More confused now than ever

Discussion in 'Investment Strategy' started by Savy mum, 6th May, 2017.

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  1. Savy mum

    Savy mum Well-Known Member

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    Hi all

    I would love to buy an investment property but Ive never felt so confused in my life.

    Im currently reading all the recommended books, attending seminars (mainly to see if they are saying the same thing), listening to The Property Couch and Jane Slack Smith podcasts, reading Property Chat and Somersoft forums and I still dont know what Im doing.

    I went to a seminar on Providence earlier in the week and I thought this was the way to go then I read they may be a spruiker. (But Im still not sure if they are). Just when I think I get my head around it, I read something else that makes me doubt the decision.

    I can't rely on hubby as he goes along with everything that I say as he knows Ive done all the homework. If I told him we are buying in the desert, he would say 'where do I sign'. You get my drift.

    People say buy within 15km of capital cities. Is it really that bad if I buy in my own city/town. (Newcastle area).

    Is it really this hard. I totally understand why people want to buy IP but dont end up investing.

    Does anyone else feel/felt the same? How do I move on from here? What am I missing?
    Cheers
     
  2. Hodor

    Hodor Well-Known Member

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    Don't try to get everything right, you can't. Most important thing IMO is to avoid major mistakes like (not limited to) mining towns, OTP, limited appeal properties, rural or over extending yourself. You can do well out of the above, however there are far more pitfalls.

    My first property was a plain 3 bedder in Newcastle which has done reasonably well. You will learn more buy doing than any other method.
     
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  3. jins13

    jins13 Well-Known Member

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    Find a style and strategy that works well for you. What may work for someone else may not necessarily work well for someone else ie people into renovations of runned down homes to increase rental and capital growth kn the reval.
     
  4. wombat777

    wombat777 Well-Known Member

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    Local knowledge can be a really big factor in doing well, so maybe buying in Newcastle is the thing for you.

    As they say, location, location, location - irrespective of where you buy. Pick a well-located property in a walkable suburb with close access to shop, transport or schools ( although the better the mix the better ).

    Also look for future changes in urban planning, infrastructure or economic development that will provide impetus for growth.

    Council and state government websites provide a wealth of information. Google is your friend.

    Research is key. Do that well and you will do well long term.
     
  5. DaveyB

    DaveyB Well-Known Member

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    Sounds you you thought with a bit of homework a crystal ball will appear, which it ain't going to
     
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  6. noogie60

    noogie60 Well-Known Member

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    There is no one true answer.
    The question I ask myself is that if I go ahead, will I be able to sleep easily at night? If not, then it's probably not a good idea.
     
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  7. Savy mum

    Savy mum Well-Known Member

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    Nope not waiting for a cystal ball to appear. That's not me at all. Im just finding with all the information out there, sometimes its hard to know whether the info is correct or lies just to get us in. Noone wants to be ripped off.
     
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  8. Savy mum

    Savy mum Well-Known Member

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    Thanks everyone for your replies.
    Im thinking I need to keep it simple, dont worry about what everyone else is doing (buying in capital cities), do what I think is best, dont over think it.
    As long as the property is going up in value and the rent is being paid, what more can I ask for.
    Cheers
     
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  9. Anthony Brew

    Anthony Brew Well-Known Member

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    LOL after a month or two on this forum, I posted basically the same thing:
    What to do when you accept that you are know nothing about property investment?

    Give it time, you will start to gravitate towards something that seems to make sense to you. I think being in a hurry to feel like you have learned everything makes things very stressful.

    People say buy within 15km of capital cities. Is it really that bad if I buy in my own city/town.

    If you want to live in it and it is in an area that does not have great growth, then you have to decide if it is worth it financially to get less or no financial benefit from it as a way to provide quality of life.

    If it is for investment, then why do you need it to be in your own city?

