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First IP

Discussion in 'Where to Buy' started by JimmySMTM, 10th Jan, 2016.

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  1. JimmySMTM

    JimmySMTM New Member

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    Hello all,

    I've been a long time stalker on this forum and I find everything about it is just fantastic.

    Basically I've been wanting to buy my first investment property for awhile but have my doubts on what/where exactly to buy to get me started because I'm not at all an expert. For example should I buy expensive, cheap, townhouse, unit, apartment, close to cbd or beach etc etc.

    Anyways I'm leaning towards buying something not too cheap and not too expensive, something that basically pays itself off so I can buy the next one asap.

    Heres two examples im looking at.

    A)

    Sold Price for 17 Marion Street Adelaide SA 5000

    B)

    Sold Price for 43 Amber Road Highbury SA 5089

    I think they both make good examples but I'm more leaning towards getting a property similar to option B). What do you think?

    Oh and I think it's important to speak a little bit about myself so you guys can get a better idea. I'm 26, single, still living at home with parents but moving out soon to rent with two friends. I work full time as an system electrician, I clear about $1500 a week and I have a deposit of just over $100k. I'm in no debt what so ever and thinking about spending 400k for my first IP.

    Just incase you guys didn't realise I'm not at all an expert lol. Any help would be greatly appreciated.

    Thank you for your time.
     
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  2. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    No money to be made in SA. Just ask @D.T.

    PS great work getting yourself into a sound financial position, you'll do wel!
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    You've put a lot more effort (saving) and thought into this than most 1st time buyers so you should be commended for that.

    I'd probably avoid 5000 post code as there's a big over supply there that's only getting worse.

    You have enough resources to get a house so I'd probably not bother with units townhouses. As cities get redeveloped, houses are in dwindling supply everywhere.

    Feel free to drop me a line if you would like stats on any suburbs you're considering.
     
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  4. Coota9

    Coota9 Well-Known Member Premium Member

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    Cheap or expensive is not a buying strategy..focus on value no matter what area you are looking at
     
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  5. HeavenlyThang

    HeavenlyThang Member

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    Hey

    We just purchased our first IP a few months ago and I can share a few things as to what, in my opinion, we did wrong:

    1. We purchased our IP with emotion rather than on numbers.
    2. We didn't undertake a thorough DD.
    3. Our loan was set up incorrectly.
    4. We didn't have a thought-out strategy.
    5. We didn't buy under market value.

    Hope this helps and good luck.
     
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  6. JacM

    JacM VIC Buyer's Agent Business Member

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    @HeavenlyThang credit to you for recognising the individual issues. Why not share your thoughts on how you might go about doing things differently next time, as there are many other first timers on the forums going through the same thing as you.
     
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  7. HeavenlyThang

    HeavenlyThang Member

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    Hahaha @JacM we are still trying to work it all out :) Once we do, I'll post something.

    However, one thing we 100% will NEVER do again is to fix an investment loan - total disaster! xx
     
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  8. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    What I would look for if I were you is to look for the best capital growth you can, (manufactured and/ or natural) with a yield that is neutral or positive... This will help you buy your next one ASAP. The reasoning for this is that the capital growth is required from your first property to form your next deposit as quickly as possible without needing any of your own money if possible (or very little from you). It is preferred to let the capital growth take care of the deposits rather than by you saving.... It's easier and faster. And perhaps don't look to pay it off until you near retirement.
    A ppor is a different matter though, as the interest on a ppor is not tax deductible. Personally, I think it's a nice feeling to have growing equity and see the debt going down on a ppor. :)
     
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  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Holy smokes.........

    Just curious.. did you read any books prior to investing?
     
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  10. MsAli

    MsAli Well-Known Member Premium Member

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    @JimmySMTM - well done on saving that deposit at 26!!!
     
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  11. HeavenlyThang

    HeavenlyThang Member

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    @Leo2413 - straight up, nope :( let's add that to the list lol

    We had some $$ saved and we just thought hey, let's buy an IP. We did some google searches, read a few articles and spoke to alot of people, mainly older family members, who are all about buying with cash saved and negatively gearing an IP.

    So, to be honest, i think our strategy was all screwed from the get go...now to fix it!!
     
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  12. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Hey Jimmy, welcome to the forums.

    I would avoid focusing on PRICE for your investment choices, but instead form an investment plan which explains WHAT properties to buy, WHY to buy them and HOW they are going to get to your end goal.

    Naturally we all have budgets which we need to adhere to - but it's really important for your own portfolio efficiency to ensure you're making purchases which are moving closer to your goals.
     
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  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Well it may not be the ideal start, but you've had the courage to start which is huuuuge, so congrats! Also, you're not burying your head in the sand with excuses for not knowing better and instead you've identified all the really important factors that you need to learn about moving forward. That also, in my books, is huuuge insight! I have no doubt moving forward you will learn, grow and move from strength to strength. Books, networking on forums and developing the right mindset will absolutely rocket you to success! That’s my honest opinion.

    Cheers.
     
    Last edited: 10th Jan, 2016
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  14. D.T.

    D.T. Adelaide Property Manager Business Member

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  15. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @JimmySMTM congratulations on saving so much at your age. Are you attached to buying locally? Might be a great idea regardless, especially with local knowledge, but with your savings, you have interstate options too - well worth considering.

    I'd definitely suggest the biggest house on the biggest block as close to a major CBD as you can.

    But as @Corey Batt suggests, work backwards from your goal. That will guide your decisions.

    @HeavenlyThang - you seem like an incredibly fast learner – already sharing wisdom you've learned from mistakes just a few months after your first purchase. Good on you :)

    FYI, I fixed my first loan (PPOR) for....*drum roll*......15 years. I'm not even kidding.

    I realised I'd stuffed up and eventually broke the loan. It wasn't cheap but was totally worth it. I picked up two investments soon after.
     
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  16. JacM

    JacM VIC Buyer's Agent Business Member

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  17. joel

    joel Well-Known Member

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    Aim for something undervalued and not cashflow negative. You can't really go wrong with a house near the city, maybe Woodville, Seaton or Largs Bay. Don't rule anything out, judge each property on its merits, perhaps use some of your savings for a major renovation. I wanted a nice house like the one in Highbury you posted, and I ended up with one in bloody Smithfield.
     
  18. JimmySMTM

    JimmySMTM New Member

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    Thank you so much everyone for your responses, I'm so grateful for the help.

    Yea saving the 100k wasn't easy, especially when all my friends are driving around in new v8s and going on euro trips, but i managed ha.

    Yea I also agree about buying as close as I possibly can to the CBD, everything's just so expensive, it's hard to find something decent.

    Renovations won't be a problem for me being an electrician, I can do most jobs and half my friends are in other trades.
     
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