Hi Guys,
So i need a crash course on how to invest. I've been saving up for the past year with my partner and we have a modest saving. Im 21 and my partner is 22 and we both have fairly average jobs. Our combined income is around $70k but the best thing we have is the fact that we live in my parents house. My parents, however, are living overseas so that means… NO RENT!!
Due to this wonderful fact, i've managed to save up $17000. Every month i inject at least $1000.00 if not $2000.00. We live a comfortable lifestyle (nothing excessive) with all our bills paid. This month i will only be able to save a bit less due to the end of financial year ending, and the gov co-contribution scheme (i work in super so i know)
All that aside, im thinking of injecting our savings into our first IP. Being the greedy gen Y i am, i would love for it to be +CF and +CG as well.. although i kinda get the drift in this forum that its either CF or CG, and if you want CF you have to go to regional/country areas.
This friday im taking a day off to learn as much as i can about the housing industry. For example, im not acquainted with the different kinds of mortgages available. Im still in the mindset that, maybe a +CF property is viable provided we save enough deposit so that the monthly repayments decrease. Would this be feasible?? Is this the correct mind frame?
I guess the help that i would like is some structure.. as i only get 1 day a month off work, what should i best do with my time? currently im just thinking of going into real estate agents and asking for any good investments.. and then looking it from there.. as well as look into some mortgage companies near Melbourne (i.e. rams, CBA, HSBC) to understand more about the different kinds of mortgages available… and i think i will actually order Steve McKnight's book or buy it from a bookstore… more education could never hurt, right?
Warm regards,
-KenHey Ken…you can't go worse then visiting my website for some simple, easy to follow tips. I've done some of the research, some of it you may find useful, some of it may be useless to you. You are 100% correct, do you research, read the forums, visit and talk, find a guru or a mentor. These will all add up to a successful purchase.
Good luck, and may the force be with you…
Research and education….
That was my starting place.
Hey guys, thanks for the reply.
I've checked out your website and have booked marked it
A quick glimpse does show its fairly useful, especially the top 10 tips- i'll keep that in mind.Whilst i don't disagree with the view of research and education as the starting place, i feel i've been doing that too much. I need some ACTION. hence i am going out on friday to do everything i can- see an MB, see the bank, speak to a real estate agent. Although some guidance would be good. Like having a checklist of 'things to do' cos i don't want to forget about anything that i should have done when i first speak with my MB.
Also, one quick question. I keep reading about the 11 second rule; quickly brief me on this again. So if a property is 250,000 for sale, do you:
divide by 2, multiply by 3, and thats how much rent you need PER WEEK to turn it into a CF+ property? or is it per fortnight?
The 11 sec rule is:
multiply weekly rent by 52 (weeks),
then multiply the total by 100.
The result is the purchase price for the property you should pay.
This is a rent return of 10%, and in most cases would result in a pos cashflow; but not always.
There are more factors to consider such as the outgoings from the property and the loan interest, but 10% is a good starting point.
Good luck finding one.Having a decent deposit will help the numbers a lot.
A few things to remember;
1. never take anything an agent says as gospel. Add lots of salt.
2. get finance pre-arranged so you know what you can spend, and as you say; the right type of loan is important. See a good M.B who is property savvy.
4. make offers to buy with "subject to" clauses – finance, building inspection, pest inspection. There are details with these clauses that need to be added to protect you, and can be discussed later. If you already have finance approved you don't necessarily need the finace cluase, but some investors put it in anyway as a possible "out" if the deal turns out to be smelly.
5. pick an area and study it very closely until you know the local values well.Good on you oneiricer, just get out there and start looking. My first PPOR took about 4 weekends of house hunting, seeing agents, speaking to the MB etc. etc. The only way you'll get there is by DOING! SO get out there and start making waves. I don't know about the 11sec thing, sounds like old school that may not apply anymore…By the way, our first purchase came from an agent, BEFORE IT WAS ADVERTISED, so you must actually go and do it…now stop reading and go…
OH, it helps if I finish reading your comment…
Advice:
1. Start sorting out finance NOW.
2. Find a good/reputable/cheap solicitor NOW.
3. Get bank statements, wage statements, ID etc. together NOW!Good luck.
Handy Andy wrote:OH, it helps if I finish reading your comment…Advice:
1. Start sorting out finance NOW.
2. Find a good/reputable/cheap solicitor NOW.
3. Get bank statements, wage statements, ID etc. together NOW!Good luck.
Hey Andy,
Thanks a lot for your reply. Im thinking about what you've said, and am wondering, what is a good/reputable/cheap solicitor?
