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Advice on investing in property

Discussion in 'Real Estate' started by Mezma3, 11th Oct, 2011.

  1. Mezma3

    Mezma3 New Member

    Joined:
    11th Oct, 2011
    Posts:
    4
    Location:
    Melbourne, VIC
    Hi Everyone,

    Just discovered this website and the information that is available is incredibly useful :) I would really appreciate some advice on investing in property in Melbourne.

    My husband and I currently have a mortgage on a home in the S/Eastern suburbs which we have had since 2007. We are at the stage where we are looking at property investment options and have been in contact with a company called the Australasian Investment Group based in Melb. They specialise in helping people get into the investment property market.

    Has anyne heard of the company or had any experience with them? They only deal with selling 'Off the plan' properties because the, as they explained, the tax benefits are better. They also have brokers who organise the finance for clients.

    My other question is, would it be better to go about finding a property and organising the finance on your own or go through a company who handles it all for you?

    Would greatly appreciate any advice. Many thanks in advance.

    Mery :)
     
  2. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    If anyone has to sell on the basis of tax benefits, be very cautious.
    There are many organisations who call themselves investor groups/companies but the reality is they are sales people flogging off the plan developments where they get up to 5% (often more) commission to sell these for developers.

    There are valid and specific cases where an OTP may suit an investors goals but more times than not, they simply do not. This is especially the case for high rise apartments or even house and land packages in the outskirts of capital cities, they often do not perform anywhere near to what is presented in fancy glossy brochures. They are generally not a good form of investment and you can be badly burnt.

    I don't know the particular group, they may be very good but check their credentials, ask for track record and history of performance against market, who are the developers, do they have lender approval to proceed, what commission are they being paid, why does an OTP development suit your goals, etc. Then do your research on the developer and the area, who your likely tenants will be, what are the median rent yields in the area.

    My view is to work out your goals and timetable first, then find a company that will work with you to achieve that. My view which you can see from other posts is it is about finance, get that right and then find the property characteristics that suit the strategy.
    Good luck with search, let us know how you get on and feedback if you decide to go with them.
    Greg
     
  3. Mezma3

    Mezma3 New Member

    Joined:
    11th Oct, 2011
    Posts:
    4
    Location:
    Melbourne, VIC
    Thanks for your reply Greg. We decided to go through with an initial appointment with the investment company, however, we found that their options were quite limited in the sense that they only offer house and land packages through their own "preferred" builder and in limited areas. They also have their own "preferred" finance broker and property manager and I became sceptical when they really emphasised the fact that everything will be taken care of for us.

    Never having invested in property before, the whole process can seem very daunting and we are aware that taking the time to do our own research is invaluable, but at the same time, my own experience with people who have invested is very limited.

    So far, we have narrowed down our long term goals with investing, our spending limit and the type of property we would like to invest in but our main dilemma at the moment is if we stay local or go interstate.

    If we stay local, we have narrowed down areas around Hampton Park, Cranbourne and Berwick. If we decide to invest interstate, we have looked at what's been happening around the Bundaberg region, central and surrounding suburbs. If we do go this way, being from Melbourne might make the process a little bit tricky for a first time investor. I have been reading about people using buyer advocates but once again, I my knowledge about using them is very limited.

    Would greatly appreciate if anyone has any further thoughts they would like to share :)
    Mery
     
  4. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Mery,
    Take as much time with the research and self education as you want so you can feel comfortable with the decision, the reason and the people you choose to assist you with the journey.
    Forums like this are good to bounce ideas around, go to some of the seminars and listen to the speakers but listen to four or five before you decide which approach makes the most sense for what you want to achieve.

    If you use a buyers agent, make sure they operate in the investor market, not many specialise in this area so you tend to get 'sold' what is available in the areas they work in. As to what areas and what type of properties, it will depend on your individual circumstances, what your equity position is, what your income is for servicing, what your timetable is, what your risks are etc.

    Do you need capital growth or rent yield to be in a position to build your portfolio? If you don't know, you have not done enough work on the numbers or found someone who will do that for you. I would be hesitant about the areas you mentioned, a long way from the CBD. Who are your tenants, are they the type you want to attract, what are the rent yields in these areas, what are the vacancy rates, how long are properties on the market for? You need to make sure the answers fit with what you want to achieve.

    I have used buyers agents personally and recommended for clients (I do not get paid any referral fee) to use, but I suggest clients see 3 or 4 to get a feel of who and what suits them. There needs to be a trust and each have different approaches. It does save time, they can perhaps negotiate better than you can, they know the market far more intimately than you will and it may be the impetus to get you off your backside.

    You are welcome to contact me for a general chat or let me know if I can assist.
    Regards,
    Greg
     
  5. Mezma3

    Mezma3 New Member

    Joined:
    11th Oct, 2011
    Posts:
    4
    Location:
    Melbourne, VIC
    Hi Greg,

    Thanks again for your advice. Our primary goal for investing would be for capital growth but we have also taken into account in our research the rental yield and vacancy rates for particular areas. We are working to a budget, which for us means looking at options closer to the CBD may not be feasible. We would also like to avoid properties that incur Body Corporates.

    I think your advice about meeting with several buyers agents to get a feel for what they can offer makes absolute sense. I think it is essential to feel at ease with who you are dealing with, which is something I didn't get from the investment company we met with. By the way, they have been putting pressure on us to put pen to paper on a house and land package by the start of next week and giving us a 3 week window to proceed or walk away, which made me very uncomfortable :confused:

    In the meantime, we will keep doing our research and I hope you don't mind if I keep in touch to bounce some ideas off you :)

    Thank so much.
    Mery
     
  6. Insight

    Insight Brisbane Buyers Agent

    Joined:
    24th Sep, 2006
    Posts:
    229
    Location:
    Brisbane
    Interested in how you ended up faring Mery?
     
  7. Mezma3

    Mezma3 New Member

    Joined:
    11th Oct, 2011
    Posts:
    4
    Location:
    Melbourne, VIC
    Hi insight,

    Thanks for your post. At this stage, we're still pouring our time into researching areas which fits the bill in terms of budget, capital growth and rental yield. We initially set out to look at QLD, we thought that being totally unfamiliar with the area would be a set back for us. For our budget, I think Toowoomba or Rockhampton would be a good option but we're still reluctant to take the plunge because it is unfamiliar territory. In Vic, we have been looking closely at Bendigo, Ballarat and to a degree, Shepparton. Captial growth potential may not be as strong but it seems like a safer option for us.

    So, to sum it up, we're still no closer to making a decision but we are making sure we spend time to cover all of our basis :)

    Mery