It is great to see new members joining up on a daily basis. A big welcome to all of you.
A common theme in new member posts is often "I'm not even sure how to start" – and that is fair enough too.
I recall in my early days of ANY new situation how difficult it was to even ask a question that made much sense – mainly because I didn't know enough yet to formulate a specific question. We all go through this as we strike new territory.But we get better, if we allow ourselves to.
Tonight, I was just trawling through some older posts in General Property and I found an absolute gem.In it, the poster traces her own steps – those early faltering ones, then trying different ways of doing things, till she became so familiar with the subject of property investing in her area, that she could make money even when markets were going down !!
Her words are well worth a read. Ignore the fact that she invests in just one market – the point is that what she does can be replicated in many others.Really it is the "How did she do this starting from scratch?" that is important.Then, "How did she progress to other levels?" – because we all can do it too.
I'll let Minimogul tell her own story :-
Do let me know if this helped you with your "starting out" questions,
“The BIG PICTURE Index” – Page 1
January 4, 2014 – 12:09 pm – One Investor’s Path from beginner to successful
January 21, 2014 – 9:22 am – Should I buy my PPOR first, or an IP first
February 21, 2014 – 12:23 pm – How do I choose WHERE to invest?
March 31, 2014 – 12:17 pm – Cross-collateralisation – what is it, and why shouldn’t I do it?
March 31, 2014 – 12:20 pm – Offset Accounts – why do I NEED TO KNOW about them?
April 3, 2014 – 10:21 pm – How to Find Positive Cashflow Properties
April 4, 2014 – 3:17 am – Why use I/O (Interest Only) loans instead of P&I loans?
April 4, 2014 – 11:01 am – How Westnblue built a portfolio in less than 2 years
July 11, 2014 – 10:11 pm – Positive gearing vs Negative Gearing
November 23, 2014 – 10:22 am – Discussion on LMI (Lender’s Mortgage Insurance) and YOU !!
April 10, 2015 – 1:55 pm – Seven most FATAL property investing MISTAKES (Jason Staggers)
———— Page 2 ———–
April 24, 2015 – 9:03 pm – Capital Gains Tax (CGT) is a complicated beast !!
May 12, 2015 – 10:41 am – WHEN is the right time to buy Property?
August 31, 2015 – 9:33 am – Is NEW or SECOND-HAND the better investment?
September 1, 2015 – 10:48 am – How to get finance on a lower-than-average wage?
October 9, 2015 – 9:54 am – How to keep a portfolio growing (from a finance perspective)
October 12, 2015 – 9:06 am – The Emotional Side of Property Investing
November 7, 2015 – 9:35 pm – Setting Goals re Property Investing – Corey Batt
November 14, 2015 – 12:15 pm – How well does Property Investing work over time?
December 26, 2015 – 8:57 am – Why we SHOULD Invest? (A ship in a harbour is safe…but)
January 6, 2016 – 11:28 am – Which city should I buy in?
March 19, 2016 – 3:57 pm – Borrowing against Equity (sure thing, but maybe not TWICE!)
March 23, 2016 – 6:51 pm – Asset Protection
March 30, 2016 – 11:32 am – In whose name should I buy? Personal, Company, Trust, spouse, etc
June 20, 2016 – 10:13 pm – The limitations of buying small apartments !!
September 7, 2016 – 11:11 am – GOTCHA’s – 1. Creating Mixed Loans and 2. Insurance “wrinkles”
November 24, 2016 – 8:27 am – If buying in a Trust, which type?
December 1, 2016 – 2:48 pm – WHERE are the Mortgage Brokers (MB’s) on here based?
March 25, 2017 – 8:32 am – A HUGE warning about Insurances (and what is/isn’t covered)
———— Page 3 ———–
June 22, 2017 – 7:12 am – Moving out of your PPOR and keeping it as an IP? READ THIS !!
August 4, 2017 – 10:35 pm – Someone called you and can make you rich in Property?
August 16, 2017 – 3:09 pm – Should I buy a unit in a Retirement Village?
December 20, 2018 – 7:09 pm – Will changing my loan from IO to P&I help my serviceability figures?
February 8, 2019 – 12:54 pm – Compound Interest is great – but what about compounding expenses?Shiny_Suit_ManParticipant@shiny_suit_manJoin Date: 2012Post Count: 54
Great find mate and a good read. Its nice to read something every now and then about someone who started at the bottom and worked their way up. Its also nice to see different tactics that people apply on a weekly basis. There is so much information available in books these days that it all tends to become a blur. Its nice and somewhat refreshing to read another 'regular' persons outlook rather than someone who has written multiple books.
Tonight, I stumbled over a post that has a go at answering the age-old question :-
"Should I buy a PPOR (Principal Place of Residence – your own home, that is) then buy IP's afterward, or <strong>should I buy IP's first and a PPOR later?"
The link below takes you a very well-written post with examples (and $$ amounts) that show which way is financially best !!