With number 3, thats easy. im fairly organised and have fairly accurate and up to date records of bank statements. Printing out my wage statements will take about 10 seconds in the office too. so thats no problem.
Lastly, arranging finance. I assume i just go into the bank, say i want to invest in propertly, and they will arrange some pre-approved credit? do i do that for every bank / MB or just for the interest rates that are good?
-Ken
Hi Ken,
Reading Steves book is one of the best starts you can make, it will get your thinking right. Once you have done that get to know the market, try to identify what you want to achieve and in what amout of time. When you have done that it will be easier to identify what strategy you want to take and then you can start with the end in mind.
Having a mentor is a good way to stay focused.
Cheers
Positive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
Hi Paul,
Its fairly achievable (i hope!!) and its currently my biggest goal in life.
It is to create an investment porfolio that will mean by the time i am 30 (in 8 and a bit years) i will have positive cashflow of $1500.00 per month before working. No doubt this will be hard, but i am definately willing to try. One flaw i have is that i am not confident; not confident of the fact that i will be able to value properties i see. If someone said to me, this propert is worth X amount, i can probably see where he is coming from, but if someone said "Y" i would probably agree.
As i mentioned i currently have $17 grand banked. What sized savings will i need to invest fairly easy in a CF+ property?
Hi again,
Depending on the type of the property you want, you almost have enough to get started with your first property. A recent real life example is if you buy a property for $95K renting for $180 per week = 9.8% return
If you only borrow 80% your deposit is $19,000 allow 6% of the purchase price for your costs $5,700
I hope this is a good general guide that you can apply to other properties you assess.
Positive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
Hi Paul,
I just would like to know how much do you charge for your services (full service)?
If it's flat rate then it's an easy answer or doest it depend on other factors, and if that's the case can you give us a price range.
Thank you for your time Paul
YounessHi Youness,
The full service is $3,300 including GST for your every day type of property, it is a flat fee. It does vary though for multiple income type properties.
Send me an email with your contact details or call the office tomorrow and I will arrange for more information.
Kind regards
Paul.Positive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
Hi Ken,
Firstly, you really need to get your finance sorted and find out exactly how much you can borrow. Then start thinking of where you want to buy and how you can maximise your return.
Don't go direct to a bank…as they can only cover their policies/products. Your lending capacity can vary greatly, depending on how you structure the loan. See a MB who can assess your situation and can think outside of the square. Moving forward, when you're looking to buy property No. 2 and beyond, you want to be able to use 100% of your rental income, which will allow you to borrow more. There's also ways you can look at eliminating the need to pay lenders mortgage insurance, should you want to buy more properties in the near term.
Kind regards,
Bianka
Bianka Demets
Home Loan Advice Centre
The complete home loan servicem: 0420 283 804 (mobile)
e: [email protected]
Vendor Finance Advicehey guys,
As i promised, i took today off to do a little more research and have spoken to RAMS and HSBC regarding how much i can borrow. At first i was a bit disheartened to see the home loans officer lay out all these extra costs i didn't even take into account , as well as mortgage insurance
Firstly HSBC says that th mortgage insurance is an out of pocket expense for me, where as rams i've spoken to says they can put it onto the loan itself too. Im already finding it that speaking to different home loans people give totally different results- HSBC only allows up to 80% borrowing of the cost where as rams gives up to 95%
RAMS gave me the best interest rate; 7.24% I/O payment for 5 years with the ability to renew for another 5 years. seeing as my goal is positive cashflow, an I/O loan is most applicable to me, is that correct?
also, do many of you use mortgage insurance? mortgage insurance seems like a necessary evil especially when you do not have enough money.
finally i also went out and purchased steve's two books- 0 to 350 and 0-700.. hopefully i can up my knowledge more.
all in all, i feel *better* for having gone out and got some 'hands on' experience, but it looks like i got a long way to go yet. at least its a step huh.
p.s. i would like some recommendations from good mortgage brokers who wouldnt mind dealing with a very inexpereinced newbie and just basically teaching me the basic framework to getting the best homeloan for me.
A quick glimpse does show its fairly useful, especially the top 10 tips- i'll keep that in mind.
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