Thanks for your post, Freckle.
Of course I want to be surrounded and advised by people who are experts and can educate me and guide me on investing. However, I feel like I might be too far in the deep end with my broker now to switch, as I have already signed a pre-approval with a bank through hermoxi10Participant@moxi10Join Date: 2010Post Count: 194
A preapproval binds neither you or the bank to anything. Your broker's previous advice could be interpreted as "just sign something and let me have my commission". You owe no debt or commitment to an advisor of that sort. I found my third and by far the best mortgage broker on this site. He has already replied to your request for help.CatalystParticipant@catalystJoin Date: 2008Post Count: 1,404
But then again maybe the mortgage broker knows Charlotte is over analysing and needs to just buy something (not anything I agree).
Charlotte are you the over analysing type? It doesn't sound like it to me (yet) as it sounds like you are just starting your research.
Some great advice here already. I'd say keep reading and look at want you want to achieve in the future. What goal do you want to achieve by buying property? Set some short term and long term (specific) goals. Not "I want to quit work".
When I started my goal was an equity $ amount. Then I realised no matter what that was I may still be tied to a job. Then I set a cash flow goal as well and made sure every property I bought took me closer to my goal. That made it easier with buying as well because it cut out lots of property that didn't suit my goal.
Good luck with your investing but be careful- it's addictive.
Thanks moxi10, that's great. Is that Richard Taylor pure talking about?
Hi catalyst, thanks for your post. Well I think I am similar to you, so far the intention for my goal has been equity, but hearing what you have said about cash flow makes sense. I guess this highlights the need to me to meet with a broker that can help me develop an investment strategy and define my goals like freckle said. Also, you're right Im not the over analyzing type, I'm actually quite impulsive haha, so I'm trying to do the right thing and cover all basesLanteMember@lanteJoin Date: 2013Post Count: 1
What about Darwin? It is booming at the moment and I have a property for sale that is getting excellent returns. It is managed for overnight rental and is doing really well.
The only reason I want to sell is that my wife and I have moved overseas and would like to by something here and settle down.
Have a look at property and its rental status at #53901 on http://www.owner.com.au.
RalphBoughtWithEquityParticipant@boughtwithequityJoin Date: 2013Post Count: 68
First off, you've saved up over $100k on a $60k annual salary….that's awesome. 2nd, you're here getting advice. 3rd, you're never too far along with any broker to sever ties and move on. Erase that thought from your mindset. She works for you…not you for her. A good mortgage broker for investment property should own some of their own…ask if she does and how she is doing with it. Same is true for real estate agents. Here in the states, every agent now is an ïnvestment"or foreclosure expert but very few of them own any properties. It amazes me how many investors buy homes from these kinds of people all on pro-forma basis that never matches the end reality. If the current broker doesn't own property – chuck her. Would you buy a mercedes from someone riding a bike? Probably not!
Scan you market, got to some real estate investment meetings in your area, get educated but don't get stuck in paralysis by analysis which afflicts many you will meet in such groups. Network with other investors or here to find solid agents, mortgage brokers and financial advisors….there are some excellent ones here. Realize that free advise is often worth less than you paid for it so be discerning.
What are your goals? I don't like leverage personally but what do you want to achieve? Do you really want to own property or are you looking to build wealth? Sometimes, there are better returns to be had by NOT owning the property. Every model is different.DaOneParticipant@daoneJoin Date: 2008Post Count: 38
Good advise bought with equity, if a broker does not have investment properties try and stay away from them. Yes mortgage broker can not provide you specific advise on structuring for asset protections or how to maximise Serviceability. But they can discuss what they have done to assist you in your journey.Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
Not quite accurate DaOne… there are some brokers (and a couple on these forums in fact) that hold additional qualifications (financial advisor/accountant/lawyer) and can therefore discsuss those very things. These chaps are very valuable individuals indeed because they understand the whole picture.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
Charlotte which lender did your current broker advise and why?
From what you told me by email i have an idea who i would have recommended especially with 100K deposit but always interested to hear what someone else in the industry recommends.
Just ask your Broker do they own a property or two and then secondly do they owe anything on them?
We can all buy a property and gear 110% but when you can live off the rent because owe nothing on them that is different.
Yours in FinancePaterson00Member@paterson00Join Date: 2013Post Count: 65cbarry wrote:Yes, you're right Freckle, I don't have a complete understanding of either, hence why I am doing my research reading, talking to various people and interacting on this forum. I am definitely ensuring I get an understanding of "The game" , to extent that my broker told me to stop over analysing everything and just simply buy something. I also have accountant, mortgage broker and solicitor that I am using, and they have all been a wealth of information. Thanks for the advice!
At some point you just have to make a start. You will learn a lot quicker and lessons will be learnt better when it's real money. You will make mistakes, fact, just learn from them and get better and better.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
I agree everyone has to start somewhere but i have to say it is expensive to make too many mistakes.
No structure is perfect for every situation but you want to set up a structure that has flexibility yet can work with you as your portfolio builds.
Yours in FinanceShiny_Suit_ManParticipant@shiny_suit_manJoin Date: 2012Post Count: 54
At some point you need to get in the game but you still want the best outcome possible. Yes mistakes are valuable lessons but other peoples mistakes don't cost you a dime! CBarry in answer to your question about capital gains it depends on what structure you purchased the property in, e.g. trust, Self Managed super, but your definition is correct, and it is taxed on the applicable tax bracket for the financial year. So if you were a high income earner it would be 46.5 cents of every dollar. I'm no accountant but that is my understanding in a nutshell if your property is purchased as an investment in your own name.
