My Property Investment Journey - Week by Week

Received a lease application this week, just waiting for funds to clear. Will post a more detailed update on the weekend

 

Skimmed the thread.

Congrats @Jose Eduardo Slompo
Well done on documenting your first purchase (I haven't read the whole thread but nice to see you lived up to your word and put your money where your mouth is)

@Greyghost
Fair enough. Business should be fair and nothing should be unethical.
True success is where you try for win-win situations.
However, in this situation, the vendor didn't have to sell. So don't be hater.
That's business. They asked for a low price, vendor was happy to oblige.

I'll sell you one of my properties 10% over market value since you seem like a nice guy.

 

Not hating.

Pat yourself on the back mate.

 

Tks for the kind words, @bobbyj!

 

Agree find the property then get finance, especially as an investor if you miss one there'll be another! Find out your numbers and then go for it with a subject to finance clause (usually standard)

 

Willing to share that spreadsheet Jose?
Feel free to reach out if you had any questions or would be keen to learn more, happy to share my thoughts.. Am curious to know if you'd mind me doing something similar? My journey is going to be different of course!

 

Interesting ones there Jose, I'll keep reading on the rest of your journey tonight although how did you pick these 6 buyers agents?

 

Hi guys, while this isn't official as long as you then don't use the same lender, generally they'll stay at OO rates.. Wouldn't say this is always the case however the onus is on the borrower to notify the lender of the change and generally a bank is not too concerned or is going to follow you up on this.. Of course ethically you could argue or question whether this is good practice or not although will leave that up to you to decide

 

Sorry about smashing you here with questions although I'm curious on the reason you went P+I given that it's an investment property? While sure you're getting a "better" rate, you're reducing tax deductibility of the debt + potentially reducing your capacity to buy another.. Of course it depends on your income etc although interested to know on your thought patterns behind this decision

 

Oh you mean that the higher LVR necessitated that a lender would not have considered IO? That makes sense certainly going P+I does open up your options for rate + lenders

 

Congratulations @Jose Eduardo Slompo

 

Weeks 28 to 36: 1/10/17 to 2/12/17

Hi everyone! It's been quite a while eh? My last post was on Oct 2nd! I've been dying to post ever since that last post, but decided, for a few different reasons, that I'd only post again once the property was rented.

Well... it turns out that my property journey kicked off with a few challenges upfront! Crestmead vacancy rates are in their highest in the last 10 years (source here) and the fact that the Logan demographics are not the best in the world didn't help much either (a few applications didn't progress due to things like bad credit history or not clearing the deposit).

A little summary of the whole journey: the property went to the market in the end of September and the asking price was $370 per week. Three weeks and a few empty opens later, I dropped it to $360. Still nothing. Two weeks later I dropped it further: $350, which I had initially decided would be my lowest limit. That's when a few people started to show up to the opens and a few applications came through, but none of them progressed.

By then it was early November and I was starting to get really concerned, knowing how slow the market would be in December, so I decided to drop it to $340 (less than the limit I had originally decided on, but at that point I simply didn't care, I just wanted to get it rented asap). That, plus the help the guys at my PM gave me through an awesome revamp of the ad with a whole lot of new pictures, made all the difference and I got it tenanted to a nice family who intends to stay there for the long term.

The contract is set up for 14 months so that it ends in the end of January, which is a better period to get tenants than late November in case the current tenants decide to move out (thanks to my PM for this suggestion). The contract also has a special clause stating that the rent will go up to $350 after 6 months, so I guess in the end it wasn't a completely bad outcome.

Something else, pending from my last post: the Quantity Surveyor, which is the last professional in the list. In my last post I mentioned I was having conversations with a company that offered Deferred Schedule and free amends to the schedule for upgrades and replacements. They also had good recommendations in this forum, so when considering all of this I decided to go ahead with them, and have nothing to complain about. I'm obviously no expert in the subject, given this is just my first investment property, but I have the impression they've done a good Depreciation Schedule. The company is called "Depreciator" (www.depreciator.com.au) and the price was $440.

Finally: after talking to a few brokers, it became clear to me that the way my loan has been set up is less than ideal for my investment strategy. I'll get to the details in my next post, but for now I'll just reinforce the importance of talking to several professionals before deciding which one to hire. I did that when searching for my BA and got an amazing deal. I did NOT do that when searching for a broker and ended up with a loan that doesn't suit my strategy. More details next week.

PS: don't ask me who the broker was, I simply won't say it. The purpose of this thread is to document my learnings, help people and, when due, give credit to good professionals. Staining reputations is not part of the plan.

Cya guys next week!

 

@jefn89 Exactly, no need for a pre approval unless you really want to lock down the deal.

@jefn89 Absolutely no issues, mate. By all means, go ahead and do it, and let's all learn from each other

Will send you the spreadsheet in a message.

Spot on, @Rolf Latham. However, knowing what I know now, I wouldn't have done it that way. I would have waited until I could get an 80% LVR and then go I/O. This is part of what I just mentioned in my post a few minutes ago (about my loan not being set up in line with my strategy). I'll explain in details in my next weekly post.

Thanks @aussieB !

 

Congrats on getting a tenant! Trying to get the first tenant in any property I think is the scariest, now you have done it I hope it’s smooth sailing from now on.

 

@Jose Eduardo Slompo I experienced the same issues as you when trying to rent my property in the area earlier this year. This is why I keep posting updates on Brisbane/Logan forums about the vacancy rates and try to keep it real. In a way it is good that the council is making it harder to build granny flats, at least the situation won't get worse.

Anyway, congratulations on getting it tenanted. If you don't mind me asking, did depreciator do the QS report in person or was this a desktop report for that price? Also keen to hear how you've changed your loan structure from your current P&I loan and what's the idea behind it.

Best wishes, hope you have a great investment journey from here on.

 

Loving the transparency here mate, thanks for sharing and yes agreed QLD can be a challenge for the rental market atm.. I've been very fortunate with my place in Zillmere, which also has quite a high vacancy rate.. It has only been vacant for 2 - 3 weeks over the last 2 and a bit years..

Interested to hear more about why your strategy doesn't fit as well (will be waiting in suspense til next week haha) being a broker myself love to learn what does and doesn't or isn't working for investors from a strategy perspective in the current market

Until next week, have an awesome one!

 

Nonetheless, a few interesting learnings here and there:
- When buying, consider the possibility of advertising the property for rental prior to settlement to expedite the process of finding a tenant.

Interesting post and read so far with your journey.......

Great note to take and ensure that this is stated as part of the contract and the selling agent has gained approval from the current owner, quite often the sales agent will say it will be fine to advertise at unconditional, then when the time comes the owner doesn't agree nor want any inspections with prospective tenants. (there is no real point in advertising if the property can not be shown to the prospective tenants within a few days.)

 

Another "quick renovation" is air conditioning if not already installed - totally recommended as this is one of the main things a tenant requests.