So here I am at the very start again, only this time I am 42, not 22 (when I purchased my first property).
I will soon have my split $50,000 (after legal costs) after a drawn out legal battle.
My first step was to purchase the Steve McKnight book '0 to 260+ properties in 7 years'. I am half way through reading the book that I purchased a week ago, and only put it down to get onto this website.
I am serious about making my fortune, and will start once I have all the information.
I have a great job that pays well, and provides me with plenty of time to do investment homework.
I don't have much available income at the end of each month as I am paying child support for 3 children
I know the following-
- I need to start now (but not rush in),
- I will have a plan, once I know what i need to do, and I will follow the plan
- I need to find a cashflow positive investment
- I need to time my entry into the market
- I will not select property based on emotion, but rather facts, and more importantly figures
- I would like to start with a smaller investment (perhaps $200k including my money)
I will continue reading Steve's book, and will learn more, but I am likely to need further help in the following areas-
- Where can I get into the market for $200k, that has a positive cashflow?
- I also have around $110k in superannuation, can I make it work for me (in property)?
- Finance structures, do I just keep it basic (through my bank, and a simple investment loan, or should it be structured differently)?
- What tools/publications assist with finding cashflow positive suburbs/areas/countries?
- Pro's and Con's of Commercial property vs Residential property.
Your help is appreciated.
I can also be contacted on email [email protected]
Just shot you an email with a copy of my SMSF ebook you were enquiring about in your other post.
In relation to the way forward i think you need to decide whether you want cash flow or capital growth in regards to an individual property acqusition or whether you want to pool the funds and look at a development project with others or merely want an annual return.
Probably more information need in regards to your initial goals before a more structured answer can be provided.
Yours in FinanceNigel KibelParticipant@nigel-kibelJoin Date: 2005Post Count: 1,425
I think the first thing is to work out a plan as to where you want to go. One of my favorite quotes is measure twice cut once in other words consider your plans carefully before taking action.
We have placed clients directly into development projects which gives they the option of making a cash return or keeping a property at close to cost
In terms of Commercial vs Residential that's a long discussion because there are so many types of commercial property some which is good some terrible. For instance if you buy a factory the value is based on the rental return. Now lets keep it simple the rent is $25,000 a year and it is returning 10% that would mean that the value would be around $250,000. Now what happens if you lose the tenant and cannot replace them or if you do the rent drops to $15000 a year. What is the property worth? Now because the bank see's this as risky they might only lend 60%.
Now if you were buying a supermarket then the bank would lend a much higher percentage depending on the age of the building length of the lease.
So it is a complex issue.Paul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
One alternative you may not have thought of is vendor finance (VF). I've seen a number of people get going in VF without much money. As with most things, it's not a get rich quick scheme and your success will be locked to your 'stickability' – persistent pays Here's some information on vendor finance (VF) educational resources.
The Vendor Finance Association is a great place to meet vendor financiers. Dates and details of meetings are available at: http://vendorfinance.asn.au/meetings-and-memberships/
I believe it's important to build a good foundation to your vendor finance knowledge and there are numerous educators to choose from. Some that spring to mind are:
Sean Summerville – http://www.thepropertyking.com.au/
Rick Otton – http://www.rickotton.com/
Dave & Julie Siacci – https://vendorfinanceinstitute.com.au/home/siacci-system-of-vendor-finance-1997/
Paul Zalitis – http://www.aussiewrapper.com.au/Cash-Flow-Investing.html
Gordon Ku – http://gordonku.com/
It is worthwhile researching all these educators and choosing one that suits your style.
Some other research locations are:
Cheers, PaulTheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271
There are a lot of pros with commercial properties however based on the information (albeit limited) I don't think a commercial property would suit you more than a resi property. Your age is a sweet spot for SMSF purchase however you need to understand the limitations associated with the purchase.
If you are looking for a positive geared property then an SMSF loan may be suitable (particularly if you are not counting the deposit portion). Which state/city are you currently looking at?Scott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,856
As the dust settles from your settlement and the ex cannot access any more of your super but your ex & kids get % of your income, investing via your super may make sense especially if you want to quarrantine the income or assets going forwards.