Hi BoughtWithEquity, Thanks for the words of encouragement and advice. From being on here it has become apparent that I need to really define what my goal is, but I suppose it is to build wealth, so when I am old and grey I have financial security and also a home that is paid off to live in, and possibly a nice little holiday house somewhere. Is that a realistic goal?
Hi Richard, my lender advised St George Back, but her reasoning for this was because I was still on probation at work and I have been a customer of them for a long time. I recently asked her, as I am now off probation, if I could go with a lender that isn't one of the big four banks but she recommended against it as this would put a black mark against my name. Anywho, I don't think I will be working with her anymore as I e-mailed her to say I was going to talk to a few more people and work out a strategy before jumping into anything and she never wrote back to me, when she always responded straight away before. I guess it showed me her true colours as she wasn't willing to wait for my business, which I doubt will be very long anyway. Cheers
Hi Shiny_Suit_Man – thanks for your words of wisdom, very helpful indeedFreckleBlocked@freckleJoin Date: 2012Post Count: 1,680cbarry wrote:I need to really define what my goal is, but I suppose it is to build wealth, so when I am old and grey I have financial security and also a home that is paid off to live in, and possibly a nice little holiday house somewhere. Is that a realistic goal?
That is not a goal. It’s just a wish. A goal has to be specific. Non specif goals engender non specif plans which almost always mean you fail to achieve your goal.
A goal might look like:
I want to achieve a net income from property assets that provides a minimum annual gross income of $250K by year 10.
Once you have a clear goal you then set objectives that are subsets of the goal:
I need 20 properties that average 15kpa net of expenses.
and so on.
Once you have a goal and stepping stone objectives you can then turn your attention to an over arching strategy. After that you develop tactical plays to accomplish your strategy.
Strategy: I will shoot for 3 positively geared properties within the first 5 years and 7 in the remaining 5 years
Tactics: I will look for properties that have unrealised CG that can be realised through renovation
You can have multiple strategies. Goals, objectives, strategies and tactics are never fixed. You change them when you need to. For example you might hit your objectives ahead of schedule or behind schedule. That will necessitate some alteration to scheduling and/or a revamp of strategy to accelerate if you get on a role or completely alter a strategy if you run into a wall
It helps to build timelines and schedules into everything. This keeps you focused, on track and provides milestones to evaluate your progress.
You might want to include personal goals like; I want to be conversant in option plays by year 2 and conclude an option deal by year 3.
You could do a SWOT analysis on yourself. Strengths, Weaknesses, Opportunities and Threats. Work to your strengths and develop strategies and goals around those. Identify your weaknesses and work to redress them. Opportunities might be relationships that already exist that you can leverage. Threats might be personal debt, employment etc.
The better you understand your abilities and limitations the better you can effectively develop a plan that has a statistically much better chance of success.
Wow, thanks Freckle, this is really helpful. Now what you have said sounds much more like a goal, in comparison to my wishy washy 'goal'! Thank you very much, this is a huge help. Again, this is why now, as you suggested a while back, I want to get a great team of experts to help me, then hopefully I can really nut out my goals adn strategy properly. However, I will definitely start making some progress with the tips you have left – thanks againNashyMember@nashyJoin Date: 2013Post Count: 3
I am from a regional area at Tamworth. You can still buy 2 or 3 bedroom properties here for $150K to $200K. I was cash flow negative until my new strategy of fully furnishing the houses in 2012 to the present time. So far of the 4 properties purchased 3 are cash flow positive. My strategy is to fix the bathrooms and kitchens (if needed) then fully furnish with single beds and rent to the 457 visa holders in the Tamworth area. There are plenty of jobs that the local kids will not do, so there are plenty of these temporary visa holders in the city. The tenants are great payers, on time every time. Since 2006 until 2011 and on a low income below $30k I have invested in 4 properties in this area, initially renting unfurnished and suffering from bad payers and damaged houses. With my new strategy my returns are with the purchase prices $105K returning $700 P/W, $120K returning $700 P/W, and $185K returning $360 P/W. They are all cash flow positive – the only one not cash flow positive with a purchas price of $160K returning $255P/W which still has to be renovated and fully furnished. I have retired from working at age 60 after only 2 years of this new strategy.NashyMember@nashyJoin Date: 2013Post Count: 3
I am from a regional area at Tamworth. You can still buy 2 or 3 bedroom properties here for $150K to $200K. I was cash flow negative until my new strategy of fully furnishing the houses in 2012 to the present time. So far of the 4 properties purchased 3 are cash flow positive. My strategy is to fix the bathrooms and kitchens (if needed) paint out, then fully furnish with single beds and rent to the 457 visa holders in the Tamworth area. There are plenty of jobs that the local kids will not do, so there are plenty of these temporary visa holders in the city. The tenants are great payers, on time every time. Since 2006 until 2011 and on a low income below $30k I have invested in 4 properties in this area, initially renting unfurnished and suffering from bad payers and damaged houses. With my new strategy my returns are with the purchase prices $105K returning $700 P/W, $120K returning $700 P/W, and $185K returning $360 P/W. They are all cash flow positive – the only one not cash flow positive with a purchase price of $160K returning $255P/W which still has to be renovated and fully furnished. I have retired from working at age 60 after only 2 years of this new strategy.