First IP as a New Graduate Doctor

Hi

I've recently graduated from med school and starting work as a doctor this month (age 23). I've saved up a lot during uni (nearly 50k) and with help from my parents should have a deposit of 100k. My starting salary will end up to be around 75k before tax but should increase about 15% every year until a big jump if i fully specialise about 10 years down the track. Continued employment shouldn't really be a big concern... at least as far as i can see at this stage. I do however have a decent chunk of hecs debt - around 55k.

I'm connected with a few older friends who have already been investing in property for some time who have started linking me to different forums / resources but i still know very little about investments in general. So i'm here to learn.

I have a few initial questions though!!

From my understanding, I should probably have an idea in mind of what my end goal is and work backwards from there - which would give me an idea of what type of investments to make and how to do so. I guess for now, i'm interested in establishing "passive income" at a relatively young age (lets say $150k passive income 20~ years from now at the age of 45ish? as a starting point)

My questions so far though are:
1. What are some immediate resources i should look at to learn the "vitals" of investing / property investment?
2. If i'm aiming to get my first IP within the next half year - what recommendations do you guys have in regards to the location? (currently i seem to think Brisbane may be a good idea?)
3. Would a buyer's agent work favorably for me - as i may be time poor (working as a hospital intern...)? Or would it be better to save money in my situation and learn the ropes as a beginner?
4. As a doc, i believe i can get loans up to 95% with no LMI... is this something that i should be taking advantage off in this initial stage or are there downsides to it?
5. Whats sorts of professional advice if any should i seek at this stage? Accountant? Financial Planner? How do i go about this?

Thanks a lot

 

Hey @Kelvinator,
Welcome to the forum. Glad to have you on board.

I will answer your questions from my best judgement (disclaimer - I have been investing for only less than 1.5 years and have 3 properties all in Brisbane):
1. This is one of the best and diverse Aus property resources I have come across in my two years of research. Also, there are some great resources on YouTube channels (Michael Yardney, Nathan Birch, Margaret Lomas, Chris Gray, Empower Wealth etc),
Podcasts - The Property Couch, Everyday Property Investing, Real Estate Talk etc
TV Shows - Your Money Your Call (property edition w/ Margaret Lomas), My Property Empire (Chris Gray)
Websites - SQM Research, OnTheHouse, Residex/RP Data property reports (ask any broker), YIP, etc.

2. Regarding location in the next 6 months - I plan to buy my next couple in the first half of this year in Brisbane again so I would suggest Brisbane also. Considering you are looking for passive income - some areas in Bris have good yields of 6% plus, but ideally you want a good balance of both CG and Yield.

3. I was seriously considering using a BA because I was a little worried about buying interstate and not knowing the area. However, because I'm treating property investing as my own business and I want to purchase a helluva lot of properties in the future, I decided to get my hands dirty and do the leg work myself. I was willing to make some mistakes along the way, but if I want to master this game - for me in the long run, I decided to source the properties myself and understand the game completely. There are some absolute guns on here that have been in this game for years - reach out to them and they are very helpful.

4. Man, I wish I could get 95% loans without LMI! However, you should seek the advice of a great mortgage broker. I can only speak from experience, and I and a few other I know use @Michael_X and I can't speak highly enough of his guidance, advice and service I have received from him.

5. A great Mortgage Broker would be my first point of contact. Also, start building a close knit team around you that you can trust and rely on. In this team would be Mortgage Broker, Accountant, Property Manager, Solicitor/Conveyancer, Builder/Handyman, Building & Pest guys.

Let me know if I can help in anyway. I love talking property with ppl of all experiences as I was in your shoes a couple yrs back.

Cheers,

Taku

 

4. Generally 90%. And yes, definitely take advantage of this.

5. Taxation and legal advice in additional to lending advice. You need to work out how to structure the ownership of the property and how to structure the loan for the property, both from a taxation pov and a lending pov. Being a doctor you may be interested in asset protection (legal advice).

Read my legal tips and tax tips for some of my ideas.

 

Nice one, you'll be off to a flying start with those savings, that starting salary and a circle of friends on the ball enough to point you to this forum.

Depending on what options you're open to, you may find your goal is achieved sooner than expected.

Good input from @Taku Ekanayake.