    I know it is hard looking outside your own city, but it can be done. It also takes more time to sift through the mass of information.
    - pick just one city that you can afford a free standing house (for my 500k budget, Melbourne has highest population growth, jobs, and overall demand and Brisbane second)
    - read up on threads for that city and start noticing what people mention such as population growth, jobs, where in the property cycle it is, and check out some of the suburbs mentioned in those threads on google maps and domain.com.au to get a feel for prices, yield, how it fared over the past 8 years, days on market, etc..
    - ask plenty of questions in those threads!

    you won't know it as well as your own city, but you will start to get a feel for the city and locations so that you will know enough to be able to hire a BA (and still be able to do your due diligence with properties they put forward)

    It definitely takes time though and yes it is frustrating when the information seems too vast to even pick a direction at the fork in the road and you feel like you don't even know how to narrow it down to something more manageable.
     
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  10. Gockie

    Gockie Life is good ☺️ Premium Member

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    Hi @Savy mum. I love going to meetups... that way you share ideas with other people. Sone ideas may stick and you'll be able to figure out what to do with that or explore ideas further. There might be people you find you click well with.

    @Anthony Brew... I have to say, if you are a newbie, you make a heck of a lot of sense. I don't know what you do in life, but to me your posts make it sound like you are an old hand.

    :)
     
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  11. Anthony Brew

    Anthony Brew Well-Known Member

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    Lol it's because I am an old newbie o_O
     
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  12. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    Yes there is a lot of info, and it often conflicts. Many people selling their way as the only way. If you feel ready to go and want to do it yourself something afforable whithin coo-ee of Newcastle or Central Coast could be ok for IP1. If you want to consider a BA there are some good ones on the forum from up that way but it sounds like you might want to go yourself which is actually fine too. Just put the time into knowing your streets, your values and get something that is fair or better price compared to what is selling around it. Aim for areas with tight vacancy rates and constrained supply (ie near infrastructure, water views, etc). No one wants to be ripped off, being aware of and avoiding the sharks out there selling off the plan stuff for higher than local prices is the biggest way to avoid the big lemon.

    Keep it simple for sure. As long as it is going up and rent is being paid are the 2 biggest things and you are right they are the main game. The bulk of traffic on this forum is Sydney and Melbourne focussed because of the size of the populations there and they probably represent 80percent or more of the users here. I find them often a little Sydney obsessed to be honest. It is understandable, I grew up there, it is the country's leading market but it is at the tail end of a cycle and very expensive so I get a lot of calls from people like you wanting sensible but affordable alternatives. Coastal satellites up and down the NSW coast are doing fine right now so a viable alternative. A simple honest cheapish 3 or 4 bed home that needs a coat of paint and modern flooring on a flat block in an affordable area close to expensive areas is often a good way to avoid screwing up. If you want to be more agressive (ie get off market or under market price, grow faster than average, improve cashflow more, develop a 2nd home on the block for manufactured equity) you might need a BA to help.
     
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  13. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Let me help you with two simple words - "Buyers Agent"

    Find a BA (buyers agent) that knows the local area and engage their services. They will be able to suggest an appropriate investing strategy and find you a bread and butter a grade investment property.

    There are a few BAs on here but not sure if any service the Newcastle area. Get in contact with one and I am sure they can refer you to a colleague that works the Newcastle patch.

    Confusion is a sign of progress but your brain just needs to process the information to catch up. Go easy on yourself as you are already streaks ahead of the rest of the population, just keep going no matter how hard it feels. The right mastermind team will help you no end.
     
    Last edited: 6th May, 2017
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  14. Angel

    Angel Well-Known Member

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    Propertunity services Newcastle i believe.
     
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  15. Colin Rice

    Colin Rice Mortgage Broker Business Member

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  16. kierank

    kierank Well-Known Member

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    To be B&B (blunt and brutal), buying property today is a lot easier today than it was when I started.

    In the late 1970's, to find out what properties were for sale, you had to wait for Saturday's paper. To see ONE photo of the property, you had to drive to the REA who had listed the property. To see inside the property, you had to make an appointment with the REA, jump into their car and be "held hostage" as they showed you all the "possible" candidates on their books. I still remember spending all day to look at 5 properties that showed some potential. And the only way to get some idea of comparables was to look in REA's shop windows. Getting reliable information was virtually impossible.

    Today, it is bloody easy. I just jump onto my computer. I can search for properties 24/7. I can do it during the day, at night, during the week, on weekends, on public holidays, ...

