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Oh yes – not thinking straight and regurgitating the banker’s line. So you would extract equity on 1st via LOC then standalone loan secured solely on property held in trust, using LOC as required to cover deposit & LVR requirements on trust property – keeps things a bit cleaner?
No one in their right mind would be setting up loans without talking to a mortgage broker experienced in property investment
Simon,
Good luck with getting going!
Do you have much in the way of savings yet? If you go into a JV with a mate you will need to get some good legal advice to structure the JV agreement properly so that you stay best mates and this advice will cost money. Same goes for trust structures. (“Trust Magic” – search for it online – will give you some insight on how trusts work). Depending on your financial interest in the deal (ie if you are contributing money as well as time) you are going to have to borrow too and without a deposit and working casual that is going to get difficult. Sounds like you are talking to a mortgage broker first – a good plan I think. If you need to build up savings this may have a long lead time but you will only find out how much once you have spoken to them. Living with your mother will help!
I have used buyers advocates but I am employed full time in a job that has a lot of international travel so I am happy to pay for someone to do the research. If I wasn’t travelling so much I would do the work myself as the fees do eat into returns, but not acting eats into the returns even more! Also, if you look at hours required to source a property and multiply by your earning rate it may pay to use one (ie if you are a doctor or lawyer or electrician
). Whether you use a buyers advocate or not, you still need to do the numbers on a deal yourself so you should have a go at running numbers on a few properties that interest you. There are good books out there which show you how – Steve McKnight has an accounting background so his books are probably stronger than most on the financial analysis of deals. If you use the forums search function you can find contacts for most of the key roles – either as contributors to the forums or other recommendations.I would also recommend learning about the negotiation process. It’s easy to blow a _lot_ of dough in a short space of time through lack of negotiating skills. Rob Balanda has done a good CD on this – his techniques made me an extra $15K last week over where I would normally have stopped a negotiation. You can probably get the same info from the library if you have time on your hands and you want to save $150.
Hope this helps!
JJ
Congratulations on wanting to get going on property investing so early!
You should read up, ask questions etc to learn, but the best education is getting your hands dirty with your first property. Nothing beats having $200-400K on the line to focus your learning. As they say, “Experience is the best teacher, but it unfortunately sometimes kills the student” so the trick is to start with something that won’t sink you financially if it goes bad. The best way to avoid being sunk is not to borrow beyond your capacity – there are plenty of mortgage brokers on the forums who can help you with that. The main thing is to start – the biggest impediment, in my opinion, to any form of success is over-planning and not enough action. (You should still plan though
). Find someone who has done it before and buy them a coffee every now and then and run through what you are thinking of doing – that can save some pain too. Again, there are plenty of people on the forums who are happy to chew over ideas and help people be successful.We started 10 years ago and our first IP was pretty uninteresting – slightly negative geared until around year 5 when it hit breakeven – but safe and we’ve made $200K on it. $200K we wouldn’t have made if we didn’t start. We like to think we’re a little more sophisticated now and will be starting some developments in the next couple of months but we wouldn’t be able to do that if we hadn’t made the boring, safe start 10 years back and started understanding the process in a way that you can’t from reading a book or talking to people.
). Whether you use a buyers advocate or not, you still need to do the numbers on a deal yourself so you should have a go at running numbers on a few properties that interest you. There are good books out there which show you how – Steve McKnight has an accounting background so his books are probably stronger than most on the financial analysis of deals. If you use the forums search function you can find contacts for most of the key roles – either as contributors to the forums or other recommendations.
