Newbie investor starting out in Perth

Hello,

Have been reading this forum for a couple of weeks now and am learning a lot from these posts and gathering some contacts for an IP either here in Perth or Brisbane in the next few months. If I go with Brisbane I would look to use a BA, so have started noting a couple That have come up in forums with good remarks.
Happy to take any questions & look forward to contributing where I can!

 

Welcome to PC @ALT

What is your goal with the property: cash flow / capital growth or a mix of both? And what price point?

 

I am not really focused on goals or anything to serious with property investing, just a hobby that I am finding is becoming quite profitable.
At the moment I Would like to go cheap ( what I can afford) and go for positively geared for the cash flow without getting into too much debt.

 

I have been semi reasearching Brisbane for a few weeks now and after talking to the RA was tempted to put an offer on a 3x2 15 year old townhouse in Northlakes for 275k with the tenant paying $355pw, but after doing further research it was not a good IP. Over 100 units in the complex with Corp body fees at $3000pa.
So I will probably be better off using a buyers agent if I decide to go with Brisbane.

 

imho that's a terrible approach. But if it suits you then that's your prerogative

You said you're finding it becoming "quite profitable". Have you made profits yet?

 

Would like to hear where you would look to go if you were in my similar position as happy to hear any ideas.
The IP’s I have currently bring in approx 3k-3.5k a month after expenses. I am not too keen on debt though and am tempted to use these excess funds to pay down debt, but know I will probably get slugged at tax time. So am thinking if I can find another IP before end of FY will will lesson the tax bill.

 

If I were you I would:

1. Forget the hobby/no goals approach.
2. Not spend a cent until you learn alot more about the basics of RE investing. Spend a few months .
3. Then once you have some clear goals, meet with a broker to get clear on borrowing ability
4. Put a plan together and ( hopefully) make a better choice on what you buy.

And plsssss dont buy something just to try and reduce your tax. This goes back to point 2.

 

No shortage of some Perth suburbs starting to see good yields as prices continue to drop and rental vacancy rates continue to drop ,some even in really cheap suburbs.
Its also a lot cheaper to maintain and do basic stuff yourself if you live close buy, what you can do for nothing and just a bit of time might cost you hundreds of dollars in costs for a handyman.

 

Cheers, have met with one broker a few weeks ago who advised what I could borrow and am now waiting on another broker to make sure they have their numbers correct.

 

Numbers is one thing, but do you have a strategy?

I guess it goes back to the goal which needs to be clarified.

 

I would like to have a growing property portfolio and Look to buy positively geared property when I can afford it.

 

Best thing you can do is educate yourself first. Books, podcasts and forum. Spend a few months. If you want an easy/quick way to do well - it doesn't exist.

 

A lot of townhouses look good on paper but get torpedoed by by body corporate fees eating into the cashflow. And as you noted if there are many in the complex then you are competing against all of them for tenants and sales which impedes cash flow and capital growth

 

Good to have clarity.

It goes beyond just checking numbers through various brokers.

 

Please don't rush in.

Positive cash flow can turn negative very quickly if you get it wrong so make sure you know how to do a good due diligence on the suburb and area, not just the house itself.

The tenants can make or break this strategy and properties that are CF+ from day 1 are often in area that have high levels of crazy tenants.

 

3-3.5k a month after expenses means your doing alright so far as a hobby! Tell us about your current IP's of when you purchased, how much etc

 

Thankyou for all your advice. I have seen most of you are a lot more experienced than I am and will definitely take on any advice that you can give.
The current IP’s I currently have are all in Perth. Bought in 2000, 2004, 2010, 2012 all purchased for between $130,000 - $290,000.
The one I bought in 2012 ($290,000) is probably worth around the same now, but I own it out right ( just the way the other loans we’re structured)

 

Well done on your portfolio so far.

Just because you have done well with these price points previously, doesn't mean the Brissy townhouse at $275k will be a good buy.

You need to be wary of the supply there, how many in the complex, the quarterly strata? Strata may quickly make it negatively geared. I have found Brisbane complexes to be large, some with pools and tennis courts etc.

You have to see if there is:
>> Too much supply
>> Too little supply of a particular type of property
>> The strata complex not being unique enough - too many of the same... hence you are prone to impact from other sales in the complex as well as similar townhouses available for rent at the same time

Just a few of many things to consider.

 

That doesn't sounds like a newbie investor just starting out, to me!

What's the current structure on your loans?

 

Yes Thankyou that is what I worked out, just the strata fees alone at $3000pa hardly made it a very good investment.
If I were to invest in Brisbane and because I have never lived there, I would consider using a Buyers Agent.