Of course, you might have non-financial things to consider as well, but that is outside the scope of the answer here:-
BennymattstaParticipant@mattstaJoin Date: 2011Post Count: 604
Hey Benny, I like how you have found some real gems in the forum. It's often hard to trawl through so many of the forum's posts to get to the ones wit hthe great insights… Keep it up!! I think it will really be useful for the newbies (And even the more seasoned) investors out there
Hi Mattsta and SSM,
Thanks – they do take time to find. Problem is, once found, HOW do we remember where to find them again?
Hence this thread.
I hope to keep adding to it… and I will endeavour to find the very best of posts so it might become a useful reference thread for new players. Of course, it is open to others to add THEIR finds as well. With many oft-asked questions from new members, a thread like this could save a heap of Searching !!. Glad you liked the posts so far….
BennyAdrian CahillParticipant@adriannqldJoin Date: 2003Post Count: 127
Hi guys, Thanks Benny for brining that great post back. I love seeing old post occasionally especially when you see the same people years later helping others.
Tip for all. To keep my favourite posts like this and all important text/posts/bookings/ideas,
Try Evernote. Strongly suggest everyone who hasn't already got on it to try it. Most Professional or IT Savvy Entreprenuers are already on it.
Evernote, free version. works on PC/Mac/Mobiles/Iphones.AdrianJPParticipant@adrianjpJoin Date: 2014Post Count: 5
A great bunch of posts. I also highly recommend Evernote – allows you to store interesting things you read and tag them so you can easily refer to them later.
Another great read re "How do I choose which suburb to invest in? What should I look for?"
In his reply recently, Dave Ward goes above and beyond with a VERY full description of things that can influence a suburb and thus its potential for investors.
I'll let Dave explain it more, here :-
Great post, Dave,
Cross collateralisation (whew!!) or x-coll, or cross securitisation.
Cross coll often comes up for mention on here, particularly in an investor's early days.
What is it, and why is it a problem for most investors?
It is often promoted within banks as it is in the bank's favour (NOT yours) to have your properties "crossed". When going for any new loan where you are drawing funds from two properties (say, PPOR for dep/costs and the new IP for 80%) be SURE you let the lender know that you DON'T want the loans "crossed".
Or let your broker handle it (brokers on here would be sure to keep them un-crossed, but an outside broker…. who knows!!)
The following link has several good posts that outline what happens, how x-coll restricts you, and what power it gives a bank. Do take the time to read the whole thread !!
Watch out when a bank or broker wants to put your new borrowings on ONE loan !! It will likely be crossing the properties.
PS There can SOMETIMES be reasons why x-coll can/should be applied – but these are not that common, and should be considered only after taking advice.
Update Oct15:- The link below has conversations adding information re why/when x-coll can work and its advantages :-
And I will leave the last thoughtful words to Banker who says this
“There are benefits to avoiding CC but it comes back to the yin and yang theory. For every positive there will be a negative and vice versa. If you can see one and not the other you are only seeing half of the picture…”
- This reply was modified 5 years, 5 months ago by Benny.
- This reply was modified 3 years, 10 months ago by Benny. Reason: Adding a further link - Oct15
OFFSET ACCOUNTS – Often mentioned in glowing terms – and well worth knowing of when starting out.
Offset Accounts are worth a look at RIGHT NOW, new reader !!
e.g. Your future might lead you to rent out your PPOR. IF you had an Offset Account already in place, this would have eased your way remarkably. Finding out about Offsets just before you are about to make your old PPOR into an IP won't save what you might have saved had you known earlier – so, make this thread (linked below) a MUST READ, and also try a Search for Offset Accounts to read even more:-
Some great posts in there from many who KNOW finance structuring.
Enjoy – (I really like the comment "An offset account is a thing of beauty!!" Pretty close to the truth)
Finding Cashflow Positive IP's – it is already a "sticky", but now and then, we need to review what is already "up there and available to all".
At least stickys can be found easily, but just in case you missed it, this thread contains FAR MORE than a suburb-by-suburb list of "where to go".
A lot of the posts in here deal more with the "How to" rather than "Where to". They are not "giving you a fish to feed you for a day" – they are "teaching you to fish" so you can feed yourself !!!!
Well worth a read – or a re-read !!!
A common question is when investing, "Why use IO loans and not P&I loans?"
And for those REALLY new, IO means Interest Only (you pay only Interest, and nothing off the Principal), and P&I means Principal and Interest are paid. Of course, a P&I costs you much more per month than IO.
One main reason is the thinking that it is silly to pay off Tax deductible debt (Principal amounts on an Investment Property) when you still owe NON-deductible debt (your own mortgage, car loan, credit card debt, etc).
The thread below has several good replies that cover a wide range of reasons and answer extra questions that have popped up. So if you are one who has struggled with "Do I or don't I?" re IO and P&I, have a read – it should help to clarify things. If it doesn't, ask your question on that thread, thus making it an even better resource.
Having just re-found this post for someone, I wanted to put it into this thread.
It shows what CAN be done by young investors starting out….. and the results are remarkable. He created rental incomes of $200k in 2 to 3 years. Out of that comes mortgage payments, rates, etc – but you will see there is still a LOT of cream left over……. (if you do a few calcs – if you can read the numbers)
Westnblue started investing in "buy'n'hold" properties in 2011, thus his success is quite recent.
