[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 26, 2011 - 5:40 am

Hey Jins,

I was in this position once and didn’t make an offer by the deadline. Lo and behold, the property was still on the market a week later. I’m not saying that the real estate agent was pulling a dodgy, but it certainly did smell a bit fishy…

Keep an eye on it and make sure you know exactly what it’s worth. You never never know…

Good luck,
Den

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October 26, 2011 - 5:37 am

Generally I’d use a conveyancer, but if you have any special conditions then you might want to get a lawyer involved. I also reckon that you’re better getting a lawyer in NSW as, in my experience, you might want to be a little more careful there (different laws, especially regarding settlement times – you need all your ducks lined up perfectly!).

As far as having someone view the property, a buyer’s advocate will give you a better feel for the place whereas building/pest inspectors do their specific job. Most of the inspections are a checklist where you get a tick or a cross in a box, so you don’t get a great idea of the feel of the place. On the other hand, buyer’s advocates aren’t inspectors so you need to get the inspections done as well.

I recently used a buyer’s advocate and wrote a blog about it:
http://www.everydaypropertyinvesting.com/purchasing-property-four-benefits-i-gained-from-using-a-buyers-advocate/

Good luck with your investing.

Cheers,
Den

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 24, 2011 - 11:12 pm

Interesting post!

There's some good advice here, such as "it's not timing, it's time in the market". Remember property investing is a long-term thing.

The Aussie market is made up of lots of little markets, so look at your little markets. Some of them are unpredictable but at the moment there are a few markets which are very steady and stable. This might be because of the uncertainty which is causing other markets to fluctuate, or it might be for other reasons. Regardless, you can find sales data for areas such as Springvale, Sunshine and Broadmeadows (three separate areas) in Melbourne which all seem to have had pretty consistent prices for a few months.

Part of knowing this can be helped by getting to know Real Estate agents, who aren't necessarily the most popular people, but they are a wealth of information. Granted, they work for the vendor, but they understand that every vendor needs a buyer, and sometimes it's not worth putting in heaps of effort to get another $5k when all they'll get for that is about $100… Let the Real Estate Agent know what you're looking for and the agent might be able to pass on some pretty good deals. Less work for him/her means a better per-hour commission!

This local knowledge is better obtained from a Real Estate Agent than from tables of figures as some of these tables can mislead (unintentionally) if there are several different markets working in the same location.

Hope this helps, and good luck for your investing!

Den <br /:)” title=”>:)” class=”bbcode_smiley” />

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 24, 2011 - 11:00 pm

Hi Nathalie,

I'm sure lots of people would be happy to be your mentor, at a price! We do free podcasts which might help you get started in property investing. Head over to iTunes (you can search "investing" or "property investing" and look for EPI, or go to our website to have a listen. We release a new podcast every fortnight and there are quite a few in the archive – I reckon it's worth a listen, and it's free!

We also do mentoring, but that comes at a price.

Have a listen and see what you reckon.

And good luck with your investing.
<br /:)” title=”>:)” class=”bbcode_smiley” />
Den

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 24, 2011 - 10:57 pm

propertyboy wrote:

EPI_Den wrote:

I'm with Commonwealth Bank and I recently negotiated a further decrease on my loan. I'm now on 6.61% which I think is 1.14% below their standard variable rates. I'm happy with this but it's not out of the question to fix part of it if I see a really good deal! Den

How did you negotiate this? Do you have significant amount of debt with them and high income?

Hi mate,

Really I just shopped around a bit and then went back to CBA. I have a significant amount of debt (and over 10 investment properties) but not a large income. I might write a blog about it and let you know where to read it.

Don't be afraid to shop around!!
<br /:)” title=”>:)” class=”bbcode_smiley” />
Den

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 22, 2011 - 10:55 pm

Vlauhk wrote:

Thanks.

The special feature are 1) location convenient (the apartment is located at Daly Street), 2) Nice view (the unit is at 18/F, facing north).  Per sales agent, I can expect AUD600 rental per week.  He claimed the pricing is way below market price and I can expect gain from the property resell in the future?!  May I know the average pricing for apartment around Toorak Road?!   

Mate, you need to do some research!