Thanks Richard, Nigel, Paul, Shahin & Scott for your valuable replies. It is wonderful how varied the options each of you present are.
From these comments I will doing the following-
- Studying up on SMSF's – starting with the information Richard sent
- I have joined Property Know How, and look forward to catching-up with Nigel
- Read-up of Vendor Finance – Thanks Paul, I hadn't even heard of this option.
- Reply to Shahin
And Scott, your comments are so right, I really need to consider where I make extra income, given that (my ex will be trying to access some of it).
I am going to take my lead on investment properties from Steve McKnight and say, 'I don't care where the property is so long as it earns me money'. I haven't yet reseached areas/states, but am open to suggestions, based purely on current and future earnings.
I live in Melbourne, but that will have no bearing on the location of any investment property I buy.
DonavanKara47Participant@kara47Join Date: 2012Post Count: 28
I'd advise you to purchase Steve's most recent book, advertised on here. It has quite a different take from the first 2. It's also an easy read – devoured mine over 2 nights!!
Donovan it is for this reason i suggested you consider a SMSF.
Yours in FinanceTheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271
There are good buys in Sydney but a bit over your price range. I am seeing a lot of investor activity in parts of Brisbane close to the CBD however they are slightly negative to neutral geared. There are also some good geared properties in VIC – a few of the investors on the forum have recently purchased in Cranbourne due to the strong yields.
Having said that – I am very familiar with the Sydney market but have limited knowledge of the Melbourne market. Talk to agents, BA's and plenty of people to get an idea of the area. As a general rule of thumb my belief is that CG chases yields.
As soon as I am finished the '0 to 260' book, I will grab a copy of his newest one.
The way he writes does make it easy to read, and stay interested.
I will keep an eye on Cranbourne and Brisbane in particular. I have family that live in Cranbourne, so I can get the down-low from them.jmsrachelParticipant@jmsrachelJoin Date: 2012Post Count: 711
Can I ask a dumb question. How is it fair one gets 90% and the other 10%? I understand It’s never 50 / 50 but this is ridiculous. How is the poor guy meant to live?KevinGrunertMember@kevingrunertJoin Date: 2011Post Count: 32
"From 0 to 130 Properties in 3.5 Years" was Steve's First Book, and a must read before "0 to 260". You should be able to find copies of it very easily at most book stores – I even managed to purchase my copy from the local Big W.
As Kara mentioned, Steve's new book, "From 0 to Financial Freedom: How to do it Today", is a really quick read and has a great flowchart that you can use to help decide which property investment strategies are most suited to your situation and goals. You can pick up an ebook copy of it from Amazon for $5, or it's $12.95 in most good bookstores – I've seen it at the local QBD.
Joe i agree with you and thankfully i have never been divorced.
Yours in FinanceNigel KibelParticipant@nigel-kibelJoin Date: 2005Post Count: 1,425Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
I personally disagree with the mantra of not caring where the property is located so long as it makes money.
You want the asset to be relatively low-risk, because you probably are not wanting to sign up for any more financial stings this lifetime. So would it be appropriate for you to have a go at a mining town? Probably not. You'd be ruined if the mine moved out of town. There would be no tenants and nobody would want to buy the property off you either.
You want your properties in places with strong tenant demand so you are not sitting praying that your tenant never leaves. You want to know that oh well, if that happens, plenty more tenants available anyway. Also if you for whatever reason need to offload the property, that there would be some buyers readily available to buy it from you. Plenty of towns out there where you'd struggle to sell at all, or at best spend a year waiting for a buyer.
I have just purchased a copy of Steve's '0 to 130' online, and will get to a book store this weekend to purchase his newest book.
You could only image how ripped-off I felt when my lawyer told me what I was dealing with, and what to expect.
It is primarily based on contribution (which was 50/50), future needs (my ex is the primary care provider for 3 kids under 9), and future income prospects.
My ex (and her lawyers wanted 100% of the assets, child support (which I pay anyway),spousal support (to maintain her life style, as it was during marriage), and a portion of my superannuation.
I kept all of my super, and dont pay spousal support, and got 10% of the assets (after lawyer fees).
Makes you consider marriage carefully, before jumping back in.