Help! Freshie/Newbie/stuck... my next step?

[xkm]

Hi All,

I am from Auckland and I am new here. I have been browsing this forum for a week or so. This forum is full of information and alot of help from each other Like everyone else, I am very keen on properties~

em.... I dont know whether I am a newbie in investment properties, but I think I should briefly introduce my IP history.

1) I bought a piece of land about a year ago with a friend and sold it half a year later. we might abit of profit, not alot but at least it gives abit of confident the bank a/c

2) 2 months ago bought another property was about 20% under registered value which expects to be completed end of year (again with friends) This property was introduced by property finder. I am planning to sell it once it's completed (you will see why later)

3) just bought a property lesser than $100k in rotorua, again with friends and introduced by property finder. This one is a buy and hold long term

Out of all 3 deals, I did very minimal because my friends virtually handled all the processing, and all of us are newbies. So to be honest I only know the process, but never really put it in practice.

I have been reading a number of books, including dolf's books, Kieran's Grow Rich in Property Cycle, Dorien's Lease option course (trying to understand the stuff at the moment). I must say I have to thank all these ppl for the education that they provide.

As far as education is concern, I think I have certain degree of knowledge, but as far as practicing is concern, I am totally new....

Currently I am abit stuck, I've just turned 26 years old, and by the end of year, i think I should have around $70k. Since I am living in a crowded house, I always wanted to buy my own home, and I set a goal to myself that I will get a $300k house for myself to live in by the age of 30, and the house is free of mortgage. I know some ppl think I am crazy (some friends think I am ) so I am not sure whether this is realistic. But having said that, I still got 4 years to go, so I think it's achievable (well, should be able to get close to that figure. Oh btw, if not having such goal in mind, I probably wouldn't even know this forum exists)

Anyway, I've been investing with friends and it's nice to invest with them, but I felt that my goal is abit different because they would like to buy and hold for long term and accumulate as much properties as possible, whereas I would like to accumlate enough cash/equity so that I can have a free mortgage house by 30. Then after that, I would like to hold IP long term and generate passive income from properties. I would like to ask, is it me who is thinking wrong?????

The next question I would like to ask is, most of the people here I believe works full time, how do you manage your time to look for properties? The reason I ask is because if I keep on doing what I am doing (my job has nothing to do with properties, and I dont have much exp in properties either, other than education from books) then there is no way I could achieve my goal.

And, how do you look for properties? I mean with the property press that has so many houses, do you look at every single one??? (I believe most ppl won't, unless u works full time in properties) I am confused.....

If my goal is totally unrealistic, please wake me up. However, if it is achievable, would someone please shine some light on me , and give me some suggestions/advices as to what's my next step? (e.g., mentor? more education? buy/hold? flipping etc etc?)

Thank you very much for your time reading my post~

Happy Investing everyone~~~~~~~~~

[Monid]

Hi XKM

Your goal is certainly acheivable, but almost certainly it is high risk, especially in the current market. What I mean by this is that to generate that sort of money from property alone in 4 years would require a fair amount of property trading etc, which is tricky in a market which everyone seems to think is going to either remain steady or go downwards.

As you note this would also take an almost full time attention to the market, and being very aware of who your market will be and how you will change/remarket the properties.

Not for the faint hearted and a very steap learning curve, some small possibility of success, but a much higher probability of being financially worse off.

Some safer alternatives:
1. Buy a cheaper house. One thing which I think holds people back is that they want everything right now. We have friends who are constantly bemoaning the fact that they can't buy a house. When every I point out to them that they are professionals earning a good whack of dough, and banks would fall over themselves to lend to them, she says yes, but properties in the areas we want to live in are too expensive... We bought a cheap place out west as our first house, and have since then bought another 4 properties on the back of that first house...

2. Buy a house and invite your current flatmates to share it with you, for slightly less rent than they currently pay each... That way they pay off your mortgage, and once it is clear you can kick them out...

3. Continue as you are, it sounds like you have a good opportunity to learn with your friends some of the tricks of the trade.

Hope this is of some help
David

[JohnL]

Your goal is certainly achievable.

You didn't mention structures and tax so not sure of what you have been doing, but there are plenty of threads on this topic. Basically you need to trade in a different entity than you buy and hold. You can't use companies that you own due to 'tainting' issues. You will be paying tax on your trading profits and need to register for GST. If you don't get it right, not only could you have a huge tax liability if you don't declare your trades, any buy and holds that you eventually sell will be taxed as if you traded them.

