Getting Started

I would suggest IO on all loans as it reduces cashflow enabling you to service more debt. Any spare funds should be diverted to pay off non-deductible debt first.

I agree with Terry.

Interest only non deductable debt first, I would also add to look at deals that allow you to increase your equity faster. i.e. renos, small subdivisions, do stuff yourself, development's.  This will allow you to increase your equity faster and obviously move you to your goals faster.

Good Luck

Don

I think I.O, with the option to pay down debt as the opportunity arises.
This way, you get the benefit of better cashflow now, and I think that everyone should be thinking consciously of regular debt reduction and keeping the LVR nice and low; less than 70%.

i agree with Deka,

it is just as affordable if not more, to rent and use the extra money (rent being less then morgage, rates and insurance) to build wealth thru real estate. because at the end of the day mortgage interest or rent is only dead money anyway.
as long as you invest the extra money and don't blow it on keeping up with the jones's

I agree with Terry.  Interest only. 

After a couple of years of hiking the rent up, the rent exceeds the holding costs and the surplus can be used to start chipping away at the principal.  Why would you use money you had to go to a job to acquire to chip away at the principal when you can instead have tenants chip away at it for you in tomorrow's dollars?

if you are renting invest first to residential., not that large or extravagant, let us say fair enough to get you out of the curse of paying monthly, then invest on commercial property., God bless

start with the end in mind , ie if you think you need 200k passive income per year to live on , plan  for that. I would not buy anything if it isnt positive cash flow or has big upsides that can be obtained quickly ie its no point working to support a property for years to find that the upside isnt really there.

Ive been an investor for 30 plus years living from them for about 20 , i retired to byron bay to surf when i was mid thirtys. of course  got bored being retired so kept on investing ! still surfing every day though

80% of my properties are commercial , ive bought a few of these no money down , vendor finance etc I recommend u look at comm property. for one thing your not competing with all the people doing the standard res stuff , plus its generally pos cash flow from day one.

If your interested I have a course available on comm property , site will go live in the next few days.

connect with me http://www.facebook.com/jamesdawsonproperty  

#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }

Hi Morgan,

Successful property investing is more than just simply buying a property as the property you do buy must fit within an overall plan you have developed which suits your goals and personal situation. 

I would start in the residential area first – mainly because your risks are lower and the amount of deposit you need is lower.  Having said that I do know of people who have been commercial investors all of their investing life and who have done so very successfully.

Typically most commercial investments will require increased financing levels. Sure you can get small office type investment.

In a nutshell there are two types of investment strategies – at the end of the paradigm there are those who invest for cashflow and at the other end there are those who invest for growth. Then there are people pursue a more balanced approach and will try and achieve both cashflow and growth, not necessarily in the one property.

Then there are those who will buy to increase value by sub-dividing, renovating and/or developing.

At this stage I would suggest you work out how your properties will help you to become financially independent as this will largely determine what strategy suits you best.

At the same time I would encourage you to hook up with a broker who can provide you with some guidance about your current borrowing capacity. Once you have this figure in mind then you are able to determine what you can afford, which, in turn, mat determine where you can invest.

Above all – step back and spend some time educating yourself. Read books, peruse forums, maybe grab a coffee with a property investor and so. Takign a bit of time to get yourself ready will be invaluable in the long run.

Morgan posted his question in Sept 2007. It would be good to hear if he ever built up a property portfolio.

Nevertheless I still appreciate the advice you have all given as I am in a similar situation. Just scoping the scene at the moment nervously holding back from plunging into the scary property market haha. I am always assuming the worst. Especially seeing as tenants don't always look after your asset.