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Newbie migrant from Sydney

Discussion in 'Introductions' started by Property Investor1, 24th Jul, 2016.

  1. Property Investor1

    Property Investor1 Member

    Joined:
    23rd Jul, 2016
    Posts:
    5
    Location:
    Sydney
    Hi All,

    I just completed 3 years in Australia after migrating from India. I am 41 with wife and 2 kids. My family income is around $140K per annum and have savings of around $60K. I am currently renting and wish to start my property investing journey. I am a total novice in the property market in Australia.

    I currently do not have any property in Australia, but I would like to know from all the experienced property investors out there if I can buy my first investment property with initial capital of around $50-60K? It may take a few years if I try to save for a 20% deposit and doing that stops me from getting a foothold in the property market.

    The idea is to buy properties with positive cash flow which has a very good potential of capital growth and the goal is to have a passive income of around $150K per annum in the short term of around 5-7 years.

    I would like some suggestions on where to start keeping the above background in mind. I was also thinking if hiring the services of a good buyers agent would help me get started since I don't know anyone who is trusted an reliable i.e. a mortgage broker, tax accountant, property manager, solicitor etc.

    Also, if it makes good financial decision to first buy PPOR rather than buying my first investment property. Some of the questions come to my mind are if I buy apartment as PPOR, then it may cost me around 600-700K in Sydney in a good suburb where there are good public schools (suggestions welcome on the suburbs to consider which has good schools in Sydney). But then this may exhaust my serviceability and not allow me to buy any further investment properties unless my income increases.

    So as you can see I am very excited to get started as well as little nervous on how to start with so many questions in mind :)

    I look forward for some good guidance and help from the property community here.
     
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  2. Nemo30

    Nemo30 Well-Known Member

    Joined:
    31st Dec, 2015
    Posts:
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    Location:
    Somewhere
    Welcome to the forum.

    There are plenty of properties you could buy with 50-60k savings. What areas are you thinking about?

    I think your goal of $150k passive income within 5-7years is extremely unlikely. Have you done any calulations to see what you need to get to that figure?
     
  3. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
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    4,943
    Location:
    Sydney
    Great! Welcome Property Investor. There's a metup at Wenty Leagues this Wednesday organised by @skater - come along. The thread is in the meetups section.
    Yes, if you aim for an 88% loan its a much better use of money for growing a portfolio quickly. You could possibly even borrow more if you want to be super aggressive, though LMI becomes much more expensive. If you are able to include LMI and stamp duty in your loan, great, however you probably can't include stamp duty in the loan though so keep that in mind. If you buy properties at 300k mark in NSW, the stamp duty on that should be about 10k, similar in other states however the rates depend on the state of purchase though. Purchases over 300k tend to incur a higher stamp duty rate. If you own no other properties you may be able to buy brand new property with no stamp duty (if you live in it for a while), but i'd try to buy property with land content (houses, villas, townhouses etc rather than a new unit).

    If you want a passive income of $150k you'll need about $3mill of unencumbered (i.e. debt free) property or assets with a 5% return. Now if you want that in 5-7 years, I'd consider that super aggressive. If you can map a strategy for you to get there in 5-7 years... share that info with me! CG (Capital Growth) is the only way you'll get there with such an ambitious target, but unfortunately I think there will be minimal growth going forward in the next few years in Sydney as we have been in a boom since 2013. If you happened to own a house and banded with your neighbours to sell to a developer a la "Castle Hill style" you could have had your 3 mill nearly overnight with nearly no effort, but can you get yourself into that situation? And if you know of a way for me to get myself into that position... by all means, please share that info with me! :) Maybe we can all quietly start buying up properties near the stations in the Hills for the purposes of onselling to a developer...;)

    Anyway, back to the question, Capital city houses tend to have superior capital growth. You may have seen the Illawarra, Central Coast, Blue Mountains growing strongly - that's because of the ripple effect from Sydney. People want to buy the city, but it has become very expensive so people are putting their money in the next best nearest option. Note if the economy goes bad, the more regional outer areas (or areas of Sydney lacking amenity and infrastructure) may pull back significantly. I don't have a crystal ball though. Remember, you want growth. You can reno, subdivide... lots of ways to increase (manufacture) equity to buy the next place but it takes some effort.