Go to any of the real estate websites and have a look at apartments in the Toorak Rd / Chapel St precinct. Look at their rents too. You will find that 2BR/2Bath apartments and cottages start in the $400s per week and go up from there. Possibly $600 is a lot to ask although you might get it. Almost every time I’ve been told by a sales agent that I could get a certain amount of rent for a property, I’ve found I get about 10% less. Remember they want to make a sale!

Looking at the sales, there’s a whole page of similar stuff for under $650k.

Just do your research!

You also need to find out the size of the apartment and whether the second bedroom really is a second bedroom or more of a study. (I bought a two-bedroom place once and the second bedroom was so small it could hardly fit a bed in it!)

Good luck with your investing and remember that shiny and pretty with good views doesn’t necessarily make a great investment.

Den

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October 22, 2011 - 10:46 pm

This is always more complex than you realise, especially if you’re not sure whether you’re going to move back in or not.
First of all, you need to speak with an accountant to find out the tax implications. There WILL be some!
You will most probably need to get your house valued as well, as the value the house holds will become important (for calculating GST) if you ever sell it.
Your accountant will also tell you how to arrange your loans so that you can claim tax deductions on the borrowings that are being used for investment purposes. Without diligently setting up your finances, you could be in for a big hit, tax-wise.
Finally, make sure your accountant is an expert with property – not all accountants are the same!

Good luck!
Cheers,
Den

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 22, 2011 - 10:42 pm

I’m with Commonwealth Bank and I recently negotiated a further decrease on my loan. I’m now on 6.61% which I think is 1.14% below their standard variable rates. I’m happy with this but it’s not out of the question to fix part of it if I see a really good deal!

Den

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

October 22, 2011 - 10:28 pm

Tommy1 wrote:

Pretax cashflow $2,020p.a. (at 100% finance)
Pretax cashflow $3,415p.a. (at 100% finance)

Can you please advise on how you calculated the pretax cashflow.
Thanks

Hey Tommy,
We have a Cash-flow calculator on our website (it’s free). Feel free to take a look and play around with some numbers. If you need a hand, message me.
Cheers,
Den

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October 22, 2011 - 10:26 pm

With no real reduction in demand, and prices softening, there are more and more good buys popping up here and there. I’m starting to write a series of articles on where to have a look,beginning with an article on three areas in Melbourne where I think there are good buys right now. Feel free to go to my website and have a look (www.everydaypropertyinvesting.com).

Cheers, and happy investing

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 11:26 am

Hi all,

I'm particularly impressed at the way emptyvessel has gone about describing the path to becoming a property investor – well done!

I was in a similar position, but I wasn't as well organised and planned. Now, after purchasing my 10th investment property last month, I have to say that I wish I'd started planning and goal-setting earlier, and I certainly wish I'd started investing earlier. My goal is to be financially free in five years, which will be fifteen years after I started investing. I've always had a below-average income so I'm not expecting to suddenly be wealthy and able to retire.

Perhaps, Marie, your goal of being financially free in five years is a little optimistic. Maybe you earn more than me and it's not. Either way, make sure you clearly define your goals and stick to them!

Good luck – and I'd love to hear how you go!
<br /:)” title=”>:)” class=”bbcode_smiley” />

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 11:15 am

Hi Steven,

My advice for a beginner property investor is to avoid this kind of property. A few years ago I fell into the trap of buying something similar (I had 20% deposit and loaned 80%) because the numbers were great as far as cashflow was concerned. Not long after I bought the property the bank changed its lending requirements and would only loan 50% on this kind of property – due to its size, not its purpose. The bank said that for any property under 50 sq.m. they would only loan 50%, or allow the owner to use 50% as equity.

What this meant is that I could no longer access a considerable amount of equity. This dramatically reduced my ability to grow my portfolio as quickly as I would have liked to. While the bank might currently loan enough for you to purchase this property (are you sure they'll loan 90%?) they can change their rules and this could impact you the same way.

I would suggest that you look at more conventional kinds of property that you can be more certain will help you grow your portfolio. It's also less likely that lending rules will change for these more traditional properties.

I hope this helps you. Good luck with your investing!
Cheers,

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 11:04 am

Have you spoken to your local council? Before you decide anything, go in to the planning department, let them know your dilemma and ask them what your options are. I've never found local councils to be unhelpful (seriously!).

