Hello All,
First of all, I’m a newbie to property investment. I was given some instructions and guidance by a friend and managed to purchase the first investment property through a club even though I’m still a temporary resident. Therefore I’m really grateful for their services and will never regret my first purchase although it’s a second hand apartment.
Recently I have started reading more & more about property investment and have some knowledge but still have few questions such as;
1. Is it really advantageous to continue paying interest only(the club advice is to pay IO) for the mortgage as I can’t make out how this is possible as the club also recommends not selling out properties but to hold them.
2. The club has their own selection of properties which mostly consists of apartments in complexes and not sure if this is a good option as I know it is always nice to have house & land packages as investments, any comments..?
3. Any advice on purchasing serviced apartments as investment properties as some of them seem to have a good rental yield and long tenancy with continuous rental increases.Please post any comments you have and all your advice will be highly appreciated.
Many thanks in advance,
AselaRHey Asela,
Welcome to the forums. Have fun learning and sharing info with us.
1.) IO is always advisable for IP loans as this maximizes your tax deductible debt. Holding properties for the long term is also good advice but you need to learn to let go of under performing assets as well.
2.) You need to ask more questions to your “club” or provide us more info on this. If they said they will guide you and provide you advice with your investment journey and also offers properties from their business is a big NO for me. Its a conflict of interest. They will want to sell you more properties from them so they can get the commission asap.
3.) Serviced apartments tend to be hard to finance in general due to it being risky to the lender’s eyes.Cheers!
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Hi PHP,
Thanks for your comments & advice.
I know that the “club” gets a commission as they also disclose this to the buyer(member). The properties they have listed are from builder that they say are approved by the club. I was also talked into going for my 2nd property(off the plan) where the researcher was also the builder. But I realized the conflict of interest and did not agree to go ahead with the property.
Therefore I have been thinking to go ahead and search for properties by myself. Seems it’s a bit difficult at present, hopefully I’ll get there someday and start to invest with confidence.
Cheers!
AselaOTP purchase has been discussed here numerous times and the general consensus was to stay away from it unless you work out the numbers properly and it fits your strategy.
Keep educating yourself. Keep asking questions. Everything is difficult before it is easy.
Cheers!
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Hi Asela
If it is the CLUB i am thinking of avoid them like the plague.
When i was full time developing in Brisbane they used to sell a lot of our properties.
We used to tell them the price we wanted and also showed them a copy of a valuation. In most cases they used to sell them way above the valuation in order to increase their commission payment.
My business partner Jacqui (JACM from the forum) runs the Buyers Agency side of our business and we never buy OTP properties for our Forum members. You have to think when you start your portfolio you want a low risk investment with reliable cash flow and good prospects of capital growth.
Building up a portfolio can take a few years but if you do the right thing to start with the foundations will set you up well in the future.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
My answers
1. Yes
2. Run, very fast, away from a club flogging properties – they are probably over priced.
3. stay away from these.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Richard & Terry,
Many thanks for your comments and advice. Highly appreciated.
One more question, so do you mean to say that it’s always best to go to a buyers agent even though they charge a fee rather than purchasing IP through these kind of clubs? I know it’s always better doing my own research and doing it myself and that needs quite a bit of research and dedication which I lack at this stage.
Cheers!!
AselaRI guess you could look at it this way
$400,000 purchase valued at $360,000 with a $30,000 commission
or
$400,000 purchase valued at $410,000 with a $10,000 fee
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
HI The residual value of property always starts with the land value (which increases) then the building value which decreases (depreciation)
So the more land the more value, apartments really want to be in prime sites before you buy those i.e. City centre or Beach Front if there is to many apartments buildings around be careful.As Terry pointed out, if you want someone else to find you the properties, you have to pay for it.
A buyer agent “should” act on your interest since you are paying them. Anyone else paid by a seller won’t act in your interest.
However if you are planning to be involved in property investing in the long term, then I would advise to do it yourself.
Cheers
AndrewsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHi Terry,
Well noted, thanks for the explanation.
Cheers
AselaHi BeAware & Andrew,
All well noted. I know that I should start doing this by myself, but am a bit afraid thinking something would go wrong. Anyway.. thanks for the comments & advice.
Cheers
AselaR
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