    Also read up on PC, other cities may be the place to get better gains over the next few years rather than anywhere near where you live.
    I think you need to think about where and what to buy, and also all the above as you have listed. Your property manager/s and solicitor/s will depend on location of purchase. (Solicitors tend to only operate in 1 state only)

    If you want to be hugely aggressive in accumulating IPs, it is probably worth continue to rent. If you can increase your income, do that. If you can Airbnb a space where you live, do that.

    Good luck... and remember to come back to me if you find a way to have 3 mill in equity starting from 60k savings in 5 -7 years.. xxx
     
    Last edited: 24th Jul, 2016
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
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    1,173
    Location:
    Gold Coast
    Welcome to PC

    Your goal is lofty given your current resources.

    I do have a bunch of clients that have achieved similar numbers, but not many with JUST property.

    To go that hard, that fast, the primary way would be business income to fuel purchase and equity, rather than PAYG and hope and pray.

    ta

    rolf
     
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  5. MsAli

    MsAli Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,147
    Location:
    Sydney, Australia
    @Property Investor1 - Welcome.

    As others have said, that is an incredibly aggressive goal. At your current starting point, servicing permitting it would be possible to accumulate the $3m base portfolio in the next 5-7 years which can then enable you towards the $3m equity mark. No body has a crystal ball about what the future holds.

    If I was in your shoes I'd work out what your current servicing is and accumulate properties that are neutral cashflow and are poised to gain capital growth. With your current savings of 60k, you have good opportunity to buy something in the $350k-$370k mark in North Brisbane with areas where there is potential for capital growth.

    Well done on these savings in just 3 years time frame. I can understand how difficult it can be to move to a new country, build foundations and now savings.

    You have a great future!! All the best.
     
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  6. Property Investor1

    Property Investor1 Member

    Joined:
    23rd Jul, 2016
    Posts:
    5
    Location:
    Sydney
    What is the meetup all about? What topics do you guys discuss about?

    @Gockie thank you for your sharing your insights. Appreciate your time and effort trying to explain things to me. Where would you look for properties in 300K range in NSW with good cash flow and capital growth? I like the suggestion that one should buy property which has land content, if you can point me where to start looking I would be very grateful.

    QUOTE="Gockie, post: 252491, member: 111"]
    If you want a passive income of $150k you'll need about $3mill of unencumbered (i.e. debt free) property or assets with a 5% return. Now if you want that in 5-7 years, I'd consider that super aggressive. If you can map a strategy for you to get there in 5-7 years... share that info with me! CG (Capital Growth) is the only way you'll get there with such an ambitious target, but unfortunately I think there will be minimal growth going forward in the next few years in Sydney as we have been in a boom since 2013. If you happened to own a house and banded with your neighbours to sell to a developer a la "Castle Hill style" you could have had your 3 mill nearly overnight with nearly no effort, but can you get yourself into that situation? And if you know of a way for me to get myself into that position... by all means, please share that info with me! :) Maybe we can all quietly start buying up properties near the stations in the Hills for the purposes of onselling to a developer...;) [/QUOTE]

    Well I agree with you completely, the time span sure is very unrealistic. Perhaps 10-12 years may sound reasonable with reasonable risks. I think for starters if I can just get an entry in the property market with 1-2 properties in the next 2-3 years would be good start. Hopefully by that time I may have got some experience and knowledge by interacting with this helpful community in what attributes to look for in a property which has future capital growth potential. I so wish I had come little earlier to this wonderful country and had some money to invest. As sometimes I feel I may have missed the boat. But as they say better late than never.

    QUOTE="Gockie, post: 252491, member: 111"]
    Anyway, back to the question, Capital city houses tend to have superior capital growth. You may have seen the Illawarra, Central Coast, Blue Mountains growing strongly - that's because of the ripple effect from Sydney. People want to buy the city, but it has become very expensive so people are putting their money in the next best nearest option. Note if the economy goes bad, the more regional outer areas (or areas of Sydney lacking amenity and infrastructure) may pull back significantly. I don't have a crystal ball though. Remember, you want growth. You can reno, subdivide... lots of ways to increase (manufacture) equity to buy the next place but it takes some effort.[/QUOTE]

    Being a newbie, I think it will take sometime for me to understand the various strategies one could take with reasonable risk in order to maximise capital growth (equity). Thank you once again.
     
