Late to the game but want to play to win

Discussion in 'Investment Strategy' started by Blessing Matshaka, 9th May, 2021.

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  1. Blessing Matshaka

    Blessing Matshaka Well-Known Member

    Joined:
    8th Mar, 2021
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    Location:
    NSW 2121
    Hi all,

    I understand no one person will have the answers for me, but I would really appreciate your opinions and input to help me clear my head on a few things.

    -I am 42,
    -recently migrated into Australia (will be 3 years in July) as a permanent resident
    -single parent to two kids (18 next month and 12 in a few months) Son is already in Uni studying Civil Engineering and daughter has started high school - not sure about the relevance of this but,yeah
    - income $90k +
    - Have managed to save $90k in the three years
    -Currently renting @420/week

    I want to get into the property market with wealth creation and early retirement if possible. My initial strategy has been leaning towards continuing to rent where we are as the area is close to my sons Uni and my daughter is in a good public school.
    My plan is to buy in the regional areas because I feel that is where I can afford and am generally afraid of too much debt- I am currently debt free- no credit cards or car repayments etc
    I have approached a broker/agent who has options for properties in the Cessnock/ Lower hunter valley areas. This is land ~550sqm which only becomes available in Feb/March next year and build will take 6-8 months at least. The options are
    1. a dual occupancy where I borrow $600k and repay ~$2200
    2.a 4-2-2, borrow $495k.Loan repayment is >$ 2700pm

    I feel this would be too much of a commitment for a regional area and would tie me down to paying a mortgage and not free me up to make any further investment. But again I’m thinking if the bank can give me the money maybe I should take it for a property in Sydney instead? Probably for lower rental returns?

    My original plan was to buy regional for $350k or less, $400k at most and look for high growth areas. I did get a pre- approval from the bank from my own application for $300k.
    I have observed the Bendigo ViC market and thought it was too hot for me, I have taken a weekend trip to Traralgon ViC but realised I needed more time in the area to inspect and buy something and I cannot do that at the moment because of work commitments and having to leave the kids alone hence the route above of using the agent.

    After speaking to the agent and looking at the area he suggested I have looked on Domain and think it might be better if I get an older property with more land for less than what the new builds cost, with a plan to subdivide in future?
    This is where I am at now, thinking to maybe take a trip to Cessnock one weekend.
    I seem to be going round and round. How do you guys do it? Any words of advice, anything you can pick from my story would be welcome.

    I know this was long, thanks for reading
     
    Nando Lee likes this.
  2. Ian87

    Ian87 Well-Known Member

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    Are you saying your mortgage broker is advising you where to buy?
     
  3. boganfromlogan

    boganfromlogan Well-Known Member

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    2% deposit scheme might help you
     
  4. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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    Im not sure what they are called, he finds the best areas to invest, arranges funding etc.
     
  5. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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    Yes, been thinking about that too. Having 90k saved is have to buy a $ 1M+ property to take advantage if this, not sure the bank would lend me the money, if still have to pay the 98% and that scares me a bit.
     
  6. boganfromlogan

    boganfromlogan Well-Known Member

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    Why not get on the gravy train, 2% deposit in the area you are currently in and go big on a Principle Place of residence. Can't go wrong. 420 pw pays interest on 870K loan :).

    Any capital gain exempt from capital gains tax. And life is simpler.
     
  7. boganfromlogan

    boganfromlogan Well-Known Member

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    Don't be scared, Just do it. Every day your investment gives you something .... a roof over head!! Stop paying rent to others :)
     
  8. Ian87

    Ian87 Well-Known Member

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    I would do a lot more reading on here, a broker should not be arranging finance and telling you where to buy. Does this person make any commission from your choice of property?
     
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  9. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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    Thanks Bogan,

    I feel like it’s too much loan for me in my situation but again I won’t be paying rent so maybe not such a scary idea.
    $870k would get me a unit in the area and houses cost about twice that.

     
  10. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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    I think he does, probably through developers, the brokers etc
    He doesn’t charge me directly. I will read some more, thanks
     
  11. Trainee

    Trainee Well-Known Member

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    So if you arent paying them then how do they make money? And whose interests are they working in?

    run. You might as well hang a sign saying fleece me.
     
    Last edited: 9th May, 2021
    thatbum, pully and NickWCBA like this.
  12. Sackie

    Sackie Well-Known Member

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    Firstly, run as fast as your legs can take you from this 'broker'.

    Imho currently your biggest risk factor is you. I know markets are moving but I wouldn't be making any decision to buy just yet. Spend 2 months solid reading/learning/ networking with others to get a good plan together.

    You already don't want too much debt and sounds like your borrowing ability isn't massive. So your purchase really needs to be a decent one, with no major obvious mistakes .
     
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  13. Ian87

    Ian87 Well-Known Member

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    I like what Sackie said above, your biggest risk factor is you!

    It sounds like you are well intentioned and motivated to do well but don’t currently have the know how. Unfortunately in property there is a lot of dishonest people with a vested interest in helping you make a poor decision so they can make money from you.
    I would spend a couple of hundred dollars on some books and read as much as you can on this forum. Spend 3-6 months educating yourself before you next speak to someone trying to sell you something.
    Would also be worthwhile posting this persons details and website most people on here will be able to tell within a minute if they are legit or not.
     
  14. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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  15. Blessing Matshaka

    Blessing Matshaka Well-Known Member

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    Do you think I’ll ever get to that point where I know or I just have to make up my mind to do something
     
  16. Ben20

    Ben20 Well-Known Member

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    Welcome to the forum. I am in the same boat. Just can’t seem to decide what is the best way ahead. Sometimes I think Brisbane, other time Adelaide, then regionals. Let’s see where I end up and how?
     
  17. Trainee

    Trainee Well-Known Member

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    No one can predict the future.
    So people always act with some level of uncertainty.The greatest gains, and the greatest opportunities, are when the market disagrees with your prediction most strongly.
    If you 'wait' until you have certainty, you either won't do anything, or you will be doing it for the wrong reason.
     
  18. Clean Cookie

    Clean Cookie Well-Known Member

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    From someone who knew not much about strategy or costs involved, I spent 12 months looking at opens each weekend to get a feel about where BA in the area (brisbane) were also looking (because I figured if 3 BA all rock up to a place, there's probably a few boxes being ticked) And spent hours listening to podcasts and YouTube, plus months reading on here. I'm definitely not an expert and ended up just choosing a property and dealing with it, but I've got another 15 years of life ahead of me before I hit where you're as so asset selection was important but not critical. I think you need to educate yourself, or have a big family learning experience to set your children up for the future investment too, and choose a BA to speed the process up of choosing a quality asset. A PPOR would make most sense imho for you.
     
  19. thunderstrike888

    thunderstrike888 Well-Known Member

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    If your max borrowing is going to be $350k or there about's there is nothing in Sydney you could buy that would be worthy imho.

    For that budget I would only be looking at Brisbane and even at that price now you'd be very limited in what you can buy and where. Even Ipswich and Logan suburbs are getting expensive but still doable.

    Dont be scared or afraid of good debt. People view debt as a bad thing which it can be but for an appreciating asset debt is good. Leverage is your best friend in this game. Use the banks money to make you more money.

    Start now. Your already 42 which is quite late compared to some ppl on here but I can see you had kids quite early so you had other responsibilities.

    Just dont be one of those guys thats procrastinate and use excuse after excuse and before you know it its 12+ months and all the houses have gone up another $100k.
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The 2 % thing announced is for owner occ and has various caps, certainly well below a mill

    As an aside the borrow cap would be nowhere near that

    ta
    rolf