Hi everyone, I've been reading this forum and there is so much great information for a total newbie like me! So first, thank you so much for that. Me and my partner are both 34, living in Melbourne. I'm earning ~50k and she ~75k, it's a bit volatile because I have a part time and a casual job and she is locuming in Pharmacie. We only have about 30k in savings and pay 1300/month in rent. We have a property in Darwin that's estimated at 275k, rented at 370/week and is fully paid. (inherited many years ago). We are now seriously considering investing and it all started because a friend told me about how he is doing it and because we have that fully paid house already. I'd love to have anyone's input or advise on our initial approach. I've been starting to educate myself as much as possible over the last few weeks and plan on keeping that up, as this is all very new to me. My friend recommended starting with a company called Destiny (by Margaret Lomas) and I've had a first few contacts with them. He had a great experience (stopped using them after the first 2 IPs) and they seem very nice, if anyone used them I'd also love to hear your experience. Their offer an initial course and 4 month of support to get you started and walk you step by step through the process of getting your first IP setup. Cost is 2k for the course and 4 month support and then $190/month as long as you use them for your mortgage (no lock in contract). This seems really appealing for us to get started. After a quick chat with their Mortgage broker they said that we are in a good position to use the equity of that first property to have deposits and then get the loans for up to 2 IPs in the 450k mark. Now the next step for us would be to to the course, and then really work on our strategy, continue learning and start working with them on finding that first IP, if all goes well maybe the second one too. Ideally we want it to have as little impact on our life as possible and add some financial freedom in 10-15 years time. We have a pretty simple lifestyle and don't need to become millionaires. Thanks for reading me! I'll surly keep going through this gold mine.
You choose mentors based on niceness. You dont want/need to be rich. No impact on your lifestyle. Do you really want to invest in property? Its a lot of debt and potential risk. You have no savings so will be borrowing everything. So likely to be cashflow negative. Alternatives might be putting savings in shares in super for 30 years?
Hi Chris, and welcome to the forums. You could certainly do worse than Destiny. The only problem with using their broking services is that they cross secure everything which is a high-risk strategy in terms of loan structure, so I'd probably rethink that side of things but their education will be good I'm sure.
Thanks for your points Trainee, I need to rephrase some of that as it's is indeed confusing. (English is not my first language :/) "Nice" is definitely not what I want to choose by, but with my little experience all I can base it on my friends experience with them and what I can read about them online. Do you have any recommendation on what to look out of? I didn't say we "don't" want to be rich or "no impact", I want to have a strategy that is balanced between have as little impact as possible and giving us more financial freedom. Thanks Jess, I was reading one of your posts about the cross collateral, learned a bit more about it and it makes a lot of sense to avoid it indeed.
We do a bit of work with Destiny clients, ie help them find suitable properties and manage their properties. I'm sure you'll be fine with them.
I've worked with Destiny clients as well...usually uncrossing their portfolios! But I definitely rate Margaret on the whole.
The problem is with that attitude, you will downplay long term capital gains (dont need to be a millionaire) and emphasise short term cashflow (want minimal impact on lifestyle). That is likely to lead you to regional (high yield) and or new builds (depreciation). This may result in worse results long term. So your dont need to be a millionaire attitude becomes selffulfilling. Focus on the long term. Cross col is also a big risk for you.
Yes, from what I was reading (keep in mind I'm just starting to learn) it can make more sense to aim for CG from the start. We have yet to really crunch numbers, if we can reasonably aim for that we will. And that makes a lot of sense, I wouldn't mind becoming a millionaire but I guess what I mean is we want focus more on minimizing risk at the start. I guess it's a bit early for us to know exactly what direction we want/can take, but that's good food for thoughts, thanks. Chris
You're right to minimise risk from the start, and educating yourself is a big part of that. The first properties can impact your long term wealth to a large degree due to the compounding effect of both losses and gains so if you can avoid newbie mistakes you'll have a great head start.
Welcome, @Christopher Kocksch ! You can learn a lot from this forum and do your own research. I did the same as well without paying for a course. If you are time-poor, that's another story. I totally agree with what @Trainee said above. Technical is one thing and Mindset is another thing in property investing.
Just reading this one article she wrote, I personally wouldn't waste my time with her course. Take bits and pieces perhaps from her book on assessing growth drivers etc for DD, but her underlying message is waaay too dangerous to kill a portfolio for my liking and I'd avoid crossing in 99% of cases. An excerpt from her article "In my opinion, choosing not to cross-collateralise will not provide protection against having to sell more than what the bank holds in the event of difficulties. It will, however, make it harder for you to easily capitalise on the increasing values and will be more costly every time you need to adjust or increase your loan". Then she says " Of course the major drawback is that, if you wish to borrow more money and the bank decides to revalue everything, then any properties which have lost value could create a situation where you won’t be allowed to do this." Umm yeah you reckon!! Full article. Why cross collateriliastion can work
Thanks so much for all your answers. I want to go into this open minded and my Mindeset will probably evolve with the process, so thanks for all your constructive words. I'm set on avoiding X collateral, my friend who worked with Destiny also did never do that. Ko Ky Naing, I'll do as much research as I can myself. What I like about their offer is that at least for our very first purchase they guide you through the entire process, from research, negotiation, inspections and all that. I'm someone who like to learn by doing so I think doing it with their guidance can be very beneficial. After that it can be another story.
@Christopher Kocksch The secret Bible for mega success.. retrieved from the lost ark. A word of warning...once you open the manuscript.....well.... you'll see. Or you won't.
What an article. She is wrong and not qualified to advise on this sort of thing. "This means that there is no protection in having your properties held by many different banks, as your lender’s power to recover monies due from you extends beyond the security it holds. " This is so obviously wrong that commonsense would suggest it is not the case. What happens if you default with one loan? The lender can take possession of the security and sell it. But loans with other banks cannot be sold. The lender would have to suffer a loss and then begin proceedings to force sales on properties which they don't hold as security. This may give the person an extra 6 months to 12 months to sells these properties themselves. If they had more than 1 property they could choose which one to sell.
I always felt her advice on asset protection was at best nonsense and at worst, fatal for portfolio progression. Only thing imo of interest to read are her tips on growth drivers. Though nothing mind blowing either.
