Forums / Property Investing / Help Needed! / First foray into IP’s – what about family???

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  • Profile photo of littlechooklittlechook
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    @littlechook
    Join Date: 2004
    Post Count: 5

    Hi all,
    Im pretty new to this whole thing and am presently paying of my co-owned home with my partner. We have some equity and although we will be selling in the coming months I am wanting to begin investing in property on my own. I have a very reliable aunty who will be in need of a place to rent in the coming months and given her excellent rental history, I am considering purchasing a property with her in mind as a tenant. My problem is that Im in Perth, have searched high and low for ‘positive’ properties and am finding nada, zip, zilch. Based on my research of the prices of the areas I have narrowed things down to, all I could do to enter the IP market was to negatively gear, no matter how I work it.

    1. Am I setting myself up for disaster by purchasing with my Aunty in mind?
    2. If anyone has any pointers from a Perth locality perspective, I would be so interested to hear your thoughts.

    tired of searching with vastly waning enthusiasm,
    littlechook (aka please help!!)

    Profile photo of littlechooklittlechook
    Member
    @littlechook
    Join Date: 2004
    Post Count: 5

    sorry to double post but I guess I am asking advice on the age old question here – at what point do you stop forging ahead with gusto to pay off your own home and invest in additional properties? Is there a ratio that is generally applied or is it a case of ‘when the right IP opportunity arises’?

    I have read so many books and am so confused….[confused2]

    Profile photo of FFCommFFComm
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    @ffcomm
    Join Date: 2004
    Post Count: 627

    Finding CF+ properties is difficult, but they are out there. Perhaps your still looking to close to the CBD/city, you have to move out to less desirable areas (rural/regional as an example).

    Also in Steve’s 2nd book he talks about how problem+olution = profit. Because it’s difficult to find good CF+ you might have to think outside the box. For example find a property with a large area and you might be able to put up some storage sheds /car ports/ etc which might make the investment positive cashflow. Get Steve’s 2nd book for a better explination about the problem+solution=profit concept.

    Rgds.
    Lucifer_au

    Profile photo of yackyack
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    @yack
    Join Date: 2003
    Post Count: 1,206

    I started my property investing journey before my PPOR was paid off.

    I used the equity in my PPOR to buy an investment property on an interest only loan. I felt at that time I could afford both mortgages, plus I had an income that needed the benefits of negative gearing.

    That was back in 1997-1999. If you have a tenant lined up and you trust her not to say I cant afford rent this week AND you can meet the payments. Go for it.

    Personally, I would wait a little longer as I reckon there will be better opportunities once we see the next interest rate rise. Could be in 6-12 months time.

    Profile photo of SonjaSonja
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    @sonja
    Join Date: 2004
    Post Count: 338

    Hi littlechook,

    To answer to your questions:

    1) You may or may not be setting yourself up for disaster by buying an IP with your aunt in mind. Does your aunt want/need to move? Were you going to ask her if she likes the property before you buy it for her to rent? Is she even interested in having you as a landlord?

    Just personally I wouldn’t have a relative or friend rent from me. This is because just in case things go wrong (eg they can’t pay rent for whatever reason, they damage the property for whatever reason, etc) you risk damaging your relationship with them. If things are difficult for a friend or relative they may well expect greater concessions from you than they would from a complete stranger. Are you prepared to either make concessions or deny them to your aunt if that scenario were to play out?

    2) I can’t help you with Perth. I llived in Bunbury until I was about 4 but haven’t been to WA since. What I will say is that if you are not finding what you are looking for in Perth and it is killing your enthusiasm (don’t let it die!)… have you considered looking for something else or somewhere else?

    I am also wondering why you are looking at property investing on your own. Is your partner against the idea or just not interested? A supportive partner is a valuable asset when things seem too difficult or that spark of enthusiasm is just about gone.

    Best of luck with it.

    Regards
    Sonja

    Profile photo of myoungmyoung
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    @myoung
    Join Date: 2004
    Post Count: 33

    If you go +ve cash flow you should be able to use surplus funds to help pay off your PPOR faster. As for interest rates rising in 6 -12mths, maybe maybe not, banks are offering 6.95% over 5 yrs fixed – doesn’t really indicate they are expecting a rise in the short term, and not many of the indicators point to it either. If our $ stays high and economic growth stagnates a little more we could see a cut. If your going for +ve cash flow, why wait?! If your going negative gearing and relying on capital gain to fund your shortfall, you may be waiting a while, given where I believe we are in the cycle.

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