Investment property

Remove this Banner Ad

bulldogrob said:
Hi all

Just wondering if anyone has a investment property out in bigfooty land? IF so what are the pro's and con's?

I have a mortgage on the home I live in would I need a deposit for the investment property?

thanks rob
Click to expand...

I lived in my mortgaged home and had a couple of mates pay board. One moved out to buy his own home so i rented out mine and we went and lived with him. It worked out $50 a week cheaper to pay him rent and and rent mine out. It's also negatively geared which is handy and any parties now aren't at my house which is a bonus.

I've had an old couple rent my house out and have been really lucky in that respect as i have heard some horror stories. All in all i'm a fan of the investment property as i've had a good experience (so far).
 
The reason to buy investment properties is to firstly make enough on the rent so that it is positively geared (doesn't need to happen initially but it should be the goal), and secondly to see the investment increase in capital over the years so you have a decent profit sitting there if you decide to sell.

It can be fruitful, but you need to do your research into areas/suburbs which will lead to the above as doing it blindly can be disastrous.

You always will need a deposit, how you access it depends on your situation. Could be cash, could be equity in your current property.
 

Log in to remove this ad.

yep good advice..goal is to get it positively geared..

i have one but i rushed into it got it at the wrong time, payed too much, not a great area and it has made no capital growth...but it is now positively geared someone is paying it off for me. I will hold onto it for ten years and try not to think about it.

even though i fkd up with my first one i wont make the same mistakes next time..i am looking at getting another.
 
what do you think of quest? seeing as though it's banners are plastered all over bigfooty
I like the idea of not having to manage it...
 
InspectorRex said:
what do you think of quest? seeing at though it's banners are plastered all over bigfooty
I like the idea of not having to manage it...
Click to expand...

Quest is horrible. Minimal capital gains if any, thats why we are all in the property game, capital gains. The return is ok but there are plenty of properties out there with the same return, you just need to do your research.

If you're after big yield and capital gains, look for a property on a corner block (or a block with rear access) with a granny flat. Put up a fence between the house and granny flat and rent out the 2 seperately. Yield can often be 10% plus (positively geared)

Takes a while to find one and they usually have a bit of a premium but well worth it with the yield you can get

A buyers agent can come in handy when looking for a particular type of property such as this if you dont have the time to scour the internet
 
Thanks lynchy
is there anything where you can just pay someone to manage the property? such as disputes,tenancy, house maintenance etc
I basically don't ever want to meet any tenants and just want rent,capital growth, obviously with the latter being a long term goal.
But yeah I just want to buy and forget about it and just receive rent and be notified of any major issues arising, don't want to be checking in or having to visit the property every few weeks,months etc!

is this possible or is it asking too much?
 
InspectorRex said:
Thanks lynchy
is there anything where you can just pay someone to manage the property? such as disputes,tenancy, house maintenance etc
I basically don't ever want to meet any tenants and just want rent,capital growth, obviously with the latter being a long term goal.
But yeah I just want to buy and forget about it and just receive rent and be notified of any major issues arising, don't want to be checking in or having to visit the property every few weeks,months etc!

is this possible or is it asking too much?
Click to expand...

Of course there is, they are called property managers. Most realestate agencies offer this service. All you ever have to do is sign the lease agreement, you will have nothing to do with the tenants, rent, inspections, repairs etc. I set an emergency repair limit of $2,500 meaning if there was an urgent repair, like the hot water system goes, the agent could organise it, as long as they had gotten 3 quotes (industry norm) and it came in under $2,500, without having to contact me. That never did happen as any repairs that were needed were never urgent but it's a good idea, you can set it as little or as high as you like. Will depend on what you are leasing.

The property managers usually charge an upfront payment (usually the first 2 weeks rent) and from then on between 6 and 10% of the total rent. The more properties you have the less they will charge.
 
do you use a property manager lynchy, got any recommendations for reputable ones out there?
They charge the first two weeks rent? isn't that a bit steep or is that sort of like a bond?
and are you supposed to go to the property manager after you have settled or can you go during (after deposit etc) so that they have tenants lined up pretty much a day or so after you've settled?
 
InspectorRex said:
do you use a property manager lynchy, got any recommendations for reputable ones out there?
They charge the first two weeks rent? isn't that a bit steep or is that sort of like a bond?
and are you supposed to go to the property manager after you have settled or can you go during (after deposit etc) so that they have tenants lined up pretty much a day or so after you've settled?
Click to expand...

I had ones in Perth for my properties there and also have ones for my properties in the US. Havent owned a property in Melbourne so sorry I cant recommend one though you can get reviews just by searching google. Say your properties in South Yarra, just google "South Yarra property manager reviews".

It's also best to use a PM that is located in your area, not only will they know the area well and how to market the property, they will be more inclined to do rental inspections as the property will be located close by. I'm currently renting and the PM for my property hasnt done a rental inspection since I have been there (12 months), I'm guessing because they are located about a half hour drive away and just cant be bothered. There are a lot of PMs out there like this, very important to choose one you have confidence in, rental inspections are very important, for all you know damage could slowly be done to your house over months if it's not inspected.

You can think of it as a bit steep, I did when I first rented but the first 2 weeks rent is payment for the advertising of the property, payment for the agency to do reference checks on possible tenants, payment for home opens they do and also payment for themg etting the lease agreement organised. All the payments you make to the PM are tax deductible so in some cases you will be getting nearly half back, of course depending on what tax bracket you are in.

