tool when you are either acquring positive geared properties for the long hall or looking at carrying out short term buy, renovate and sell projects.

Funding such deals can sometimes cause issues especially if lenders believe you are doing the deal purely for profit however structured correctly you should be able to do this over and over again.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Ph: 07 3720 1888
richard@tayloredfinancialsolutions.com.au.
Email me for your free Residex Property report Australia wide

Jodie...I don't think it cost A$2000.. Last time I set up cost about 500 dollars

I totally disagree with you, not setup a DFT for purchasing property.
there more benefits using DFT than not

I don't want to hear spruiking around with TAX deduction or depreciation bla bla bla
sorry only novice investor that will fall into the trap

For a simple DFT with Personal Trustees the average cost is around $600 and if you throw in a Corporate Trustee then you add around another $1000.

GOM you are correct for doing what Kkatlea is trying to achieve I cannot see any reason why she would not proceed with that style of entity.

Often we suggest to clients they start off with a DFT and PT's and then build upto a Corporate Trustee but again this may vary depending on their marginal Tax rate and the amounts they are thinking.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Ph: 07 3720 1888
richard@tayloredfinancialsolutions.com.au.
Email me for your free Residex Property report Australia wide