All Topics / Help Needed! / How to get foot into the door

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  • Profile photo of wannagettherewannagetthere
    Member
    @wannagetthere
    Join Date: 2012
    Post Count: 2

    Hi all

    I know this is probably a ridiculous question, but i really want to get into property investing because i love it and i love the prospect of fiancial freedom and hate selling my soul for the corporate ladder.

    However like many aspiring property investors i have the problem of finance, so i am wondering how to get into no money down deals (you can assume i have researched etc) i mean no one i know and certainly not me has an extra 20,000 to 80,000 bucks just lying around. So I'm wondering how u guys do it and how the heck i can get into this property investing game without any real big bucks other than just getting money from the family.

    Cheers guys

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi and welcome to the forum.

    I started in the same way most of my clients do – by saving a deposit.

    In my opinion, the first property purchase is often the most difficult. Since my first purchase a while back, I've been able to use equity ever since for each subsequent purchase.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi & welcome to the forum.
    Saving for a deposit is the litmus test for investors.
    It tests motivation, patience, determination, money skills, discipline, goal setting, . . . . .
    It’s not easy so many fail.
    It requires you to adopt the principle of delayed gratification – save now enjoy later.
    Sounds like you’ve reached a fork in the road.
    I wish you success.
    cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of luke86luke86
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    @luke86
    Join Date: 2010
    Post Count: 470

    Hi Wannagetthere,

    Along the same lines as the above posts- Most people I know who own propetry have had $20k – $80k lying around to get themselves started. Unless you have a friendly family member who can put up equity as security or lend you money, then you will need to save a deposit.

    Also, without the money management skills to save money, holding onto a piece of real estate might be very difficult.

    Cheers,
    Luke

    Profile photo of luke86luke86
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    @luke86
    Join Date: 2010
    Post Count: 470

    And sorry in answer to your question- I saved approx $30k to purchase my first property. I also used the $14k first home owners grant to put towards the deposit and claimed the stamp duty expemtion for first home buyers. I am now living in a rented unit and have rented this apartment out to a nice tenant who pays her rent on time.

    Luke.

    Profile photo of P SoaresP Soares
    Member
    @p-soares
    Join Date: 2012
    Post Count: 6

    Welcome,

    If you don't mind me asking, how well have you handled your money in the past/currently. If you can put away $250 each week religiously for 3 years that is $39,000 you'll have in the bank NOT counting in the interest you get on your money!

    Saving for a deposit is the hardest part. A lot of finance institutions and banks won't lend you (at a decent rate) unless you have at least 5-10% deposit unfortunately.

    Do some research on some suburbs outside of your main cities, have a read of this article, it will give you an idea of (affordable) suburbs you may choose to look at.

    Here's some info on the FHOG. You may have to live in the property for at least 6 months before renting it out to someone though. Search for the factssheet, it has plenty of useful information.

    Profile photo of streamlineinvestingstreamlineinvesting
    Participant
    @streamlineinvesting
    Join Date: 2010
    Post Count: 171

    I know it can seem a bit daunting to try and save enough for a deposit. I believe you should ideally try and save 20% of a deposit, one reason to avoid lenders insurance, and also because by doing so you should have enough equity in the property for future investments.

    But with the median house price possibly around $400,000 in most areas, it is not likely to have $80k just lying around, not to mention all the costs associated with buying a property, such as solictor fees, stamp duty, mortgage fees etc etc. Nobody is really expected to have this sort of money just lying around.

    If you are really desperate to get your foot in the door in terms of investment properties, there is no reason why you can’t go out into the country areas for investment oppurtunities, although the capital gains is typically not as high as city areas, the rental yields are quite often a lot higher, and it is typical to achieve a round 9-10% gross yield, and once all expenses are taken out you may be lucky and find it is positively geared.

    The other benefit with country property is the entry level is a lot lower, it is not hard to find decent properties in smaller town centres for around the $100,000 mark. Then you only need to save up around $20k. It may not be as glamarous as going into a nice 3 bedroom penthouse apartment in the city, but it is definitely one way of entering the property market when you have next to nothing to start off with.

    Profile photo of xdrewxdrew
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    @xdrew
    Join Date: 2010
    Post Count: 479

    The answer of how to make money without money is to make it with someone else's money.

    If you cant sell your property because you dont have it, sell the skills to make someone else's property better.

    Negotiate to sell a property for someone for a better price by improving it or marketing it better. Ask for a profitshare from the arrangement.

    The whole deal is to achieve a desirable win-win outcome from a property sale. And that requires proper negotiation.

    Think outside the square. You'll still need SOME money to make a deal happen .. that part is inevitable. But again .. its how you swing that deal .. that makes it happen.

    There are always people out there who need or want a better deal. If you know how to make or provide a better deal on a property then do so.

    The sheer idea of a no-money down deal is being able to convince a vendor or a bank or a broker that you can make this deal work. Thats what the negotiation is all about.

    Fix a deal and make a mint. Read up on how other people did it. It will never be the same twice .. but once you know whats possible you can be more flexible.

