Join Australia's most dynamic and respected property investment community

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

Discussion in 'General Property Chat' started by Tim & Chrissy, 16th Dec, 2015.

Tags:
  1. Tim & Chrissy

    Tim & Chrissy Well-Known Member

    Joined:
    5th Dec, 2015
    Posts:
    813
    Location:
    NSW
    What mistakes did you make?

    What would you do differently with the benefit of hindsight?
     
    Xenia likes this.
  2. Pins

    Pins Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    100
    Location:
    Melbourne
    Don't rely on 'experts'. Seek not only advice but education and do your own due diligence.
     
    Leo2413 and Tim & Chrissy like this.
  3. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,754
    Location:
    Sydney
    +1000
     
  4. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,347
    Location:
    4/136 The Parade Norwood, South Australia
    Create more cash flow at the very beginning. Not positive cash flow properties necessarily but set up businesses in conjunction to property.
     
    Tim & Chrissy likes this.
  5. Tim & Chrissy

    Tim & Chrissy Well-Known Member

    Joined:
    5th Dec, 2015
    Posts:
    813
    Location:
    NSW
    CF has been my main hurdle so far. What do you mean about setting up businesses in conjunction to property?
     
  6. charttv

    charttv Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    87
    Location:
    Perth
    i would have bought houses instead of apartments. Greater land components generally.
     
  7. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,347
    Location:
    4/136 The Parade Norwood, South Australia
    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.
     
    Last edited by a moderator: 4th Nov, 2016
  8. Tim & Chrissy

    Tim & Chrissy Well-Known Member

    Joined:
    5th Dec, 2015
    Posts:
    813
    Location:
    NSW
    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.
     
    Last edited by a moderator: 4th Nov, 2016
  9. Beanie Girl

    Beanie Girl Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    243
    Location:
    Melbourne
    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.
     
    Summersky, trinity168, samiam and 5 others like this.
  10. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,078
    Location:
    Australia
    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.
     
    Tim & Chrissy, Leo2413 and Terry_w like this.
  11. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
    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. :)
     
    Tim & Chrissy likes this.
  12. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,754
    Location:
    Sydney
    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.
     
    Jess Peletier and Tim & Chrissy like this.
  13. ross100

    ross100 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    158
    Location:
    Melbourne

    Looking at St Albans now you would have got 450+
     
  14. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,773
    Location:
    Perth WA
    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.
     
  15. hammer

    hammer Well-Known Member

    Joined:
    28th Aug, 2015
    Posts:
    416
    Location:
    Darwin
    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.....
     
    4point5million and Tim & Chrissy like this.
  16. rhinsor

    rhinsor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    437
    Location:
    Perth
    My first mistake was procrastinating about buying an IP even though I had done the research and knew it was a great buy.
     
    Coota9 and samiam like this.
  17. Johnny Cashflow

    Johnny Cashflow Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    739
    Location:
    SA
    I wouldn't have locked my loan in for 8.5% for 5 years!

    At the time it seemed like a good idea lol
     
    Sonamic likes this.
  18. Johnny Cashflow

    Johnny Cashflow Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    739
    Location:
    SA
    I do this all the time. It has cost me a few good buys :(
     
  19. joel

    joel Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    783
    Location:
    Adelaide
    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.
     
    Gingin and Pins like this.
  20. samiam

    samiam Well-Known Member

    Joined:
    5th Sep, 2015
    Posts:
    525
    Location:
    on my way
    same mistake I am doing