Hi everyone. I’m new to the forum and getting ready to make the move into property investment. I have been interested for many years now and have done plenty of reading so much so that now I’m just confused.
My intention is to develop a portfolio and hopefully buy a property every year or so for future financial security. I feel like I understand many strategies but as I have been reading of course everyone has a different one and believes theirs is the best.
My current position is married (35), one child with another planned. 0 debt, $70k cash, $80k income (due to increase to at least $100k in the next quarter). I would like to keep $30k cash as a buffer.
Based on this we have a modest budget of <$250k so this limits us to regional areas as I am more keen on houses than apartments.
My concern is trying to get a balanced rental yield and capital growth so that I don’t find myself in a position of not being able to borrow again relatively soon.
My question is not entirely clear, perhaps I am after some moral support and a gentle shove! But I wonder if I should continue the hunt for the current price bracket, or wait a bit longer, save more deposit and wait for the income increase and then look for higher priced properties closer to bigger cities for a better return.
Is it better to get into the market as soon as you can? or wait until you can buy into a bracket that is higher CG & RY?Kinnon BellParticipant@kinnonJoin Date: 2014Post Count: 151
Hi Kerky, it’s a very fine line between not acting due to analysis paralysis or acting just for the sake of it. As I’m sure you’re aware, a good decision needs to be made! But it looks like you’re taking the right steps.
Looking at your figures it seems you want to keep your LVR around the 80% mark? Have you thought about venturing into LMI territory? That may give you some more options.
Sounds like you’ve got a rough plan already but need to firm up the details. Reverse engineering is always good – ie “I want a $5m portfolio in 10 years time at a LVR of 50% that has a 6% rental yield” so in order to achieve that you will need to purchase X amount of properties that have a price point of $X00,000 with avg CG of X%p/a and gross yield of at least X% then you find the areas and properties to suit. I find that can help with the analysis paralysis.
As corny as it sounds, having a good ‘team’ on your side helps too – a decent accountant, solicitor, broker (slightly biased there!) that can help guide you along your way.
Thanks Kinnon. Yes, we’re keen to keep our deposit low, looking at 90% LVR at this stage. I had started the pre-approval process with a broker but have put the brakes on that for the moment while I give myself a little space to think over these questions.
Reverse engineering is definitely what I need to do to create some clarity but I am unsure how to calculate that? Do you have any suggestions for reading etc for this process. I am certainly a planner and like to have all my bases covered so I know this would help me get my ducks in a row so to speak.CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121
Welcome to this site. This is certainly my favourite haunt. So welcome.
I suggest you keep on searching because it gives you more knowledge and confidence of the market. Initially it is confusing, but eventually you get a feel of the market and either your idea of a house in regional areas will firm up or you change idea ie. a flat in a suburb. You’ll know what you likes and dislikes. At the beginning you may even be confused about which suburb / regional areas to look at, but eventually this firms up as well. Just keep on looking and get ideas. IMO it is part and parcel of learning.
Everybody starts out at the same point like you :)
All the best
- This reply was modified 7 years, 2 months ago by Cattleya.
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.Kinnon BellParticipant@kinnonJoin Date: 2014Post Count: 151
Hi Kerky, can’t really recommend any reading material sorry.
How I work it is define my end goal so, for argument’s sake, that might be an income of $100kp/a from investments – what will I need to get there? Through the power of compounding over the years what avg yield and CG will I need to get there? LVR, portfolio size?
This is only a very high level view but gives something to work towards with the other considerations.[email protected]Participant@spartantomJoin Date: 2015Post Count: 18
I doubt many people would suggest investing rurally at the moment. With the economy as shaky as it is I think most would agree capital cities (as always) are the safest bet.
The question then is are you happy investing in a smaller flat type property with a smaller land component or would you prefer to wait until your deposit is larger and you can then afford a unit (or similar town house etc) with more land component?
Are you chasing capital gains or cash flow? Cash is king but capital gains will give you more leverage to grow your portfolio at a greater rate! Or you can walk a line down the middle with more modest capital gains and a more modest cash return.
Keep researching, asking questions and talking to knowledgeable people and you’ll figure out the strategy that suits you best. You have to pull the trigger at some point though otherwise you’ll be 45 posting on here about wanting to get into the market…Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539