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  • Advice on Starting in Investment Property

    Hi All ,

    What advice would you give to a recent graduate with current income of around 20K-25K pa and ~40-50K+once they get a graduate job about how best to get started in Investment Property both in NZ (with the current market 'slump') as well as the Australian Market .

    Also thanks for all the contributions on my last post ,
    the deal didn't go through due to its overall level of attractiveness and financing issues.


    Many Thanks

  • #2
    if this is you i would advise you to live frugally and put together a decent cash deposit. Invest it conservatively in Kiwibank or Rabo, and add to it when you can. Keep a close watch on this site and also the economic forecasts from the trading banks.
    While you are doing this, think about what you want to acheive with property investing. Do you want to be a landlord for the rest of your life and retire at 50 with a fat portfolio of rental properties? OR do you want to buy, add value and sell, building up equity as you go and get yourself a mortgage free home relatively quickly and then decided what you want to do? There are hundreds more options, these are two more likely ones.
    Then learn as much as you can from people that are doing your option well. This is a great place to find such people.
    Learn to do quick maths on a property deal and watch for a deal that works for you. Don't rush in :-) Your $45k can quickly disappear if you have to prop up a negative cashflow or vacant house. Good luck!!!!!!.
    PS i am in the "add value" camp so PM me if you want to chat more about it.
    two ears and just one mouth.. for good reason.

    Comment


    • #3
      Princess is giving good advice. Since I am a buy and holder myself I would add, wait you are in no hurry the market will always be there and now doesn't look like a time to rush in. (Speaking purely about the NZ market)

      However take the time to educate yourself, not necessarily by paying someone for it, but instead by reading PT & other things such as books and get a real firm idea of a couple of markets (visit open homes, do background research on them reading etc www.stats.govt.nz is usually worth taking a look at). Then when cashflow positive properties or neutral properties start to pop up start buying taking care to ensure your LVR remains low so that you don't over expose yourself to further falls.

      Good luck
      David
      New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki

      Comment


      • #4
        Also get to know the area that you may be investing in.

        eg good streets, bad streets, transport arrangements, schooling, shops etc.

        Have a talk to property managers in the area.

        Try and talk to other investors in the area.
        "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

        Comment


        • #5
          Muppett,

          Streets are neither good or bad. Streets are just streets. People can be either good or bad, but not streets. Don't let anyone tell you otherwise. Streets are just streets.

          Also learning is not based on talking, but rather listening. Better advice might be to listen to property managers. It doesn't sound as cool, but the results might be more beneficial.

          Julian
          Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

          Comment


          • #6
            I for one Julian, wouldn't buy a house next to a Black Power house. Therefore if the street doesn't have very many houses in it I wouldn't bother.
            "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

            Comment


            • #7
              Originally posted by Julian View Post
              Muppett,

              Streets are neither good or bad. Streets are just streets. People can be either good or bad, but not streets. Don't let anyone tell you otherwise. Streets are just streets.

              Julian
              Sorry, but as cool and philisophical as that sounds, there are bad streets.

              A concentration of 'bad' people on an otherwise unremarkable street, will detrimentally affect that street in comparison to other streets. Therefore as a possible investment vehicle, it's a bad street.

              The word street has lost all meaning.

              Comment


              • #8
                How about buy your own first home?

                Preferably a bit of a do-up.
                Exert a bit of sweat and gain some equity/experience.
                The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

                Comment


                • #9
                  I agree with both princess and monid. I am a freshie, but have been doing holds and do-ups with intention to rent, getting immediate equity to buy, then letting natural capital gain kick in....growth can be exponential, so long as you know the market, and the money is in the deal WHEN YOU BUY...

                  Comment


                  • #10
                    The world is at your feet literally. There are so many things you could do but a conservative approach could be to make your first purchase an investment property rather than a principle residence. (when you are young there are may issues around relationships, moving for work etc also the obvious tax advantages.) Get something close to where you live with good cashflow. Avoid gimicks and spruikers. Read as widely as you can. Join your local property association.

                    Learn about how to get money, from banks and later from investors and partners. Employ experts but here is the catch.


                    Never let anyone put you into a company, scheme, structure, business or investment that you could not explain at a dinner party or to your family around the table.

                    Someone recently told me " I don't know how the structure (apparently to avoid a tax) works and I can not explain it but I have been told it is legal".
                    IMHO you need to be able to have a good working knowledge of the nuts and bolts of your investments and structures. You don't need to know how to do it yourself but you should be able to understand what you are doing. If you don't then slow down and reasses what you are doing, learn a bit more and take the next step.

                    While this market is flat try buying one Postive Cashflow Property every year or every 18 months.

                    Know that there is no such thing as a free lunch.

                    Learn how to manage tenants (via your property manager)

                    When the cycle moves back to a growth phase you will be streets ahead of most people.

                    Cheers

                    Comment


                    • #11
                      Great advice from Cashflow!!! Keep it simple :-)
                      two ears and just one mouth.. for good reason.

                      Comment


                      • #12
                        DrDM: Don't go anywhere near property for at least 2 years.

                        And make sure you open a KiwiSaver account to get that free $5000 from the government.

                        Comment


                        • #13
                          Originally posted by Green Fish View Post
                          DrDM: Don't go anywhere near property for at least 2 years.
                          Bit of an over-reaction, but, yes, sitting tight for a while may be a good idea.

                          As for good and bad streets, Yes streets are all different, that's why the 3 top choices are for location, location, and not forgetting location. Proximity to services, beaches, major roads, sunshine, wind etc. affects the price, as well as quality of tenant.
                          Last edited by Perry; 25-04-2008, 08:54 PM. Reason: formatting correction

                          Comment


                          • #14
                            Thanks Everyone for your incredible response , extremely helpful and Highly appreciated .
                            I hope to give a more elaborate reply on some of the points mentioned very soon .

                            Cheers

                            Comment


                            • #15
                              Muppett,

                              I might suggest you would buy a house next to Black Power if the deal looked good enough. Say, for example, Black Power had a place on Takapuna Beach and the place next door, which would otherwise be on the market for $8m, was on the market for, say, ten bucks. Then me thinks you would buy it. You might sell it to a bargain-hunter the next week for $6m.

                              Most people will usually buy if the terms are attractive enough.

                              My father paid thousands and thousands of dollars for cancer, but as the terms included nicotine he was pretty happy with the deal.

                              Julian
                              Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                              Comment

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