Hi there,
I have been looking over this website and have already learnt alot of new things in a short time.
I am looking to invest in an Apartment or Unit, i have a steady job and a good rapport with my bank. I initially wanted to buy and hold but now after reading about all the other investment options im not sure.
Also what are you opinions on interest only loans?
Thank you for your help and i'm sorry if these questions have all been asked many times, but I just wanted to start somewhere.
Max Williams.
Hi Max
Buying an Apartment or Unit seems like a pretty good place to start. If you happen to be in a major metropolitan area, I suggest you buy apartments or units as close to the CBD as you can afford. Their capital growth seems to be at it's best, the closer they are to the CBD. Probably the same free standing property too but apartments tend to "drop off" more quickly than houses, the further you move out from the CBD.
I believe that our long term wealth lies in the equity we have in property. Sure there are a lot of other more creative strategies but, for starters, a buy an hold, probably negatively geared, is a good way to go.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks for that, i think for starters i am leaning towards the buy and hold.
So do you think an interest only loan isn't really the way to go to start with?
Thanks again.
Hi Max
In your situation I'd probably go with an Interest Only loan for your first IP. However, I suggest you talk with Richard and/or Terry in the Finance sub forum about this topic. While I used to be a mortgage broker, that was a long time ago and these guys are right up with all the latest.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Max
Interest only is the way forward for most investors starting out.
Sure you Bank maybe appear helpful but remember they will only look after their interest and not yours and certainly wont tell you if there is a better deal around the corner for your personal circumstances.
Richard Taylor | Australia's leading private lender
I think interest only is good in a few situations
1. When someone else is paying for the interest. Such as a neutral or positive cash flow property. If your rent can cover all your expenses and the interest on your mortgage, then you don’t have to pay for it. This means you can use the money left over (after all expenses and interest is paid) to enjoy your life.
2. When you think you can get a better return on your money. When you pay principle off your loan you are effectively getting a 6-7% return on your money (whatever the interest the loan was costing you is). If you think you can get a better return for you money such as 10-20% by using that money to invest in more property or shares or something then it would be worth spending it on investments instead of paying off debt.
3. When you need the cash flow. When you start investing it might cost you too much each month to do a P&I loan, interest only makes the cash flowing out of your pocket a lot easier. This means you can afford more properties. When rents go up to cover the cost you can then switch to P&I.
Hope that helps. If it was me I would do P&I for cash flow purposes and try to neutral or positively gear the property ASAP!
Ryan McLean | On Property
http://onproperty.com.au
Email MeThanks for all the help guys.
The other thing i'm struggling with is what area to be looking at. I have read alot of things saying you cant really go wrong with places close to the the CBD, and i figure places close to amenities and schools/universities would attract renters. What i'm not sure on though is established suburbs a long way from the CBD. I live in Perth and I have been looking North of the city, Yanchep has been there a million years and alot of new developments are creaping right onto its doorstep, Yanchep has older houses on large blocks. The same is also happening down South, Bunbury was another I was looking at, the new highway has just gone in, and so on.
What are your thoughts? I'm so new to this, I want to make a well informed decision for my investments, my first especially.
Thanks again.
Hi Max,
Keep doing the research and you will find the right investment property for you in the right area. I have been looking down kwinana way recently as there seems a few good buys down there.
Glen
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