Forums / Property Investing / Help Needed! / Advice newbie ?

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  • Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    Hi all I am a newbie looking at getting into my 1st investment property.
    I own my ppor in Sydney with nothing owing on it and I have a small share portfolio as well and I was looking at diversifying into property.

    I was looking at possibley buying a house in a rural area say around Armidale or the Hunter region or maybe Singleton locality areas to invest in, I have a $100,000 deposit to put towards it.
    I would be looking at going up to $350,000 price.

    I picked these areas as the uni is in Armidale so students looking to rent and it’s also a larger town and also the Hunter region has work in the area with the mines and it’s not too far from Newcastle another major town.

    I would like to buy a house in half descent condition without having to do anything major if I had to do some minor renos paintthis would be ok.

    This will be a long term retirement investment with the idea the rent and also my own contributions will pay it down or off over 10 and maybe along the way buy another one.

    Can I please get some feedback on my plan and also some thoughts on these areas for capital growth ?

    thankyou for reading.

    Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    any thoughts anyone ?

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,749

    Howdy ajg71. Thanks for the post.

    Here’s the process to think though:

    1. Are you investing for income (cashflow), or for growth returns?

    2. Are you a passive or active investor?

    3. What is your timeframe (investment horizon)?

    4. What is your risk threshold?

    5. How much deposit do you have, and what is your borrowing ability?

    Answer the above and I’ll reply with more info when time permits.

    – Steve

    P.S. If you’d like a free coaching session to talk through this then email the guy I recommend as the best property coach of my material: [email protected] and tell him that I said it was okay.

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    Hi Steve,
    thankyou apprecaite your reply, this will be my first foray into property investing so I’m still new on the lingo, so bear with me.

    1. Are you investing for income (cashflow), or for growth returns? – I’d say growth returns for when for when I retire maybe to sell it then or keep on and use the rent as cash as well as my super.

    2. Are you a passive or active investor? – I’d say maybe passive nothing too high risk ?

    3. What is your timeframe (investment horizon)? – 10 years and onwards no rush

    4. What is your risk threshold? – low risk would be better

    5. How much deposit do you have, and what is your borrowing ability? – 100k deposit im not 100pc sure on my borrowing ability but it would be a good amount

    Answer the above and I’ll reply with more info when time permits.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,749

    Properties in regional areas tend to be more income orientated than growth orientated, but of course that is a generality, not a rule. Student accommodation is definitely an income maximisation strategy though.

    Some questions I would work through:

    a. Who is going to manage it, and at what cost?
    b. Who is going to buy it off you? It will need to be another investor? How will you add value or create a compelling investment opportunity to achieve your exit?
    c. With a 10 year horizon, and with a growth focus and a passive mindset, might you be better off with the classic “worst house, in the best street, in the best suburb you can afford” approach?

    The approach I advocate today is this:

    a. Spend less than you earn to create savings (or cash surplus)
    b. Use the surplus as capital to invest
    c. Invest for growth – either active and quick turn, or passive and generic growth
    d. Once you have accumulated enough capital, redeploy to income (commercial property)

    Regards,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of wattowatto
    Participant
    @watto
    Join Date: 2002
    Post Count: 50

    G’day Steve,

    “a. Save less than you earn”

    Should a be “SPEND less than you earn???”

    Have an awesome day!!!

    Cheers
    watto

    Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    Thanks Steve,

    I understand what you are saying regional areas are probably more suited to an income strategy rather than growth, I was probably focusing on this area due to the lower prices as a start to get my foot into the market but this may not be the best scenario for future growth ?

    Property management I assume I would look local, eg.real estate agent.
    I didn’t really take into consideration who in the future the purchaser would be I would hope the area has gone ahead and risen in value so the property may be more desireable but this is all hindsight.

    With my time frame your suggestion that it might be better to save more and look at best address worst house this may be better in the longrun.

    Thanks again you have given abit to think about.

    Cheers Adam.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,749

    Thanks Watto. You’re right. Typo fixed. :-)

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of BuyersAgentBuyersAgent
    Participant
    @knightm
    Join Date: 2005
    Post Count: 317

    Thanks Steve,

    I understand what you are saying regional areas are probably more suited to an income strategy rather than growth, I was probably focusing on this area due to the lower prices as a start to get my foot into the market but this may not be the best scenario for future growth ?

    Property management I assume I would look local, eg.real estate agent.
    I didn’t really take into consideration who in the future the purchaser would be I would hope the area has gone ahead and risen in value so the property may be more desireable but this is all hindsight.

    With my time frame your suggestion that it might be better to save more and look at best address worst house this may be better in the longrun.

    Thanks again you have given abit to think about.

    Cheers Adam.

    How did you go so far @ajg71 Adam? Any progress on narrowing down your areas?

    BuyersAgent | Precium
    http://www.precium.com.au
    Email Me | Phone Me

    South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au

    Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    Hi thanks for the check up, no still thinking on my strategy as where to look/buy that will give me growth over a length of time, I dont want to commit to the wrong house in the wrong area.

    Profile photo of BuyersAgentBuyersAgent
    Participant
    @knightm
    Join Date: 2005
    Post Count: 317

    Hi thanks for the check up, no still thinking on my strategy as where to look/buy that will give me growth over a length of time, I dont want to commit to the wrong house in the wrong area.

    very true. the difference between buying the the right area/wrong area is night and day.

    keep going and do your research you will gain clarity eventually. In the meantime you might think about mapping your goals, and then choose things that are important to measure. The measurements will help you cut down the big locations list to a shorter list. I personally think that supply and demand are the most important drivers, with growing populations meaning more demand and constrained housing supply being way more important than most people think.

    Another example of a really important metric for investors is vacancy rate. It is important that this number is low (under 2.5% ok but the closer to zero the better) as it means more tenants fighting for your home, which means short vacancies between tenants, more rent increases etc. If you can have rising rents in the first few years everything gets easier – you are less likely to ever be forced to sell at the wrong time and growth comes eventually too.

    Some examples of these markets include:

    Tweed Heads 0.9%

    Ideal Retirement climate, growing international airport, large new regional hospital, perennial tourism and surf/beach industry.

    Unanderra 1.1%

    Express trains viable commute option to Sydney, close to Wollongong University, it is the first affordable option heading south in Wgong compared to the northern suburbs which are more expensive

    Queanbeyan 1.2%

    Affordable housing next to Canberra, comparably investor friendly rules (ie freehold land ownership, less onerous land tax rules than ACT)

    Dubbo 1.2%

    Major Central NSW regional hub, university, hospital expansion, agricultural and mechanical repair centre.

    Goulburn 1.3%

    Canberra commute option on the Sydney side, correctional centre.

    I have blog post here with the full list of 20 low vacancy rates across NSW worth considering. Also if you want a free property buyer’s cheatsheet which helps note things to do to avoid lemons and some free goal setting sheets you can get that too. All the best with your decision making, keep reading you will get there.

    BuyersAgent | Precium
    http://www.precium.com.au
    Email Me | Phone Me

    South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 174

    no still thinking on my strategy as where to look/buy that will give me growth over a length of time,

    1. Decide strategy first.

    2. Find areas that will suit your strategy.

    3. Find the property in the said area.

    Most people do it the other way around, and get stuck after buying 1 or 2.

    Profile photo of ajg71ajg71
    Participant
    @ajg71
    Join Date: 2019
    Post Count: 7

    thanks for the advice, your blog is well worth reading.

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