  7. Property Investor1

    Property Investor1 Member

    Joined:
    23rd Jul, 2016
    Posts:
    5
    Location:
    Sydney
    Thank you MsAli for providing those suggestions. These are the kinds of suggestions/tips I am looking forward to from the community members so that I can make a beginning in buying an IP.

    You got it absolutely right, it is very difficult to build foundations from scratch especially at my age and it has taken some effort to reach that savings figure. The other thing is I do not wish to borrow any money from my parents so that also makes things slightly more difficult. But I guess in time with some good guidance from helpful community members who have a passion in property investing and help others learn from their experience.
     
    MsAli likes this.
  8. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,943
    Location:
    Sydney
    What is the meetup all about? What topics do you guys discuss about?

    Anything and everything... here's the link
    NSW - Western Sydney Meetup - Wednesday 27th July


    @Gockie thank you for your sharing your insights. Appreciate your time and effort trying to explain things to me. Where would you look for properties in 300K range in NSW with good cash flow and capital growth? I like the suggestion that one should buy property which has land content, if you can point me where to start looking I would be very grateful.
    For a roughly 300k purchase budget right now i'd look at Hobart, Adelaide (Its a sleeper town mostly but hold and I'll believe there will be growth - try to go as close to the city as possible), Brisbane (Moreton Bay or Logan council regions perhaps but check the vacancy rates and flood maps in the area), and see what you can get suburban Melbourne but make that a higher budget, say try low 4's, or in the 3's maybe you can try Frankston area. Melbourne is a huge area and the West or North could also suit. For 300k NSW.... I won't suggest anything. Not sure of any places that will deliver CG. You are pretty near priced out of freestanding homes for majority of Illawarra, Sydney, Central Coast and Newcastle. And I won't go regional... not enough CG.

    Well I agree with you completely, the time span sure is very unrealistic. Perhaps 10-12 years may sound reasonable with reasonable risks. I think for starters if I can just get an entry in the property market with 1-2 properties in the next 2-3 years would be good start. Hopefully by that time I may have got some experience and knowledge by interacting with this helpful community in what attributes to look for in a property which has future capital growth potential. I so wish I had come little earlier to this wonderful country and had some money to invest. As sometimes I feel I may have missed the boat. But as they say better late than never.
    Cool. You just missed the Sydney boom... you need some boom and you could have been half way there already. Never mind, you can't go back in time. Some patience will help. Or a business as Rolf suggested.
    QUOTE="Gockie, post: 252491, member: 111"]
    Anyway, back to the question, Capital city houses tend to have superior capital growth. You may have seen the Illawarra, Central Coast, Blue Mountains growing strongly - that's because of the ripple effect from Sydney. People want to buy the city, but it has become very expensive so people are putting their money in the next best nearest option. Note if the economy goes bad, the more regional outer areas (or areas of Sydney lacking amenity and infrastructure) may pull back significantly. I don't have a crystal ball though. Remember, you want growth. You can reno, subdivide... lots of ways to increase (manufacture) equity to buy the next place but it takes some effort.[/QUOTE]

    Being a newbie, I think it will take sometime for me to understand the various strategies one could take with reasonable risk in order to maximise capital growth (equity). Thank you once again.[/QUOTE]
    No worries... good luck... the way to go foward is to keep reading, asking questions, listening to input from others... also you can't believe everything you read too, so keep a bulls#it reader hat on, remember to think for yourself and soon you'll hopefully be able to sort the wheat from the chaff.... :)
     
  9. MsAli

    MsAli Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,147
    Location:
    Sydney, Australia
    Totally relate! There are a few members on this forum who have started later on and done really well. Don't let age be a barrier. Sure it's more challenging with responsibilities. I think the challenge to settle in a new country and what's required really builds up focus and the desire to do well and have the quality of life - same as anybody who has been in this country longer or was born here etc. I don't know your personal situation, however my own experience has been you will catch up and do even better should you keep the goal at the forefront of the mind.