Having said that, I have also had a go at renting the property myself, without a PM. Big hassle if you work full time. Good idea if you're working full time or are retired. My GFs mum manages her and her husbands 3 properties herself as she is a part time teacher, she quite enjoys it and obviously saves a bit of money.
 
Any good areas to buy property where you can generate some good rental cash flow??

I'm looking at Moe, Nhill, Mildura to buy my first investment property soon and build my portfolio.

If I can buy a home for 60,000 in Nhill and rent it out for $125 a week, thats 500 a month in rent with a 20% bank deposit going in for the loan I'll have 48,000 to pay off at 250 a month (mortgage repayment estimate).

The house is paying itself off. I don't see many downfalls other then buying a shodder property that requires a lot of fixing, can anyone run me through the pros and cons as well of the nitty gritty purchase of the property itself and what to look out for?
 
TheUndertaker said:
Any good areas to buy property where you can generate some good rental cash flow??

I'm looking at Moe, Nhill, Mildura to buy my first investment property soon and build my portfolio.

If I can buy a home for 60,000 in Nhill and rent it out for $125 a week, thats 500 a month in rent with a 20% bank deposit going in for the loan I'll have 48,000 to pay off at 250 a month (mortgage repayment estimate).

The house is paying itself off. I don't see many downfalls other then buying a shodder property that requires a lot of fixing, can anyone run me through the pros and cons as well of the nitty gritty purchase of the property itself and what to look out for?
Click to expand...
Why do you want to buy in Nhil? Just because it's cheap? A couple of things concern me about Nhil. 1 is that the population is a touch over 2,000 and 2 is that they only have the 2 main industries; farming/food processing and servicing the main road running through the town. The 1 food processing company Luv-a-Duck employs a huge number of the towns population. Can you imagine if the company shut down, the population would suddenly halve, your property would be worthless. What happens if they change the trucking route and they suddenly use a different road going through a different town. The other problem is that there are 40 properties up for sale with none having sold in the last 3 months, capital gains are just not there with that sort of sales history. If you want to buy the property and pay it off over 30 years you'll have to pay a total of $55,000 interest. Renting it out means you'll have to rent it out for 440 weeks / 110 months / over 9 years without a vacancy just to break even if you're not earning capital gains. Sorry about the lay out, my enter buttons not working :confused:
 

(Log in to remove this ad.)

Lyyynnnchy said:
Why do you want to buy in Nhil? Just because it's cheap? A couple of things concern me about Nhil. 1 is that the population is a touch over 2,000 and 2 is that they only have the 2 main industries; farming/food processing and servicing the main road running through the town. The 1 food processing company Luv-a-Duck employs a huge number of the towns population. Can you imagine if the company shut down, the population would suddenly halve, your property would be worthless. What happens if they change the trucking route and they suddenly use a different road going through a different town. The other problem is that there are 40 properties up for sale with none having sold in the last 3 months, capital gains are just not there with that sort of sales history. If you want to buy the property and pay it off over 30 years you'll have to pay a total of $55,000 interest. Renting it out means you'll have to rent it out for 440 weeks / 110 months / over 9 years without a vacancy just to break even if you're not earning capital gains. Sorry about the lay out, my enter buttons not working :confused:
Click to expand...

I'm certainly no expert like yourself Lyyynnnchy that's for sure. Thanks for the advice about Nhill,

What do you think about Mildura? Any other areas in Victoria you suggest I look at to buy my first investment property?
 
If you're looking for large yields for cheap prices then rural towns are undoubtedly the way to go but they can be very risky. The town must have a large number of industries, you want mining, agriculture, tourism, large number of schools servicing of a close by highway as well as any possible government departments. You also want a large number of school. Another thing to look for is a reasonably active property market, if for whatever reason you want to sell, you want to be able to actually sell the property
 
Lyyynnnchy said:
If you're looking for large yields for cheap prices then rural towns are undoubtedly the way to go but they can be very risky. The town must have a large number of industries, you want mining, agriculture, tourism, large number of schools servicing of a close by highway as well as any possible government departments. You also want a large number of school. Another thing to look for is a reasonably active property market, if for whatever reason you want to sell, you want to be able to actually sell the property
Click to expand...

You make lots of good points.

It's a daunting task (property buying) I'm in a position to do it and I don't know where to start, :S
 
I myself would never invest in a small town. If I was going rural it would be a large mining town, the risks are just too high with small towns
 
Lyyynnnchy said:
Population, number of industries, number of schools, housing, public transport if any, tourism. Each person will have a different perception as to what and how many makes a small, medium or large town
Click to expand...

Thanks mate, I've been looking at that forum too, it's helpful, I'll keep doing my research before I make a move that's for sure.
 
TheUndertaker said:
Thanks mate, I've been looking at that forum too, it's helpful, I'll keep doing my research before I make a move that's for sure.
Click to expand...
If you're a bit hesitant to ask questions, search for posts from lynchy. That's me and I had the same questions as you will have 6 years ago so it might help out
 
You must log in or register to reply here.

Similar threads

Puddy
Using Superannuation to invest in real estate
Replies
0
Views
352
Puddy
Puddy
Cotchin 9
Advice/Investing/Multiple Income Streams
Replies
4
Views
1K
Cotchin 9
Cotchin 9

Remove this Banner Ad

Back
Top