Good luck!

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 11:00 am

Why not ask an expert to come and have a quick look? The amount you pay will surely be worth it in peace of mind…<br /:)” title=”>:)” class=”bbcode_smiley” />

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 10:57 am

If the cooling off period has expired then you will need to negotiate something with the other party – that's the point of a contract!

Good luck!

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

May 28, 2011 - 10:52 am

I tend to agree with ALF1.

There seem to have always been reasons why property is about to crash in value, yet this has never really happened across the board in Australia. It certainly hasn't happened after such a considerable period of sideways movement.

If you're going to buy a property, the number one consideration is that the property you buy is not costing you an unsustainable amount of money NOW. Property is for the long term! Make sure the rent you get NOW is enough to manage the debt costs you have NOW. Of all of my investment properties, none have reduced in rent in the past two or three years. Some people may have had reductions but this is surely the exception rather than the rule, so as long as you can sustain your properties right now you should be fine.

In the long run, I can't see how property will decrease in value over time, in real terms. Put simply, population increases over time and available land doesn't. This causes demand to increase and with it price does as well. This, coupled with the fact that the average person now has more disposable income than ever before (and this trend of increasing amount of disposable income over time doesn't look like abating), means that people have more money to spend on property, underpinning its value. Furthermore, most current reports suggest that the projection for numbers of new properties is below the number required – further increasing demand. As long as demand is strong it is unlikely that prices will drop significantly.

So basically what I'm saying is that property might be moving sideways now and it might not be the best investment for a quick buck. But in 2011 what is?

In the long term, however, I still reckon property is a worthwhile investment. Just make sure you can sustain it's sideways movements now and it'll repay you in the long term.

And good luck!<br /:)” title=”>:)” class=”bbcode_smiley” />

[EPI_DenMember@epi_denJoin Date: 2010Post Count: 71]

January 12, 2011 - 5:56 am

Hi Investhut,

Take Richard's advice on this one. DO NOT re-draw on your current mortgage to pay a deposit on your investment property as this would not be tax-deductable debt. Instead, borrow 100% of the costs of the investment property, the equity in your existing property securing the deposit (there is a chance your re-draw facility will be reduced but that's fine – you would have used that money anyway and this way you have maximum tax deductions on your interest).

Make sure you chat to a broker before you do anything – your account set-up is critical to your success as an investor (and it's something I screwed up with when I started investing). Ask the experts and don't make the mistakes I made!

Good luck,
Den

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January 12, 2011 - 5:46 am

As far as I know, this isn't possible. I'm sure your accountant would be able to let you know all of your options.

Good luck!
Den

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January 12, 2011 - 5:45 am

Hey JayDee,

Here are some opinions for you…

1. I think you should be careful when you select suburbs. If it is somewhere you'd like to live, then pick an area you'd like to live in; if it's for investment, choose an area that gives you the investment numbers and prospects you want. I have blurred this distinction in the past (bought a property to live in and then thought I'd rent it out) and not only is it not the greatest performer of my properties, but it caused tax headaches as well.

2. I'm surprised you have suburbs like Blacktown listed as a no-go suburb for investing. There are considerable infrastructure developments there, it figures prominently in greater Sydney's future development and the returns can be pretty appealing. Sure, you might not want to live there but that doesn't mean it won't make a decent investment. Have a good, unemotional look at the suburbs which look like they might increase in value (there are a few criteria to look at which would indicate potentially decent capital growth) and then see what properties give you the numbers you want.

3. I think JacM has answered this one.

4. For sure, location is important. I always look at whereis or google maps (if I haven't actually been there) to get a good feel for where the property is and how well it's serviced by public transport, shops, schools and the like.

5. Again, look at the figures and see if there is a way you can find properties that give positive cash-flow. They are harder to find but they do exist. Remember, for your investment properties, do the numbers!

I hope this helps.

Good luck with your investing!

Den

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January 12, 2011 - 5:01 am

I agree! Change your loan straight away so that this loan is your investment property loan (this is important for taxation purposes – you don't want to get your investment debt mixed in any way with your personal (non-investment) debt). Also, try to make it an I/O loan as soon as possible as this will increase your cash-flow from the start – every investor wants to maximise their cash-flow!!

Good luck!

Cheers,
Den