Hello Realestate folks

It's pretty simple.

• Buy House
• Rent out to tenants.
• Collect Rent
• If price of house goes up, maybe sell it.

Done

The Y-man

 

Ok these get a bit more involved into the "why" question

If you are going to do Melb/Sydney, the thinking goes more like:

• Buy (bloody expensive) House
  • Can't afford on my own so need to borrow money (i.e. get a loan)
• Rent out to tenants to help you meet interest costs and other holding costs.
• If the house goes up more in value than you are paying out, then good. Sell or keep holding to see if it goes up more.
  • Otherwise you bought a lemon. Either wait to see if the tide changes, or ditch it and try again.

The Y-man

 

Resi IP is one of the MOST capital intensive exercises around - so if you are going to play in MEL/SYD resi you'll need say $200k as a decent play amount.

The Y-man

 

These are my opinions/views only - reality may be different:

• Use bank money as "free money to invest"
  • It's never free. You need to pay for it.
• Buy the place around school/university/high renting yield area in (Melb/Syd) - looking for around $600Kish
  
  • Ok - some bargains going at the moment because they are deserted (no international students).
• Also considering places which are newly developed like Donnybrook etc.
  • Ok, this one I leave for others to comment - I have never touched new devs. Only been on the selling side.
• Keep it for couple of years - if I can double my deposit (after cutting all expense) sell it otherwise keep it.
  • Couple of years probably won't cut it. Resi realestate comes with high transaction costs relatively speaking. You need to play for a 7~10 year timeframe.

The Y-man

 

PPOR = priciple place of residence
Your main residence

The Y-man

 

No "one size fits all" solution - it's about the same as "what sort of car should I drive".

You need to talk to a reputable broker.

Basically - first question to ask - "How much can I borrow?"
...and please don't go "tyrekicking" different brokers once you find a helpful one. Reward them with business.

The Y-man

 

For rental properties:
Rental properties 2020

The Y-man

 

Good to see you are not blindly going into this:

• What happen if I don't have tenant for the house?
  • You chose the wrong type of property and/or in the wrong location
  • At the end of the day, if you lower your rent enough, you will almost always get a tenant. Whether they are the sort of tenants you want is a totally different question!!
  • I always work on the basis of having rent coming in for 48 weeks a year
• How much negative gearing differences I have to pay?
  • Depends on your pay, other deductions etc etc etc - just assume you don't get any tax benefits and it will be fine.
• How to be prepare for all the costs comes with the investment.
  • Have a strong, reliable income from something else (bank won't lend you money anyway if you don't).

The Y-man

 

You're welcome to give me a quick call
Return of the ad-hoc meeting [Online]

The Y-man

 

Some people get a broker to do all the hard work of finding loans for them, and then go and apply through someone else.... (brokers get paid by the banks when they write the loans)

The Y-man

 

Yep as I said, resi ip (in MEL/SYD especially) is *very* capital intensive.

In order of upfront capital you need, I tell people from lowest to highest in general (there are always exceptions of course):

• term deposits ($1)
• Shares, listed REITs (commercial property) ($550)
• ETOs (possible $0.0 but in reality you'll need about $20k to open the account)
• managed investments (managed funds) (between $1k to $20k)
• Unlisted commercial property funds ($20k to $40k)
• Direct resi IP / Small commercial property ($100k upwards - more for MEL/SYD)
• Big commercial property ($1m upward)

The Y-man