    And, from my computer, I can see old and current photos/videos of the property, do walk-thrus, study floor plans, look up sale dates and price information on every property in the same street, same suburb, ... You can apply filter, sorting criteria, ... to present the information in a sequence that suits you. You can copy+paste this information into say Excel and graph it in a way that makes sense to you. Getting reliable information is easy as you can visit multiple websites (government and commercial) and validate just about everything.

    IMHO, property buyers have never had it so good.

    Last year, we wanted to buy an absolute waterfront apartment to us to downsize into some time in the future. We started with our own list of requirements like 3bed, 2/3 car, etc. Then I jumped on the computer and looked at sale listings for apartments and selected things we would have never thought of. In the end, we ended up with 41 items on our list.

    Our initial search area was from Bargara to Coolangatta. No-one can monitor property in 500 kms of coastline. So I jump on my computer (many times at night and on weekends) and looked at what was available in each area. I look at photos, floor plans, street shots, Google maps, ...

    Then one by one I rejected areas until we ended up with 15kms of coastline from Burleigh to Coolangatta.

    I then searched this area and found 5 properties with five REAs in different price brackets that appeared to meet most of our 41 criteria. I set up 5 appointments on the one day in order of lowest price to highest. We checked out all five properties and found two that "ticked all our boxes". We started negotiations with the lower price one.

    There are 24 apartments in the complex. I found out when each was sold and for how much. I plotted this data on various graphs in Excel. Within a week we had a signed contract. The REA even "found" us a tenant before we had signed.

    Through the process we 'saw' thousands of properties BUT only met five REAs. We could never have done this level of research, could never have done this level of analysis, could never have gained this level of confidence in our decision-making, ... in the old days

    As I said, property buyers have never had it so good.
     
    Last edited: 6th May, 2017
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  17. paulF

    paulF Well-Known Member

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    As per Kierank above, lots of info and tools available these days but you need to be able to filter out the noise. Follow the usual fundamentals(location,transport,jobs,vacancy rates,school catchments...) and accept that it will be almost impossible to find the perfect property and accept that it takes time to find a good IP. Also make sure you know where you stand financially and what is the IP meant to provide(cashflow,CGT...)

    My methodology is very similar to Kiranks'. Hours and hours of research based on a list of requirements and after getting down to the suburb level, i start inspecting properties and get onto the street or pockets level(There are good and bad pockets in most suburbs). I think that nothing beats being on the ground and inspecting the properties if possible. If not possible than BA will have to be your only other option unless you have someone you really trust in the city you want to buy in.

    Well done for making the effort so far; keep at it and be patient. You are on the right track and you will get there.
     
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  18. Perthguy

    Perthguy Well-Known Member

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    Just to let you know that you have not misunderstood this. There is so much information around now with different areas and different strategies that it is really easy to get overwhelmed.

    What you will need to learn how to do is filter out all the noise and focus on what you need to do. It's not easy! There are so many options now that I get overwhelmed too.

    Incidentally, I don't think buying in your local area is a mistake. You have the homeground advantage. Same applies to any other purchase: make sure the market is going ok, the property is a good deal and it fits your strategy.

    Hope this helps. :)
     
  19. Gonx

    Gonx Well-Known Member

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    Maybe you can start with where you are since you know the area. That gives you a good advantage over people from Sydney for example that seem to be looking around the Newcastle area lately but have to take a day off or weekend to check it out. I have watched the Newcastle market for sometime and I still believe it has a long way to go before it settles in it's current growth cycle in general, maybe some suburbs more than others. At least in the lower to mid range bracket.

    The bonus with Newcastle is that its the only city besides Canberra that is close to Sydney. Only 2 hours in the train or car on a nice highway and it will only get less as rail improves and becomes high-speed in the future. You get all the benefits of the fresher country and seaside air but it's only 2 hours to Sydney and closer to the north than Sydney. it also has a very friendly vibe with little traffic congestion and no population mass. But I think the biggest thing it has going for it is that the city is well laid out and most areas are within 15 minutes or less to beautiful beaches and the new revitalized city centre. Places over by Lambton. New Lambton, Waratah to Mayfield have good prices still but are still really close to the city and beaches. These suburbs are also out of flood zones but check each street.if you go inwards then that changes. I think older apartments are great investments there as the prices are still low in cg compared to houses but houses are still good too if you look around.

