Looking at my first IP and have organized my finance with 200k linked to an offset account ready to fund deposit and stamp duties etc
Knowing how important my first purchase will be I am thinking of using a buyer advocate and was wondering if this will be worthwhile decision?
Also as I am Melbourne based am I better to look interstate for my first purchase?
I am unsure why you feel you would be better to look interstate because you are from Melbourne. You would be best to look at property that will offer you the best growth and/or yield. If that is in VIC, good. If it is interstate, good. Follow the numbers.
I am also unclear why you feel you need to use a buyers advocate. They certainly have their place, though equally you are certainly able to acquire a copy of API magazine and check out the stats and start zeroing in on some suburbs…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
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JacM
Buyers advocate is more due to my confidence level for more first purchase.
There is nothing wrong with using a buyer's agents. The only thing is that the cost is unfortunately not tax deductible. What's your purchase budget?
Regards
Shahin
TheFinanceShop | Elite Property Finance
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Shahin
My purchase budget is 400-420k
Hi Coota,
Start local for your first IP. Attend as many open houses and auctions as possible. Get an idea of trends, demographics, rental demands and price guides. With your budget you should be able to either buy a house close to the city (say Hawthorn) or travel a little out and buy a house. I personally would prefer the latter. Concurrently, sit down and map a few scenarios out and get a feel for when you expect the properties (say the house or the unit) to be positively geared and the expected CG.
Even if you decide to go with a BA I would suggest doing your own due diligence before making any committments.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Shahin
Looking at my first IP in my local area ie Thornbury,Northcote or Fairfield area in which I am really keen on
Fairfield units have only shown moderate growth in the last 5 yrs of 34%
Hi Coota
Welcome aboard.
Signing up to forums like this are a good start. It's full of up-to-date, free info.
The historic growth only shows one side of the picture. Is their anything that's happening now or in the future within the area that would stimulate growth?
BA's can be a good option for interstate purchases. I have a number of clients who have and continue to use BA's and are generally quite happy with the service they receive. Like any profession though, there's some that are more competent than others so some DD is required when choosing.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Coota,
You need to work out what the property is supposed to do for you.
No need buying a cashflow property if you are looking for growth and vice versa. If you do use a BA then you need to be able to give them a 'buying brief' otherwise you'll just end up with any old property.
My advice would be to step back and, if you haven't already done so, work out what you are trying to achieve with property. While there are a lot of properties out there not all will suit your investment goals.
34% in 5 years is pretty decent growth. Start hunting in that area first. It also sounds like you know the area. Fairfield is a great area – I have an investor buy an older style unit and he converted it to an amazing french provincial inspired unit. He made a healthy profit once he sold he after about 2 years.
What type of rent are you about to get with your budget?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Growing your knowledge through reading books, contributing in the forum, asking questions and actually inspecting a number of homes (especially the ones nearby) is a great way to overcome your lack of confidence. This is important so that you gradually build your skills and knowledge especially as you continue to buy more properties in the future.
If it's for an investment property, then aim to start small first. The reason is because if you stuff up in any way, then at least your you only started off small, and you built experience.
If you feel that it's more than just a lack of confidence, and it's really that you don't have enough time to do the research, then using helpful services may save you time. Although if you really do plan to make investment property an endeavour that you want to do more of in the long term, then it's best to try and figure as much things out for yourself (and not just delegating it all on a buyers agent).
Thinking of starting off my portfolio with loans of 90% which I know will attract LMI but I think this would help me build my investment portfolio whilst in a soft market.
Is this a good strategy in the current climate and what are the risks/benefits.
I am in the process of buying a property for my personal portfolio at 88% lend. LMI is tax deductible. I have several clients (surprising 2 from Sydney) who have purchased in Fairfield due to its close distance to the CBD.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Just to clarify Sharin's earlier post.
The cost of a Buyer's Agent is actually Tax deductible as it is added to the cost price of the property when calculating CGT in the event of a sale.
LMI is also Tax deductible over a 5 year period or the term of the loan whichever is lesser and proporitonal in the first year.
Subject to serviceability i wouldn't have a problem in taking the first loan to a 90% lvr. Course alternative would be to go to 100% and use a TD as collateral security.
No point in doing so though if you income can't support further acqusitions and if this is the case you might as well have dropped the lvr to 80%. Remember not ever lender charges LMI at 90% and whilst the majority do the premiums can vary considerably from lender to lender and insurer to insurer.
Definitely shop around for the best quote.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Coota,
Its a nice area that you want to invest in, close to the city, public transport isn't hard to find whether it be trains, trams, etc which adds a premium to the rent demanded.
Being older suburbs, blocks are generally small with narrow streets, however house prices are above the Melbourne median, and with your budget you would definitely be looking at a unit in that area.
PLC,
Currently have 200k put aside in a master facility so my reasoning behind 90% loan with LMI is to purchase property below.
Purchase price
$450,000
Total cost including duties/legals/LMI
$480,000
Looking at purchasing 2 of these properties as initial outlay would be around 100-110k thus leaving approx 90k as a buffer in my Master Facility.
When you say master facility i hope you are not referring to a line of credit.
Not aware off the top of my head any lender that calls its offset account a Master facility.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Coota,
As per Richard's post, what exactly are you referring to in terms of a master facility?
Also your figures might be out of whack. With 10% deposit and stamp duty, etc on a $450K purchase will set you back $70-$75K. Doesn't leave much change out of $110K as per your post for a second purchase.
PLC,
I have 200k in an offset account ready to go so my sums are as below.
Purchase 2 properties at approx 420-450k at approx 70k outlay x 2
Total outlay 140k still leaving approx 60k as a buffer.
Again don't want to picky but if you haven't purchased the properties yet the money can't be in an offset account.
Still concerned when you mention the words Master Facility as it still seems to me like a Portfolio style Mac Bank or Dragon style loan.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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