My Property Investment Journey - Week by Week

What a great read!!! Glad you had fairly good success with your first investment property. The Logan rental market is low at the moment and yes vacancy is higher than it has been in the past few years, a question or research that quite often gets missed when buying a property, engaging with a property manager or BDM early on in the buying process can give you the information you need to know with regard to the current rental market and expected vacancy, Good marketing strategy and top realestate.com position can assist in minimising this also, a discussion that should be had prior to advertising. All the best and look forward to hearing about the next one!

 

I think your initial asking price for rental was too high. If you price your house accordingly with the rental market it will rent quite easily. No-one is going to pay a premium of $30-$40 per week for enhancements that are not that different to what is available at a lower rental price point.

Not sure how accurate SQM vacancy rates are but even at 3% its very very low. Not sure what people are expecting here but thats a great rate.

I think a combination of your chosen PM along with the over asking price was your delay in getting tenants. I've got numerous investments in Crestmead as you know via PM and never had a single issue with rent - actually not even more than 2 weeks vacant on any of them.

Overall you did a good job for your first investment though. Well done. Next time you will learn alot from your mistakes you have made and what works and what doesnt.

Now onto the next one

 

Awesome read!
Interested in what the valuation comes back at.

 

Definitely, @Kassy! The beginning is always hard, just like anything that's new in life. Tks for the encouraging words!

 

@Invest_noob Exactly, it's important to keep it real. Didn't know the council was making it harder to build granny flats, that's good news... how did you find out about that? Just curious so that I can get the same info in the future

The Depreciation Schedule was desktop. Is that a bad idea? Is it better when it's in person?

I haven't changed my structure, will keep it this way. The key point is that I learned (the hard way) and will do it right for the next purchase.

 

Good stuff, @jefn89, great to know you've had luck with your tenants! I have the feeling it will be alright going forward for me, given the tenants said they want to stay there for the long term.

I'll post about my loan structure soon.

 

@Brooke Colledge We actually got early access to the property, but didn't put the ad up because there were renos to be made. Once they were finished, the photos were taken and the ad was put up. Thanks for the advice anyway

@Brooke Colledge There's air con already, but tks anyway

@Brooke Colledge Couldn't agree more. Thanks a lot for the kind words, stay tuned for future posts!

 

@eletronic_exp0430 Couldn't agree more: initial value was definitely too high. The PM did a great job, though, and it's definitely not on them - I was the one who wanted to ask for $370 initially.

As you said, it's all about learning from past mistakes. Thanks for the kind words!

 

@Michael b I did a CBA desktop valuation and it came back at $322k

 

Weeks 37 and 38: 3/12/17 to 16/12/17

Hi all!

Interesting posts following my last post. Love this forum, it's great to interact and learn from everyone.

Only news in my property journey is that a CBA desktop valuation came back at $322k. Apart from that, just saving for my next purchase.

As per my previous post, I'll briefly talk about my loan structure: my strategy is to buy below market price, add value (when possible) and then extract the equity asap so I can put it towards the next purchase. Two key pieces for this strategy to work are the valuation and my borrowing capacity. The latter is not an issue, given our combined income (me + wife) is pretty decent and serviceability won't not a concern until we get to several properties.

The former, however, demands flexibility - in other words, the ability to get valuations from several different lenders and, obviously, go with the highest one. In my current loan, if I change banks I'll have to pay LMI (because my LVR is higher than 80%) and will have to pay a break fee (because my loan has a fixed rate component).

The learning for me is: for the next properties, to go for a LVR of 80% (no LMI if I change banks) and variable rate (no break fee if I change banks) so that I can have that flexibility. On top of that, for an 80% LVR I can get I/O rather than P&I, which is a plus. Some good learnings here! Keen to hear people's thoughts on this! What do you guys think?

To wrap up this week's post, I want to quickly talk about an article that generated a lot of buzz recently: https://www.linkedin.com/pulse/australias-economy-house-cards-matt-barrie/

The author is Matt Barrie, founder and CEO of Freelancer.com - a company that, by the way, lost 75% of its share value in one year - no wonder he's ranting!.

My view is that he definitely has a point when he says Australia should shift towards exporting technology and science rather than resources, but, apart from that, the whole article seems to be more doomsaying than anything else. Pete Wargent (@petewargent) and Shane Oliver both had solid counter-arguments in their posts about it:

Pete Wargent Daily Blog: Growth hacking
Is Australia’s economy “built on shaky foundations” that are “about to collapse”?

Keen to hear everyone's thoughts on this as well!

That's all for today. Loving the journey, the learnings and the great people I've come to meet thanks to this thread.

Cya next week!

