Advice for newbie couple please?

Discussion in 'Introductions' started by Samuel Brophy, 16th Apr, 2018.

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  1. Samuel Brophy

    Samuel Brophy New Member

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    Wa
    Hi Guys,

    I'm a newbie here to PC and have only been reading these threads for a month. I was hoping to get some advice for me and my partner. We are 26 years old. Sorry in advance for my grammar.

    So we basically saved a little over 100k over the years. Rather then leave our savings in the bank we knew property was a good solid investment. We spontaneously attended an investment seminar on feb 2017. We both got really motivated and excited to "make our money work for us" .
    Its fair to say we jumped in not looking back.

    Now that I have read some of the information about property spruikers on PC it has kind of made me a little more pessimistic. Still trying to stay posivite though of course.

    We went out and bought two H&L Packages.(turn key)

    1. QLD- Redbank Plains.
    4x2x2
    Cost 388k . 90% LVR IO Loan. We getting 375 week rent . (more then we expected)
    So this one is already neutral Geared.Which we happy about.

    2. WA- Butler
    4x2x2
    cost 409k 90% LVR P&I Loan. We getting 300 week rent.
    Doing the numbers we are going to be in the negative of bout 100 a week.

    We are both working hard my partners a nurse and I'm in construction.
    We have been and will keep aiming to save 1k a week. So there is no living beyond our means .
    Our current savings is sitting in an offset account and we have roughly 50k.
    Our current goal is to build an asset base as quickly as possible, and buy and hold.
    Capital gains is where we see the bling. Not too worried about cash flow at this stage. As long as we can service these property's. We looking into starting a family in couple years so just want to be set up in a nice situation.

    Now this investment firm want to review our strategy next week and see what the next step is too reaching our goals. I Just don't know what to do. Its too early to say for me. They made the whole process extremely easy and were good to work with. But the more educated I get the more I think I might be getting stung in commissions. I'm now thinking I want to buy established propertys and not pay the premium for new and possibly slow growth .

    Any advice? Much apprecited




     
  2. thatbum

    thatbum Well-Known Member

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    The Butler purchase seems like an odd purchase for someone starting out or seeking a growth strategy. What was the aim with that one? Was it a below market value purchase or something?

    I don't know enough about QLD to know the merits of the QLD property.

    But going off what you've said so far, with an "investment company" recommending H&L packages, I'd be concerned as well.
     
    JacM likes this.
  3. Gockie

    Gockie Life is good ☺️ Premium Member

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    Perhaps read a lot more of the forum and meetup with other forumites?
    The investment firm might be good but many will be more focused on looking after themselves more than looking after you.
     
  4. Eric Wu

    Eric Wu Well-Known Member Business Member

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    Welcome to PC @Samuel Brophy , good thinking there re working hard and getting started.

    Can i assume that the "investment company" took over everything, from "finding" the property, getting the loan, legal side of things, and on going management as well? Everything is in house. If this is the case, I would say they definitely made money from you.

    Meeting them to review your portfolio is fine, BUT don't make any decisions before you spending enough time reading on PC, and asking plenty questions (like what you are doing)
     
    Gockie likes this.
  5. Samuel Brophy

    Samuel Brophy New Member

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    Wa
    I don’t know exactly why . But maybe long term we will be looking pretty.

    The reasons they gave us as why to butler.
    -Northern growth corridor. Major housing estates opening in Alkimos, Jindalee, Yanchep

    -We are 1.6km to butler train. 4 min drive.
    The train will eventually go upto to yanchep.

    - 3.6km to beach - good lifestyle factors

    -Mitchell freeway widening and extending up north

    And a few other little things likes good infrastructure there schools, parks , golf course
    High median house prices in surrounding suburbs ...

    It sounded good to us at the time of course
     
  6. Samuel Brophy

    Samuel Brophy New Member

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  7. thatbum

    thatbum Well-Known Member

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    Here's my thoughts. It wasn't that long ago that I was in a similar situation to you, and I bought my first two properties at a similar age, 27. Our methods differed though it seems - I bought completely run down properties on big blocks and renovated to manufacture equity.

    They were both very high yielding and high growth potential straight off the bat, which was evidenced by the fact I was able to borrow against them again after only about a year.

    I don't want to poo-poo the properties you've been recommended without hearing the full details, but I'll just say I don't know any investors who have done well with H&L packages in Perth compared just buying something established in a similar price range.

    I would immediately ditch the investment company, and do your own research instead - starting with spending as much time as you can on these forums and even at the Perth meetups that happen occasionally.
     
    freddy likes this.
  8. freddy

    freddy Well-Known Member

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    did you use any websites to assist with your decisions of areas to purchase?

    Also did the H&L include landscaping, fencing, curtains, blinds?

    Is there low vacancy rates in both areas?
     
  9. Greyghost

    Greyghost Well-Known Member

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    Did they provide rental guarantees?
     
  10. Tom Rivera

    Tom Rivera Property Manager Business Member

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    Welcome mate! I'd love to hear more from you, there's not too many people here who disclose their positive experiences with H&L, so I love that it's working for you.
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Hi Samuel, welcome to the forums.

    Before you go any further, I’d suggest having your loans reviewed as often we see investment companies tying up all your properties together which make a mess long term. And even short term when paying LMI.

    It may be fine, but best to get them checked before your next purchase as the more you have tied in, the harder it gets to sort out.
     
  12. Trainee

    Trainee Well-Known Member

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    Two issues you dont see yet
    Capital growth (or lack of) and
    Ability (or inability) to borrow more
     
  13. Propertunity

    Propertunity Well-Known Member

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    ^ ^ this. +1 from me.
     
  14. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    If he only bought last year it's likely too soon to say if it's working for him. Especially the Perth one - success there will only be known in a few years I reckon. Short term, if he's got decent tenants that's a win - that's hard enough at the moment without even thinking about growth.
     
    Tom Rivera likes this.
  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Welcome Sam and partner.

    Butler is a somewhat odd choice if you live in Perth and you know how far out it is but hopefully you got some good discounts on it from the land estate and builder considering the downturn in the market.

    As to your next move I think I would try and capitalise on your skills which would mean a renovation project. First I would go get a second opinion from a broker to make sure the first 2 loans are set up properly and see if you have any ability to purchase again. The $50k won't go to far though so it will be interesting to see what is available that might suit.

    For a reno project I'd try and get something closer to the city but first see how much you can borrow for next.