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first timer trying to get 2 IP within 18months

Discussion in 'Where to Buy' started by rookie101, 14th Feb, 2016.

  1. rookie101

    rookie101 Active Member

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    Hi all,

    I thank you in advance for any insight or advice you may have.
    I'm trying to develop a strategy to obtain 2 IPs (plus PPOR) within 12- 18months.
    Obviously both need to have potential CG to obtain enough equity to get the second, 3rd and so on.
    I pretty much have Pre approval for 350k purchase price for IP 1.
    I'm located in Brisbane and currently looking at Boondall area (airport etc)
    I considered waterford/daisy hill but have been advised cg is slow. Trying to obtain a low set 3 bed brick. Any advice on my strategy? I seem to keep getting priced out of each of the areas in inner city north Brisbane. I then looked to bray park/bracken ridge/strathpine.
    IP 1 is so critical in having enough equity to get IP2 so I'm trying to get it right.
    Any input would be really great.

    Thanks in advance,
     
  2. Bran

    Bran Well-Known Member

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    Why low set?
     
  3. rookie101

    rookie101 Active Member

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    I guess based around renovations. I'm ok to do cosmetic renos but structural not so much
     
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  4. Bran

    Bran Well-Known Member

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    Where are you based in Bris?

    Most of us like high sets, OO's, investors and tenants alike.

    From our point of view, we can deck out downstairs as a nice living space, and if legal height, more bedrooms... Tenants like the space, parking, utility rooms, extra dodgy bedrooms. Whatever... Far more options to add value under the same roof line when there is more than one level.

    High sets are high on my set list. (Sorry)
     
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  5. rookie101

    rookie101 Active Member

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    Great advice, thanks.
    I'm in North Lakes
     
  6. Bran

    Bran Well-Known Member

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    I'm no expert, but I would look closer to you compared with Waterford/Daisy Hill. Devote your weekends to some open homes in the price bracket and you'll be away.

    The north side is a black box to me, although I am doing my darnedest to become internet familiar with it. I would shoot there rather than Waterford/Daisy Hill, but Logan as a whole hasn't really fit in with the early components of my strategy.
     
  7. jchan86

    jchan86 Well-Known Member

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    I recommend taking the time to perform some good due diligence related to the following (a) employment hubs; and (b) infrastructure. I'm biased towards the northside of Brisbane but take your time in looking for big picture fundaments.

    The reasons why I like Brisbane northside:

    1) Good commercial infrastructure/employment nodes (and forecasted future employment nodes; e.g., Brisbane Airport, Westfield Chermside, Eagle Farm + NBN between Eatons Hill to Airport). Brisbane Airport is predicted to be a major employment node in Brisbane by 2020, so surrounding suburbs/areas with good access to the Brisbane airport are a big plus. Westfield Chermside significant improvements over the next 18-months will position this area as a stronger satellite city, in addition to the nearby local hospitals.

    2) Good current/future transport access

    I kept things simple and drew concentric circles away from Brisbane Airport and Westfield Chermside respectively. Some suburbs have already moved however there is still good opportunities in Boondall/Bracken Ridge/Bray Park/Strathpine and even slightly north-west (e.g., McDowall; Eatons Hill)

    Nevertheless, have fun with this learning journey. Looking back on any decision, you can always say I should have done this better/differently, but realistically if you're open to learning, building a great team around you, and willing to take action, i'd probably say you're 90% of the way there... you just then need to let time take play its course

     
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  8. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @rookie101, have you spoken to your broker about how you're going to finance IP2 and your PPOR? Make sure you're clear on this before proceeding. Generating equity with a reno is perfect but you'll need to borrowing capacity to top up/refinance after the reno to access equity and far more importantly, the borrowing capacity to finance IP2...and then a PPOR.

    Was your pre-approval for a $350k IP based on a constraint on borrowing capacity, a limited deposit or just a price you wanted to roll with?
     
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  9. legallyblonde

    legallyblonde Well-Known Member

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    I do not know these areas.... but it looks like you need to seriously value add and have CG if that is goingto be your deposits for IP2 and PPOR.
    I believe many banks won't even allow you to reval in the first six months!
     
  10. rookie101

    rookie101 Active Member

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    I should have stipulated more clearly
    We currently have a PPOR. We intend to use the equity in it to buy IP1 cashfree.
    We owe 320k on that loan and cba did a valuation last week of 470k.
    IP 1 of 350k is set around borrowing capacity I believe.
    Earner 1 makes 90k/year.
    I'm working casually earning around 20k studying and about to finish a medical degree in Nov so our financial state will change dramatically then.
    We are aware time is of the essence hence wanting to go ahead now with IP 1.
    I assume our borrowing capacity will increase when i commence FT work in Nov?
     
    Last edited: 15th Feb, 2016
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  11. MsAli

    MsAli Well-Known Member Premium Member

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    @rookie101 - it will improve. In fact doctors have access to LMI waivers with various lenders so you can maximise borrowing and hence opportunity.

    Forward thinking is good. Important to take action now than wait for a future event to happen.
     
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  12. Creamy

    Creamy Active Member

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    I assume banks will require you demonstrate you have a stable income, ie. You've been in the job for a period of time? Last I checked with cba this was 6 months. Happy to be proven wrong.

    Might not be necessary if you're with the same employer.
     
  13. rookie101

    rookie101 Active Member

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    Yes absolutely.
    I've been casual at my current job for 2 years. Borrower 1 has been permanent FT for 5 years (gov employee).
    I'm thinking of IO for both PPOR refinance and IP 1. looking for a property with a tenant in place for as much of this year as possible.
    So IP2 goal is around this time next year.
    Any areas/strategies in North Brisbane you suggest will get enough equity to obtain IP2 in 12 months?
     
  14. Jake Milne

    Jake Milne #1 Buyers Agent, Vic. Business Member

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    12 Months is really too short a time frame to be relying on market forces to generate growth. Hot spotting is risky and is more often than not, speculation. Speculating is not investing. Usually people buy speculative properties that may have huge upsides to offset the risk (i.e. mining towns in the past) when they've already built up a solid portfolio.

    My recommendation is to focus on adding value to create short term equity (to borrow against again) but to buy in an area with solid long term fundamentals.

    When you are adding value for short term profit you need to research areas and streets that have a high disparity between the cheapest and most expensive properties. Then you try and buy something that is structurally sound but on the cheap end and do it up, mainly cosmetically, so it's worth a value much closer to the more expensive houses in the street.

    Residex has suburb renovator reports that can be bought which include all the information you'd need to do the research including all of the street value ranges and the methodology/ formula to work out your own personal strike point and budget.

    I don't know much about the Brisbane market so I can't help with the areas, but please aim for a long term investment strategy. If you want short term returns put money into LT deposits, technical stock trades, or FXOs ...not property.
     
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  15. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Significantly, but the sounds of it.

    I imagine your reno strategy will work well given your income path from here. If you can generate enough equity, the 90% no LMI lends available to medicos with many lenders will be invaluable for pulling out your profits and moving to the next deal.