 

At a high level lending comes down to 2 main things - serviceability/borrowing capacity and deposit.

Most people fall into the category of having one or the other (i.e. high deposit/equity and low servicing or vice versa). Very few people, especially post APRA/ASIC changes, have both.

80% gives you the flexibility of moving if you get a bad valuation with lender A but a good valuation with lender B or if your circumstances have changed whereby Lender A can do the deal whereas other lenders cannot. A good example of this maternity leave where Westpac has the superior policy in all the land.

However, depending on the purchase price you may need to contribute a significant amount to feel the LVR at 80% and this in turn can limit you for doing renos, investing in other asset classes, subsequent purchases, etc.

I am a big fan of 88% lending provided you are using the "best lender" - the only time this becomes redundant is when you have an abundant amount of funds or have no plans to use the surplus funds in the future. My definition of "best lender" includes one that has a decent servicing calculator, flexible cash out policy, excellent valuation policy, etc.

Everyone's scenario is different so there never is a one strategy fits all. Everyone has different purchase budgets, different borrowing capacities, deposit positions, etc.

 

Hey Jose, thanks for sharing and looking forward to hearing more..
As with a lot of the comments, suggest that it really depends.. In an ideal world yes you'd go 80% lend with an I/O loan although in reality (hopefully you fall into the ideal world category) it will depend on many different factors that are outside of your control i.e. lending policy, valuations, life and family situation etc..

For me though it has to be about your goal, waiting to get to an 80% LVR i.e. having deposit or having equity is going then likely take time, depending on how much you can save.. As @Rolf Latham mentions, if you pay 5 - 10K of LMI yet are able to see 6% growth you may be better of paying the LMI rather than delaying and seeing further growth in an area, which means you'll need a bigger deposit or more equity anyway..

Ultimately the bigger and quicker you can build, while doing so without betting the house, the quicker you can reach those goals

Keep posting and looking forward to having more chats !

 

Thanks for the great post, @Rolf Latham! Absolutely agree with everything you said.

In my case, I fall into the "those with 80 % lvr for this and future property and "open ended" servicing that makes sense for an add value, reno, revalue model" category you mentioned. Our combined income (me + wife) is reasonably good, so saving for 80% LVR + entry costs + reno for the next purchase won't mean we'll have to wait much and, therefore, I'm not expecting to miss out on a rapidly rising market as you said.

But yeah, absolutely agree that, depending on the conditions of the investor, LMI is a small price to pay, considering it could take a while to save for 80% LVR.

 

Thanks for the post, @Shahin_Afarin. Just like @Rolf Latham's post, I also agree with everything you said and my answer will be pretty much a copy and paste: our combined income (me + wife) is reasonably good, so saving for 80% LVR + entry costs + reno for the next purchase won't mean we'll have to wait much and, therefore, I'm not expecting to miss out on a rapidly rising market or get limited on how much we can spend with reno, as you pointed out.

Good point with the 88% LVR - I've heard about it before and apparently it hits a "sweet spot" in terms of LMI, definitely something investors need to consider.

And couldn't agree more when you say "Everyone's scenario is different so there never is a one strategy fits all."

 

Hey @jefn89, tks for the great post! Yeah, I agree 100% with the underlying message that you, @Rolf Latham and @Shahin_Afarin are putting forward: every situation is different, depending on the position of the investor when it comes to saving capacity, serviceability and strategy.

Maybe in my original post I should have said that... anyway, thanks for posting, chat soon!

 

Hi everyone!!! It's been a while... my last post is from Dec 17th, almost more than 5 months!!!

Even though I've been following quite closely all the news related to properties and also to the economy as a whole, I've been absent from the forum simply because making money in Crypto has become way too easy and I've been spending most of my free time on it. I won't get into details because this is not a Crypto forum, but I'm obviously more than happy to explain to anyone interested, just message me.

Back to property: my property is rented, payments are in order, no hassle at all... just cruising. I travelled up to Brisbane a few months ago and drove the city from Bracken Ridge all the way down to Springwood, stopping in Manly for lunch. What a nice experience it was! I've been following the forum for a while and always seeing the same suburb names come up, but it's all too abstract, even if you go on Google Street View and "walk around".

It's a whole new story to get to physically see the suburbs, drive around, watch the people, feel the atmosphere. My next purchase will be in Brisbane and this exercise was super helpful, definitely recommend to anyone buying interstate.

I guess that's all for now. You guys probably won't hear from me again in a few months - at least while my methods for making money in Crypto keep working!

 

Good to see your post again Jose. Although I've been investing for a few years still I can't tell how much I learnt and enjoyed this post. I'll look forward to read more about your journey from one to multiple investment properties whenever that would be