Davids suggestion re flatmates is one option for your own home. I know a young man who bought a house which had three studio units on the back. He used a trust and along with some flatmates had a very strongly cashflowing investment property as his own home. With a trust and a property like this, you can even be paying rent yourself. The loan is fully tax deductable and being paid off by others.

Another school of thought is to always rent, certainly in the shorter term. There was a good thread on this topic as well. Renting in an affluent area is much more cost effective than buying in that area. As a tenant you are taking advantage of the fact the house has a low rental yield. Then all your focus is on your investments. Once you have great success in this field, you then look at your own home, paying cash and without reducing your ongoing investment income.

Just some thought starters.


John

[whitt]

Congratulations you have come this far. Another valuable thing to do is immerse yourself with other successful investors.
Attend a investors association and turn up to meets etc.. You can learn so much in books but you learn so much more talking in person too.

[toby]

To achieve the goal you want you may be better off doing a bit of both. I mean trade and B&H.
With the right entity structuring you can shift the debt from your home to your rentals, however I believe you need to own that home first.

You maybe better off purchasing a home in which you can realise some equity by renovating or the like.
I'm not suggesting this, but some people will live in a home reno then sell and repeat until they get the house they want.
Trading is just a business like any other, so if you'd prefer to sell widgets then you might consider that.
Personally I wouldn't be to concerned with "what the market is doing", a deal is a deal is a deal.
Whatever you do, do it full noise.

[xkm]

Thank you Monid and JohnL,

em... I am currently working as an employee, so I dont have any special structure or anything..... but I am trying to figure out what sort of tax structure that I am going to use.


Whitt, you mentioned that I should try to turn up in investors association meetings, but where can I find one? I am living in Auckland (though I dont mind travel down south during the weekends). I know there is a lunch next saturday organised by Propoholic, which I am going to attend.

Toby, I noticed that you have 2 websites buying and selling houses. Do you mind me asking how did you get started? were you working (employed) as an agent, or property related job before? Cause I am interested to know whether you have a solid background in properties and finance. I am abit struggling managing my time at the moment...

[muppet]

Hi xkm

As part of your education you should also read some of the many property books that are available.
Do a search on PropertyTalk for the various threads that are about books.

Also there are two monthly property magazines that carry very good articles.
They also list the Property Associations that are around the country.
The NZ Property Magazine has a monthly roundup of what the Associations are doing.

The link to the list on PropertyTalk is: http://www.propertytalk.com/componen...rt,0/search,*/

There is also a forum on PropertyTalk for the various Property Investors Associations to list their up and coming events.

Regards

[Propoholic]

Hi xkm

The Auckland Property Investors Association(APIA) meets once a month at the Ellerslie Convention Centre. Contact Karen Farrell ( 09 3799692, [email protected]) for membership details).

A bit of recommended reading for this weekend (you can purchase at Whitcoulls) :-
Residential Property Investment in NZ: Lisa Dudson & Andrew King
Grow Rich with the Property Cycle: Kieran Trass
NZ Real Estate Investors Secrets: Graeme Fowler
Property Tax, A NZ Investors Guide: Mark Withers

Read the above and you will be half an expert!

[Hec]

Hi XKM

Your goal is absolutely definitely achievable through trading. Only way it is risky is not knowing thoroughly your market area and what the market is doing.
If you can stick with 3 bed or more with garages.(easiest market to sell)
Up your goal to $500k, and if you dont quite reach it (say $400k) then that is not so bad is it.
Absolutley first step, pick your market areas and get to know those areas backwards. That is YOU know those areas, not what others or agents say.

Go for it !

Hec

[whitt]

xkm

Whitt, you mentioned that I should try to turn up in investors association meetings, but where can I find one? I am living in Auckland (though I dont mind travel down south during the weekends). I know there is a lunch next saturday organised by Propoholic, which I am going to attend.

Yes. Auckland has a great property investor association network.
The price is minimal considering a 12 month sub to Nz property mag is included. You have alot of meets a month to choose from in AKL.

- sattelite meets eg, east, west, central, north, south. (groups of about 20)
- Big Akl meets. (hundreds of people attend)
-commercial meets
-and for the under 35 a young investor meet


And of course another good place to start is PT lunch Saturday or the charity event, see you there.

[AustinWong]

xkm,

My first thoughts about those who do not think you can achieve your goals or think you are crazy..

Have they tried to achieve what you are doing now? Or failed or suceeded? The saying as I recall is to get advice abot property investing from property investors...not your mates.

I would suggest strongly that your goals are highly achievable and I wish you all the best. I unfortunately am not able to advise you of how to achieve it, but have read of many who have achieved greater goals.

As for property trading becareful you do not taint your other property investment plans.

Keep well and all the best.


Lawrence