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New here, hoping for some advice.

Discussion in 'General Property Chat' started by Mike_D, 2nd Jul, 2016.

  1. Mike_D

    Mike_D Member

    Joined:
    2nd Jul, 2016
    Posts:
    7
    Location:
    WA
    Hi guys,

    Been lurking around here trying to learn about investing in property, you guys seem great and i've learnt a ton just by reading all the threads, so thank you very much. (obviously a lot more to learn tho)

    Was hoping people could chime in and just give some opinions, here is my current situation.

    I'm 32 and live in Perth WA, me and my partner are looking to invest in property, currently I've found a few places with great bones going for quite below the median price for the suburb they're in. I was thinking about buying as a owner/occupier and doing a lot of cosmetic changes myself as we have extensive trades in the family. Hopefully after some reno's the house would have gone up a little in value and then we could either sit and hold for a while or after the 6 months living in it, move out and make it a rental if the market is looking ok for that. Maybe use the equity as the place will probabaly have gained some capital and maybe look at a next one (don't want to get ahead of myself tho) The suburb is Kinross, it's a northern suburb in Perth close to the beach and trains/schools/shops.

    The place i'm looking at i'm hoping to get at between 429-455K

    Currently have about 65K cash, have parents who have said they are happy to go guarantor for anything we borrow (is this a good thing? a few people i know did it this way). Just hoping for some smart advice, i'm very new to this property game, it all seems very risky being my first time investing in something like this. Maybe i'm looking at places that are still to expensive? Also is it better to pay off the load as principal&Interest or just interest? the latter would be hoping for good capital growth and i see the market is kind of flat atm. So many questions floating in my head, thanks for any advice. - Mike
     
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  2. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

    Joined:
    4th Mar, 2016
    Posts:
    220
    Location:
    Melbourne
    Welcome @Mike_D

    So at the moment you are renting and have no investment properties (IP) from what I gather? Is the plan to renovate then turn into an IP, and then purchase a home to live in long term?
     
  3. Jerry O

    Jerry O Well-Known Member Premium Member

    Joined:
    21st Jun, 2015
    Posts:
    360
    Location:
    NSW / Melbourne
    Welcome aboard @Mike_D !

    Without knowing much of your situation and basing it on what you are planning to do, that strategy have been employed by quite a few people on the forums. Just be mindful though, not because you are a tradie or knows a lot of tradies doesn't necessarily equals good profit. Knowing what to change, what to add, what to remove in a property comes into play as well. Some things does very little in terms of increasing property value no matter how good the quality of works has been done. I would say continue to read and continue to ask questions from the forums. Engage a good broker as well from here to help you out with the beginning stage of planning.

    @Jess Peletier is one of the good brokers here from WA if you want face to face meetings. Otherwise, there's plenty on the forums to help you get started.
     
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  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,758
    Location:
    Perth WA
    Hi Mike, welcome to the forums! Buying below market and renovating can have good results for equity even in flat markets, particularly if you're not selling.Using a guarantor for this can be good (saves you LMI) if servicing is there, but there may be more flexible options if you're hoping to release equity for the next purchase. Your parents borrowing themselves and lending to you, for eg. A lot will depend on your servicing and your parents position as well.Good luck! Sounds like a fun project :)
     
    Last edited: 2nd Jul, 2016
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  5. Mike_D

    Mike_D Member

    Joined:
    2nd Jul, 2016
    Posts:
    7
    Location:
    WA
    Thanks everyone, i can't stress how much i appreciate a place like this with active people posting advice to newbies like myself. I've felt so alone since i started looking at investments, so many smart gurus out there and they are hard to follow, always feels like their situation is way above my level. I'll try cover some of the questions some of you asked. The place i'm looking at has a very nice open plan layout, just by doing some mashup cosmetically using software and seeing the difference, i think the house could gain a lot of value just by changes i could make myself. There are finished homes on the same street and in the suburb with almost identical layout going for and being sold at around 525K even in this market.

    Yes at the moment we are renting at a very good price, i was even considering myself and partner moving in with the parents (they have a lot of space) while we save a lot and try our hand at our first investment, but i don't want to use that as a safety net i'd rather budget and know what we can do on our own feet first. I'm just trying to get opinions of weather people have had better success with doing cosmetic reno's then after 6 months renting it out. Or to keep this place as our owner/occupied house after reno's and focus on paying that mortgage at a decent rate and later using the equity to get a second IP to have as a rental. That is of course if things work out and it's geared in a way that lets us service it. My partner is studying so we have less income but also works on the side, between us we don't have a huge income but it's not too bad, it's under 140K yearly combined. The big attraction as you said also was having a guarantor helps us out with the LMI.

    And also thanks for the broker link, we actually have a really good broker that freinds and family have used many times, he's been a big help to us in understanding what we can and can't do. I just find hearing from real people like all of you that are in this game going through the process is more confidence inspiring :)

    Thanks again everyone.
     
    Last edited: 2nd Jul, 2016
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  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,758
    Location:
    Perth WA
    It would be worth while running a few numbers to see what's possible for you over the next few purchases with the first property both as an IP and a PPOR. It's useful to map out the next couple of purchases to make sure it's achievable from a finance perspective and determine the best path that will get you the results you're after.
     
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  7. Mike_D

    Mike_D Member

    Joined:
    2nd Jul, 2016
    Posts:
    7
    Location:
    WA
    Thanks Jess, our broker has ran the numbers and it looks like we can quite comfortably service a loan up to 470K, i wouldn't want to borrow much more since if we had a guarantor we would still have the bulk of our savings to do any improvements, plus i don't want to pay too close to the median price in the suburb as it would negatively effect our profit's if the market stays flat for a long time. I will get him to run the numbers as an IP as opposed to PPOR. Thanks :)
     
  8. Marg4000

    Marg4000 Well-Known Member

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    18th Jun, 2015
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    Location:
    Qld
    If you can, definitely move in and establish it as your PPOR. Then if you choose to leave and rent or live elsewhere, you have CGT advantages under the 6 year ruling.
    Marg
     
  9. Scott Townsend

    Scott Townsend Active Member

    Joined:
    16th Aug, 2015
    Posts:
    38
    Location:
    Perth
    Hey Mike! We had a Perth Property Chat meet up last night! You will have to come along to the next one! Always good bouncing ideas off other investors in the area!

    Scott
     
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  10. Mike_D

    Mike_D Member

    Joined:
    2nd Jul, 2016
    Posts:
    7
    Location:
    WA
    Hi mate! dam i'm sorry i missed it, would've been great to talk about it with some other Perth folks. I'll try my best to keep an eye out for the next one :)
     
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