Newbie looking for advice

[ratz]

Iam lookinng for my first investment property. I have a pre approval loan from the bank without any conditions apart from the loan limit. My goal is to buy more properties. I'm a goverment employee on a 39% tax bracket.

Very keen to get started.

Question?

How can I get a discount on a property with a cash offer?

What type of home loan is best for me? IO or Interest and principle?

Any help would be greatly appreciated.

[SuperDad]

How can I get a discount on a property with a cash offer?

Figure out the discount you want, and make a cash offer at that price.

What type of home loan is best for me? IO or Interest and principle

Search the forum - this is one of the more frequently discussed questions. But if you are looking to buy more properties (as you state), then I would go for IO.

Finally, I don't mean to sound like a prat, but if you don't know the answers to these kinds of question, you should not (in my opinion) be thinking of purchasing property yet. The time when anybody could have made money in property is over. Get some education, either by asking more questions on this forum, reading books and magazines, enrolling in a course, or all of the above.

But that's just my opinion.

Paul.

[revdev]

Nor would it be a wise idea to make a cash offer (I assume you mean cash unconditional) for your first property. That is fraught with danger and pitfalls for the unwary and the less experienced.

Ratz, there are many many threads covering the first steps of PI, and most of the replies revolve around YOU having a very clear idea of what you want and why you want it.

Cheers
G

[xris]

Hello ratz,

How can I get a discount on a property with a cash offer?  

In the same way that you can get a discount by making an offer with no building inspection clause - you don't put in a finance clause. This supposed technique is amazingly overrated. As SD says, just make your offer and see what happens. The fewer conditions the more attractive it will be.

 
What type of home loan is best for me? IO or Interest and principle?  

Depends on the person but generally an IO is preferable because monthly cash flow will be better. If you are looking to build a portfolio this will be very important.


Revdev, why is omitting a finance clause fraught with danger?

xris


PS anybody. What is a php code?

[SuperDad]

revdev wrote:

Nor would it be a wise idea to make a cash offer (I assume you mean cash unconditional) for your first property. That is fraught with danger and pitfalls for the unwary and the less experienced.

xris wrote:

Revdev, why is omitting a finance clause fraught with danger?

SuperDad writes:

I understood revdev's comment to relate, not just to omitting a finance clause, but omitting all clauses. That is fraught with danger if one has not completed one's DD prior to making the offer.

It takes time and experience to learn how to do one's DD quickly and comprehensively before making offers. I wouldn't recommend making cash unco offers unless you have these skills. These skills come as a result of actually doing DD - going through council files, walking through properties with builders, paying for valuations, having a solicitor check the title and other documents for you before making an offer.

Ratz, I'm no expert. I've purchased three properties in the last 7 years, two of which have been my own homes. (I say this so that you know that I'm not a big-time investor who knows all there is to know.) But now I'm in the business of making offers, I have been spending much more time honing my DD skills. If you want to make cash unco offers, make sure you know how to do your DD.

Paul.

[revdev]

Hi xris,

Yes, I read this as ratz going in unconditional , boots and all on offers. A valid technique of course, but for person negotiating their first IP, an unneccesary level of risk.

But it must be said, I am a fairly cautious investor.

G

p.s. xris you have the most creative quote setup I have ever seen

[xris]

p.s. xris you have the most creative quote setup I have ever seen

Thanks for the compliment. I thought I had it sussed a while ago but obviously I have forgetten exactly what to do.

[ratz]

much apreciated

I can see alot of homework is needed on my part. excuse my ignorance what is a DD?

Looks like I need to attend a few more IP seminars.

I am a little scared to put an offer now.

[SuperDad]

Hi ratz,

"DD" stands for due diligence. Listing what needs to be covered in the course of doing one's DD on a property is too long a task to be undertaken here. Use the search function and search for "due diligence". This should help you find out what you need to do.

Out of interest, which IP seminars have you attended?

Paul.

[revdev]

I can see alot of homework is needed on my part. excuse my ignorance what is a DD?

Looks like I need to attend a few more IP seminars.

I am a little scared to put an offer now.

Don't worry about it Ratz, we have all been there! Books, industry mags, seminars, your local PIA and mentors will all help you to learn.

All the best!
G

[ratz]

thanks superdad

I haven't attended any seminars yet. I am going to the Wanganui investment Property association which started this year.

May be we need to find someone to point us in the right direction before we make an offer.

really appreciate the advice.

[SuperDad]

Great move joining your local PIA ratz!

I read a book years ago, published by the Consumer's Institute, entitled How to Get the House You Want. While this was aimed at homeowners rather than investors, it covered much of what one needs to know about due diligence. Another awesome book I read early on, and keep coming back to, is Lisa Dudson and Andrew King's The Complete Guide to Residential Property Investment in New Zealand. Now, it is not as complete as it purports to be, but it is an accessible and somewhat comprehensive introduction.

If you keep on reading this forum and making posts, you'll find that there is no shortage of people willing to help point you in the right direction.

Paul.

[ratz]

Thanks everyone

My wife has been reading the forums for a year or so now. This is where our learning has come from. I have recently started reading also and I have learnt a lot in a short time. There is a lot more to do yet but I am keen and focused.

My wife has been learning through Investment DVDs and books.

Putting things into action is the crucial part. One step at a time. Getting the finance is the easy part. Going through the process of offers and the rest appears to be the area where we need most confidence.

I have had preapprovals in the past and it amount to nothing because we were not confident enough. Now I think we are confident enough to take it one step at a time.

[JohnL]

Yes, making the offer is one of the key psychological barriers you need to overcome. While some people leap in with no knowledge, others have attended every course available and read every book ever published but still won't take the leap.

There have been many threads on this topic as well as its your own mind set which ultimately determines your long term success.

There is no replacement for action so start making those offers. Just put in a due diligence clause as you have finance pre-approved and get into ACTION.

You are going to learn so much from that first property.

John

[SuperDad]

Hi again ratz,

I was just looking through my stash of NZ Property Magazines, looking for a certain article, and I came across something that made me think of your question about DD.

The May 2006 issue has an article on due diligence investigations, on pages 42 and 43. Reading it again, I see that it is very good. - it might be something to take a look at.

While I'm here, a agree fully with John's comment about putting offers in. As long as you have an "out" (in the form of a DD clause), you are relatively safe. You will of course first need to learn which clauses to put in, but once you start putting offers in you will learn so much, and you will overcome the first hurdle which is presenting an offer.

Good luck,

Paul.