If you think properties returning 10% can't be found, squint at the numbers in that thread, or buy the Dec 2013 issue of the mag, and see how he did it.
One of the common areas providing confusion for new investors is the “gearing” of property (i.e. Positive or Negative Geared). In short, if a loan is positive geared, it means the loan is small enough (or the returns high enough) so that it requires none of your own money to keep it running – it puts money in your pocket each month.
Negative gearing occurs when all costs including the mortgage exceed the Income, and you lose money each month. With many investors opting to maximise borrowings (e.g. 100% and even more), the mortgage cost is also maximised, making negative gearing almost a definite. With current laws allowing investors to claim losses against their personal Income, these deductions alleviate some of the pain of losing money every month. Some might choose to pay down a mortgage when $$ are available to bring a negative geared investment into positive territory. Increasing Income and cutting costs can also help with this.
The term “neutral geared” is also used to indicate neither negative nor positive. It doesn’t cost you to hold, but it also makes no/little Income per month (of course, it may be growing Equity, but that is not Income).
When in acquisition phase (growing your portfolio), gearing can be a big help. Of course, it carries bigger risk too – so consider your own tolerance levels when planning whether to gear negatively. Like high gear on a bike, negative gearing can help you to achieve greater speed, but if you strike a hill, much effort is needed to keep going – AND it can end up taking you backwards if you are unable to maintain momentum.
Positive gearing is more like a low gear on a bike – even if you strike hills (e.g. Interest Rate increases) it requires less effort to overcome them. You may not make as many $$ per month, but it is easier to keep pedalling (pay your mortgage) when you are positive geared, even when climbing hills.
As Steve warns in his “Negative Gearing” article – https://www.propertyinvesting.com/strategies/negative-gearing/ – if a Sales person pushes the Tax Advantages of purchasing a property he is promoting, take special care !! The article linked above tells you WHY !!
There are advantages and disadvantages in both kinds of Gearing, depending on your situation and your goals. Feel free to ask more questions if things still aren’t clear. These subjects are very important to your investing future, so better to get them right before starting out.
Check out the useful articles in the Training Centre (look for the link on the Home page). A wealth of useful information is subdivided into sections like – Finding Properties, Buying, Selling, Analysing, Finance, etc.
BennyChrisA1Participant@chrisa1Join Date: 2011Post Count: 172
Thanks for bringing so many valuable threads to one place Benny, you have helped a lot of newbies, and not so newbies.
Appreciate your time delving into the vault and for teaching others to fish!
Persistence is 'to keep on keeping on, no matter how hard the going may be'WinWinParticipant@ozkeysJoin Date: 2014Post Count: 5
Excellent! Steve’s article on negative gearing is a marvelous read, put in plain English and easy to read and understand.
Coming from a UK property investment background where negative gearing was a big NO NO I was gobsmacked to see how it it used to sell properties here in Australia. I would never dream of taking on property with negative gearing. It’s a very scary prospect. I once had a property that went into negative cash flow during the recent (some say still current) UK recession and it scared the life out of me. It caused all sorts of stress and worry. You need to be very careful.
I have ridden out the Uk recession which was very bad for at least 6 years and it taught me a lot of lessons. Six years in the business with little or no increase or a decrease in equity and sometimes a loss and falling rental yields as accidental landlords caused an over supply. Mortgage lenders started exercising their right to consolidate loans across a portfolio (never done before) making selling very difficult as there was no point. Mortgage lenders kept the equity from your house sale to reduce their overall loans. Many people lost everything as lenders jumped in and repossessed after only 2 missed mortgage payments.
Steve’s article is a must read for any potential property investor anywhere in the world. Thanks Steve.
Another area that raises a lot of questions is around LMI (Lenders Mortgage Insurance) – how it can be used, when/where it should be used, and why it makes sense to “gear higher” in some situations.
I am looking around for articles and threads that go into detail on this…. If you see one that seems well-written and could be used here, please post a link so that the good stuff can be shared,
PS – Corey Batt has come to the fore with exactly what I was looking for. Onya, Corey. *applause*
Go see his contribution here:-
Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,010
- This reply was modified 3 years, 10 months ago by Benny. Reason: Adding a link to an LMI thread - Nov15
I will see if i can’t link one of the LMI articles i wrote from the API magazine.
Yours in Finance
Thanks Richard – please do if you can,
Well, thanks to Jason Staggers, this Article (the Seven Most Fatal Property Investing Mistakes) hit the website recently – and it SCREAMED to me to post a reference into this “New Readers” thread. Take a quick look by all means, but then go back and read it all deeply. Commit the thoughts therein to memory, make this link a Favourite, or whatever.
You will WANT to find this one again to review prior to buying your first IP. Or when you receive your first “cold call” with the “Real Estate offer of the Century – guaranteed to save you Tax!!!” Buyer beware when that happens !!
Here’s the Article:-
Well done Jason, and thanks,
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