where to start?

Unrelated, but I’ll tell you one thing… I have $20K in the bank, am on just under $30K, married with two kids under 10. (Nearly the same position as yourself – except for the family part.) Most lenders are offering us around $130K.

My one thing?

Don’t get married before you buy! (Unless you ship her off to her own job of course!) : )

To give some info though, you are entering the property market at the end of a boom.

Prices are stagnating – or falling – and many investors have left the market. Banks are seeing a huge drop in loan applications and all those who drew on their equity to buy worthless toys like a new commodore or entertainment system (instead of wealth-building assets) will now settle down for the next several years and struggle to pay just their minimum loan repayment.

What this means is, banks are falling over themselves to offer loans, trying to maintain their turnover of the last few years as long as possible. (This is evidenced by the fact some are offering fixed-rate loans with interest rates lower than the standard variable interest rate.)

Because investors have left the market and first home buyers now have a fighting chance, rental vacancy rates will begin to creep up. (Fewer people looking to pay rent.) So rental incomes will decrease – property investing suddenly doesn’t look so rosey – so those who jumped in without knowledge will begin to sell off their investment properties. BUT. Many will get this idea about the same time – and suddenly there’s a glut of homes on the market. Sellers begin to think they are not going to sell their properties. And how do you sell when there’s a glut? Reduce the asking price.

Some first home buyers may now have a chance to enter the market. Lower prices, more first home buyers, less tenants, lower rents, higher vacancy rates, more investors selling up… And round and round it goes.

What we plan to do is buy our own cheap home – and I mean – CHEAP. Pay it off over the next two or three years. The herd mentallity of the market will have settled by then. If other properties fall dramatically, our cheap property won’t have fallen that much when compared to Sydney, etc. since these places were overinflated to begin with. (A 10% reduction of $60,000 is better than a 10% loss of $600,000.)

Then when the market begins to turn again, we will be able use all our income to direct into investing.

Have you considered something else I just thought of… There are always garages for sale in smaller towns. I have seen several online – a few just yesterday – some with residences attached. Less workload than the city, but cheaper residence and a slower lifestyle – which means you can use that time to hit the library and read, read, read.

Allan.

Hi Nowork

i think a great start strategy is to buy properties that you can do something to- to add value to the home. When i started investing i bought really cheap homes (30-40K) that i painted and recarpeted. Usually the cost of this was my time plus 4000 (mainly the carpet). But these homes were then worth ($50,000).
So obvoiusly the days of $40,000 homes are well past but the strategy hasn’t changed. Buy cheaper homes that you can add a lot more value to with minimal expense then you can refinace these home as the deposit for your next property.
Following the above patten while time consuming will build you wealth even in a flat market. I started with 25k (in 1997) and was able to buy 10 homes in 12 months. I soon got lazy and paid people to do the work but the concept didn’t change buy homes that a profit was in the deal.

it worked for me, maybe it will work for others?
regards westan

I live in New Zealand, for a fee find cash positive deals there, and now 15-25% Returns in the USA email me at [email protected] to join our database

I am curious – where are vacancies increasing?

Derek
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0409 882 958
Property investment advice and researched property in quality locations available.

Ik’m with Derek…where’s vacancies increasing?? Certainly not Toowoomba. We advertised an old farmhouse IP in a rural area for $200pw and got more than 30 phonecalls, swamped with applicants from all walks of life, and ended up with fantastic tenants who want to stay “forever”. Many who rang commented that as soon as houses hit the paper they were rented. One family even offered us $240pw if we’d choose them. None of our IPs have ever been vacant for long![thumbsupanim]