    Look for streets and areas where builders and developments are working. Look at future infrastructure an building projects. Waratah has a lot of activity going on lately and so does areas around Mayfield with a new coles supermarket going up. look for future plans for shops, malls and transport improvements. Railway stations, bus stops, hospitals, schools and parks all are going to help the area grow. Newcastle city has got many infrastructure projects going on including the recently announced International airport extension, Racing cars project, Universities and parks. There is a new IT hub happening in the city along with education projects . There are many new building projects going up in the city right now so in a year when many of these will all be completed the property prices in the 15km area should rise with growth. You really can't go wrong if you are 15 minutes or less from the city, maybe 12 mins for Newcastle since it's smaller than capitol cities. Also some are saying Newcastle will become Australia's next capitol city so keep that in mind too. The Hunter Valley is a huge resource rich area with so many things going for it, too many to mention here. The potential of the Hunter region is massive especially been close to Sydney. The key was getting rid of the old industrial.factory look as you drove into the city. Now that is done it's open season ;)

    Another key thing to consider is that Sydney investors are looking at new options now and many would prefer to drive 2 hours to Newcastle than head to other cities around Australia. If they ever need to do repairs or go to their property it's just 2 hours away.

    I have provided you with many reasons to consider your local area for your first place but still keep your options open for the rest of Australia. Just keep researching as you can never do enough of that. Don't be afraid to ask questions as you never learn otherwise.
     
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  20. See Change

    See Change Well-Known Member

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    my two cents

    Personally I wouldn't buy in Newcastle because it's already boomed . I don't mid it as a place .

    We live in the north shore and have a weekender at north arm cove so we drive past newcastle every second weekend and have looked at property there and in in raymond terrace. We seriously looked at IP's in Newcastle three years ago , and that would have been a good time to buy.

    People who tell you it's time in the market that counts are trying to sell you a specific property ( or really dont know what they're talking about )


    I have some basic rules.

    Capital or major diversified regional . I prefer coastal . We've bought in townsville , Rockhamptom ( previous cycle ) , Launceston ( recently ) but decided against Cairns ( tourist ) and Gladstone ( too much development - can be a bad thing ) . . Cairns would have been ok , but glad we decided against Gladstone and mining areas

    We pay no attention to the 15 km . We've bought in nice central areas and lower socioeconomic areas and down well in all of them .

    When we do buy in lower SES areas we try to buy places that are neat clean and tidy with no major flaws . Generally don't aim to buy right at the bottom of any particular market .

    For me , timing is the most important thing . I look at the ten year moving average and assume each market will roughly double in each cycle . Then I look at which places are UNDER performing . I do check on stock on market and vacancies . sqm is the place to do that .

    We bought out first PPOR in Concord west at the peak of a boom and it went sideways for the next seven years . We bought our last one less then four years ago and it's come close to doubling . Personally at the moment I wouldn't buy in Sydney Newcastle , Woolongong , or Melbourne at the moment .

    Much of the emphasis at the moment is on Brisbane , Hobart ( taking off , I think ) and Adelaide . We've bought in all three in the last year and IMHO , I think in the Medium term ( 5-7 years ) , they will all move up more than the above mentioned places .

    Some people spend a lot of time looking at gentrification / changes in local areas , but when you've seen Shi....holes ( logan , mt Druitt ) doubling in two years for no other reason than every other areas has also doubled I personally don't worry about it .

    You can go the BA route , but first I'd be working out where you want to buy .

    How much do you wan't to spend ? Are you happy to subsidise it with running costs or do you want close to cash flow neutral . If you wan't to buy a nice place within 15 k of Brisbane , chances are it will be seriously cash flow negative . Buy something in Ipswich or Launceston for under 250 and the cash flow drain won't be as bad ( unless the drains block , stove and hot water go at the same time as the tenant skips .. )

    BTW , I spent about a year reading the forum and asking questions before we bought our first one . THere was a somersoft BBQ in canberrra and I got the award for analysis paralysis . When we started we bought 19 in the next 18 months .

    Cliff
     
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