    Profile photo of mattstamattsta
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    @mattsta
    Join Date: 2011
    Post Count: 604

    i have been saving for a few years now with a deposit of 20-30k….
    i used the first home savers account and will use the FHOG to help me out. I'll buy a PPOR with it and then convert it to an IP – you could do this as well.

    Good luck!

    Profile photo of wannagettherewannagetthere
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    @wannagetthere
    Join Date: 2012
    Post Count: 2

    Yeah thanx heaps guys thats awesome advice. However i am really into this idea about selling my skills instead of the property i dont have. I mean i love working but i'm not into selling my whole sould to make some company a whole lot of money.

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Welcome to capitalism. When some company makes enough money, there is a job for an employee.
    Work hard, build reserves, you’ll get there.
    Good luck
    cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    Saving a deposit is key. I wish it wasn't (because it would be so much easier) but it is. For good reason too!

    If you can't afford to save a deposit and you are investing without a deposit then your risk of financial loss is increased dramatically. Mix that with inexperience in property and you have a disaster on your hands.

    There are ways you can buy a property without a deposit (like vendor finance) but they are difficult and better suited to the savvy investor. But DON'T WORRY! You can save a deposit if you work hard and put your mind to it.

    Ryan McLean
    How to Save for a House

    Ryan McLean | On Property
    http://onproperty.com.au
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    Profile photo of Pat007Pat007
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    @pat007
    Join Date: 2012
    Post Count: 71

    I am in the same position, but i take the view that while i save i can investigate, read , learn and ask so that when i have the hard cash to put down im not taking a gamble.

    depending on your entry level, personal loans, private lenders or credit may be an option.. it will factor heavily against long term profitability but will allow the building of equity that otherwise you may have been locked out of.. but with that goes a higher inherent risk if things go sour.

    A deal like that is better for what's known as flipping… put down a deposit, negotiate long settlement and arrange early access to property for rennovations in the contract… have a team you trust ready to go and improve the place as fast as you can in a cost effective / value adding manner.. then while all this is going on line up a buyer .. it is risky, takes skill and planning but from what i read it can rapidly get you into the game.

    Another option may be to go for good land at a lower purchase price, have plans drawn up and approved, do a deal with a builder and then sell to a buyer based on the plan..  again needs alot of research into the "how to"  and maybe some official legal advice…
     

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    Maybe you could alter your way of thinking for a while. Think of your job as something that is helping you get started in property. You turn up and they pay you money. With that money you will buy property and hey presto you are on the property ladder. There will come a point when you don’t need to have a job to keep making progress.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi Wannagetthere.
    Obviously there are a number of ways and means of “getting there”, ranging from possible to certain, but I suggest you put the main one into action because it’s guaranteed to work – save for a deposit. The proven method obviously is to cut expenses, increase income, build reserves, increase education in real estate, educate yourself exhaustively on a geographical area you will target. Aim for say 3 years, document all your efforts ready to impress a lender, and it will become a certainty. I guess you could ask yourself if it would’ve been worth it if you’d put a plan into action 3 years ago and own a property now – so where would you like to be 3 years from now ? Where you are now, or owning your first property?
    Wish I’d started very young. The above info from me is very hypocritical, because I didn’t do it until my forties, it’s what I know now.
    Just get started, use this forum and all the help from the finance and real estate investing experts here who’ve been so very helpful to me, and the results will be yours.
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of sevilleseville
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    @seville
    Join Date: 2012
    Post Count: 12

    Here's my 2 cents worth. I bought my first home in partnership with the Government and I only had $2000. I believe these are still available. How they work is the gov gives you an equity loan which means you will own approx 67% and the gov will own 33%. When you make payments to pay your mortgage, you only pay the amount associated with your 67%. When you put value into that property, you send the paid invoices to the Gov department and they will pay for their share = 33%. You are still entitled to the FHOG too! When you sell your house, the equity loan gets paid out first and then the rest is split = 67% portion goes to you and 33% portion goes to the Gov.

    Profile photo of mattstamattsta
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    @mattsta
    Join Date: 2011
    Post Count: 604

    there's different kinds of vendor finance…

    I've seen alot of deposit finance deals, however, very few vendors will vendor finance the entire price of the property – and if they do, they charge a high interest rate

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Interesting topic and one that we get asked about on a regular basis.

    On a side note i am up in Darwin at a Finance Conference and the NT govt yesterday launched a new 100% loan for owner occupiers who are buying or building new properties. Loan consists of an 80% split which you pay interest on and a 20% split which interest free. Ckmes with no mortgage insurance.

    We are looking at launching our own new 100% loan to investors later in the year with no second security required.
    Investor must own a PPOR but will not have to use this as security at all.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi Richard.
    That’s interesting about NT Govt – howzabout NSW Govt doing anything to help, or is that a really dumb question to ask about this greedy oppressive NSW mob ?
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of winadilwinadil
    Participant
    @winadil
    Join Date: 2012
    Post Count: 15

    yeah i saw that on the tv and went to the website but it is only for new houses only and there are no new houses alice springs:(

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