What mistakes did you make when you first started in IP's?

What mistakes did you make?

What would you do differently with the benefit of hindsight?

 

Don't rely on 'experts'. Seek not only advice but education and do your own due diligence.

 

+1000

 

Create more cash flow at the very beginning. Not positive cash flow properties necessarily but set up businesses in conjunction to property.

 

CF has been my main hurdle so far. What do you mean about setting up businesses in conjunction to property?

 

i would have bought houses instead of apartments. Greater land components generally.

 

Hi Tim & Chrissy
my business now pays for properties - that is now my main form of real estate. I purchased my first 10 properties before I set up a business. Going back now, I would have set up the business a lot sooner.

 

Is that through a trust? I was planning on setting up a Testamentary Trust so I can pass the properties onto the kids, protect the properties from divorce and for the tax advantages.

 

I bought my first IP in St Albans, Melbourne in 2005 for 205k, a triple fronted brick veneer house on nearly 900m land. I was dreaming of building townhouses there one day. I was a very conservative and risk averse investor, I plonked all my savings 160k into the loan 'cos I did not know any better. I should have bought a couple of properties with that 160k making up several deposits. But I was risk averse. Interest rates went quite high in 2008/2009 and in hindsight, it was good I put most of my savings against the loan of 205k because the BMR rent from my friend was barely covering the interest payments with the interest rate so high.

I sold that St Albans IP in 2009 for 340k and promptly invested interstate in Brisbane in 2010 for a 330k dual living house. I should have bought some period house in Albion, Melbourne for approximately 296k in 2009. That same period house in Albion would now be 520k. The 330k brisbane house hardly moved after the devastating floods of 2011 even though it got rent of $420. The St Albans house is being rented out at $310 pw by the new owners. But if I had just stuck to my patch Melbourne and didn't foray into other states like Brisbane and Logan in 2010, I would not have developed my understanding and confidence on how to identify good properties in Logan/Brisbane and make subsequent good purchases and helped others to do the same. So i guess there was a reason I had to make those mistakes.

 

Investor buying properties in price range of pre-approval limit.

Pre- approval limit should be treated as max borrowing capacity!

IP buying should be based on Due Diligence and based on one's overall strategy.

 

My mistake was pre-IPs.

I bought my own place first and fixed my PPOR home loan for 15 years at a crazy interest rate.

It held me back from investing for about 3 years while I waited for my break fee to come down from $40k to sub-$20k then bit the bullet and went out and dropped nearly $1mil on IPs in 6 months (my borrowing capacity exploded when I broke the loan – my rate dropped about 3% and I went interest only).

Lesson: don't go direct to the bank–use a mortgage broker.

 

when i first started probably my biggest mistake was believing what the agent/vendor says. I was a little naive ...and on one deal it bit me bad. Managed to get out of the deal but lost around 5k along the way. I vowed to never let that happen again. Went straight to Borders/dymocs and bought a whole host of books on certain topics.

 

Looking at St Albans now you would have got 450+

 

My first property I bought I made all the mistakes. It was a PPOR that ended up a rental, so in my inexperience my heart lead the negotiating (or lack thereof - I was negotiated upward ) it was high maintenance, and just not a great buy. Also on selling I got played by my RE who just wanted a quick buck. BUT - I was lucky and bought just before Perth boomed, and sold at the top so it wasn't all bad. Also learned to deal with tradies and perform reno's from 2400 km away. Good skills to have learned.

 

I bought land.

On an island.

I bought 2 blocks for 20k each. Sold one 10 years later for 60k. The other for 18k (post boom).

Stupid.

After a decade of rates, buying/selling costs I would have been better off putting the money in an online bank account.....

 

My first mistake was procrastinating about buying an IP even though I had done the research and knew it was a great buy.

 

I wouldn't have locked my loan in for 8.5% for 5 years!

At the time it seemed like a good idea lol

 

I do this all the time. It has cost me a few good buys

 

My mistake was trying to invest in shares to help build up a deposit faster - it did the opposite. That, and beginning renovations before the place was even valued. Heh.

 

same mistake I am doing