Definitely connect with a great broker (@Michael_X is a gun), clarify your goals with her or him and build a plan to achieve them.

90% no LMI is well worth utilising.

Brisbane looks good

 

Ive used 95% LMI a few times (medfin will throw money at you), but there is a catch: in short, that 95% needs to be paid down to 90% within 3 years (i.e. P+I repayments), plus no offset.
95% is also very highly leveraged, thus your capital can disappear overnight. I was comfortable with this, others may not be. 95% will also be further from cash flow positive (none of mine have ever been positive) from what this is worth to you.

I would focus on your training, a training position and the end game - being a specialist. If you can do both, fine, but it's not easy and you may simply not have the time. Medical school was the easiest time of your life compared to what is coming.

 

Wow thanks so much for the very valuable responses!

@Taku Ekanayake - thanks for the link to the resources! I guess the next step is to speak to a mortgage broker then
@Terry_w - points noted
@Steven Ryan yan - cheers!
@Bran - Thanks for the info! And yes, i agree with you. My medical career is the real "end game" and i have concerns about my time management in the future... I guess this is the biggest reason why i'm also considering using a buyer's agent. Is that a service you've used before?

 

@Bran - Thanks for the info! And yes, i agree with you. My medical career is the real "end game" and i have concerns about my time management in the future... I guess this is the biggest reason why i'm also considering using a buyer's agent. Is that a service you've used before?[/QUOTE]

I haven't, but I'm in a position where I almost have to to progress. I know a small area well enough in an appropriate time in the property cycle, but once this window closes (it may have happened already), then I'm going to have to outsource the search. I simply do not have the time to start from scratch in another area.

 

Hi Kelvin

Firstly congrats on becoming a doctor- what a fantastic achievement and I do hope your internship goes well and you obtain sufficient sleep

1. As far as building knowledge, this forum and lots of reading about the basics and principles of investing will assist. Check out popular authors such as Lomas, Balanda etc (use the search function on this forum and Somersoft and you can choose from many titles) Even something like Karin Derkley's 'Buying Property for Dummies' is a good start if you need a basic rundown of what's involved.

2-3. Work out your budget first (after ascertaining with a good broker) before deciding on location and what type of property you're ideally after. We have had several medicos over the years as clients (note I am a Sydney BA) and you all certainly seem to be pretty time-poor , but this is really a personal outsourcing choice and only you can decide if you do or don't have the time to research, locate and negotiate property in your spare time. If you are interested in using a BA check out the largest national list on REBAA and read more about how to select one that's right for you Real Estate Buyer's Agents Association of Australia - REBAA

4. Definitely ask for professional loan packages - the big 4 seem to offer these for medical professions and you can normally obtain lower discounted rates depending on loan amounts. Broker best to speak to about these. Plenty of good ones here on the forum too.

5. For entity setup speak to your accountant and finance obviously your broker.

Welcome to the wonderful world of property investing!

 

My tip... Don't be a junior Dr with your head up your ass. Yes nurses are crazy but most will still know more than you. You can be an ass once you know what your doing

 

Welcome to the Forum and congratulations on saving so much whilst studying, excellent job!

It is very important to always assess a property yourself before making an offer and not only rely on a building or pest inspection (I recommend also having an electrician do an inspection for older properties in case significant rewiring work is required - if you have this information you can negotiate the cost off the asking price). Likewise, great advise already given is to establish a credible and ethical team around you to work in partnership with you ...when choosing team members such as a Property Manager (PM) or Accountant etc ensure you get a strong sense of the business/professional as these individuals are your investment colleagues- a long term business relationship. Likewise, when exploring quality PMs learn about (1) their communication style - are emails and phone calls responded to within 24 hours? (2) are they property investors themselves to have a lived experience understanding of what matters for owners to build and sustain the equity in their assets and source quality tenants; (3) does the PM follow through on maintenance matters or any requests? - follow through is critical and (4) does the PM build and sustain excellent relationships with tenants to get the best out of people (critical to keep tenants happy) whilst ensuring that their core client 'the owner's' interests are always upheld and a primary focus? Enjoy the journey to establish your professional team ...

 

Welcome to the forum
Some good advice, just keep researching, keep reading threads, keep learning..

All the best

MTR