Tips for new property investors?

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gaaRa
Posts: 55
Joined: Fri Jun 28, 2013 3:35 pm

Tips for new property investors?

Post by gaaRa »

Good morning Home Loan Experts

I am the F&B manager at a large hotel in Brisbane earning about $80,000 a year. I already own a home where I live with my wife and son. Recently I have been reading a lot about real estate and about people who are making good money in it.

Do you have any tips for would-be investors? I imagine you work with many investors with their loans.

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Otto Dargan
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Re: Tips for new property investors?

Post by Otto Dargan »

Hi gaaRa,

Yes actually we interviewed a couple of property investment experts such as Peter Kouzilos AKA The Property Professor and Tony Hayek of Blue Wealth Property recently about the mistakes that new investors make and are better off avoiding.

Their first observation was that people tended to rush into a purchase thinking only of the short term benefits. This usually results in a bad decision with the investor buying a property which is not suitable to their investment strategy or has problems with it.

Another opinion was that new investors often did not prepare their finances accordingly before applying for an investment loan. Keep in mind that you will still need to meet the lender’s requirements before you get approved for a loan and things like excess debts or defaults or other credit issues can get you declined.

New property investors also choose a property based not on research but because their parents “told” them to, or because they “liked” it. Investing in property is a very big decision and you need to plan your purchase carefully to ensure that you will achieve your investment goals.

These are just some of the mistakes that could you cost you dearly while getting into real estate however you may also find it helpful to learn about what can affect property prices.

For example you may not have realised it but your purchase consists of two components, the land and the building. The building component depreciates in value over time which means that you should be spending more on the land component of your next purchase.

You should also look into the level of economic activity in the area since more spending in an area means that people will also be buying, selling or renting more. Similarly you should also research the population and demographic shifts since you need to know what kind of potential tenants there are so you can buy an appropriate type of property. An area where the government has built more public facilities also helps to stimulate the local property market.

Hopefully these tips will have given you some ideas on what to do or not to do while planning your investment strategy.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

gaaRa
Posts: 55
Joined: Fri Jun 28, 2013 3:35 pm

Re: Tips for new property investors?

Post by gaaRa »

Great, I think these will be really helpful. Do you also have an idea on how much I should be borrowing? I trust my accountant but I’d also like to hear what a mortgage brokers thinks I can afford to get on my salary.

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
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Re: Tips for new property investors?

Post by Otto Dargan »

Hi gaaRa,

It is not possible for us to determine how much you can afford to borrow without knowing all your details. You can still try out our How Much Can I Borrow Calculator which should give you a better idea about this once you enter in all your details.

Our calculator will assess your situation based on the methods used by our lender’s credit departments and will work to maximise your borrowing power. If you feel that it is low you can also work on improving it by either picking a lender to whom your situation is more favourable.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

danny elfman
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Joined: Tue Jul 02, 2013 6:52 pm

Re: Tips for new property investors?

Post by danny elfman »

I’m actually already past the research stage and am going down to see a few houses this weekend. Do you have any suggestions on how I can spot a bad deal?

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Otto Dargan
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Re: Tips for new property investors?

Post by Otto Dargan »

Hi and welcome to the discussion danny elfman,

If you are going to speak to a real estate agent then you definitely should read our blog post on what to ask your real estate agent to make sure that you get a good deal.

For example did you know that properties in Australia are usually sold for 10% less than their quoted price (depending on the market) so you should speak to the agent to negotiate prices. Some sellers will also tell you right away what their minimum price is, while others may hint at this.

It is also a good idea to ask about previous offers for the property and how many were declined. This will give you an idea of how much the seller is expecting you to offer as well as what other buyer thought of the property. The seller may also have an urgent need to sell which can help you get a good bargain so ask them why they are selling their property.

Aside from these things you should also look up the local market and the local demographics to ensure that the area is suitable for you. Keep in mind that the property purchase should be a carefully calculated decision and you should take your time with it.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

danny elfman
Posts: 47
Joined: Tue Jul 02, 2013 6:52 pm

Re: Tips for new property investors?

Post by danny elfman »

Yea yea, I had thought of some of those but I really didn’t know about the 10% thing, that’s an eye-opener for sure! Speaking of the local market, the house is a bit far off so I’m a bit worried. Any idea about that?

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Otto Dargan
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Re: Tips for new property investors?

Post by Otto Dargan »

Hi danny elfman,

A property in a remote location which appears to be hard to sell or rent will definitely have less chance to be accepted as security by lenders. Most lenders actually have a postcode guide which determines their lending policies according to the location. If you have the postcode with you then just try our Postcode Location Guide and it should tell you what restrictions you may face while getting an investment loan.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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