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Discussion in 'Real Estate' started by davo6253, 11th Jul, 2008.

  1. davo6253

    davo6253 Well-Known Member

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    I am young (20 yrs old) and have just started Full Time work. I have been considering looking at an investment property, given my situation probaly a unit / apartment to buy and rent out. As I am new to finance in general I was looking for some advice about whether this is a good time to buy? I am in the area south of Melbourne and due to recent economic activity my area house prices are significantly decreasing while rental property availability is low, that I understand.

    My question is more are houses likely to fall further in price and should I wait before investing? And does anyone have any tips on what type of investment property would be best given this type of market (i.e. what type of people would be looking at renting). Any comments, suggestions, thoughts will be much appreciated.

    Thanks alot in advance.
    David
     
  2. AsxBroker

    AsxBroker Well-Known Member

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    Hi Davo,

    Totally separate from your investment property you should look into the government co-contribution http://www.ato.gov.au/content/downloads/spr_89416_nat11589.pdf

    Cheers,

    Dan

    PS This is general information and not specifically tailored financial advice. Before making an investment decision speak to your FPA registered Financial Planner.
     
  3. TryHard

    TryHard Well-Known Member

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    Welcome Davo. Depending on the area you are investing in, you could talk to some real estate property managers (not sales) and ask what is sought after and by what type of people. You're much better waiting to buy something that is always in demand, if its purely for investment, than getting something unusual that might sit empty. Just tell them you're considering investing in the area and you need a good PM as well as some advice on what you should buy. Just get a few opinions before allowing one of them to shove you off to a salesperson - there should not be any rush to buy at the moment.

    As long as you are prepared to support the investment with any top-up funds etc. most people will tell you today is always a better day to buy than tomorrow. If its a good investment, regardless of what it's sale price is today or in 6 months time, if you are never going to sell it, it shouldn't matter much if the value goes up and down, as long as the rent keeps coming in.

    Having said that, the way things are, if this is your first, I would spend the next 3-6 months reading and researching everything you possibly can, and saving as much deposit as possible (search some threads here for books to buy, including the usual Jan Somers etc) rather than buying. I'd suspect prices won't change much, and probably not upwards, over that time.

    Have fun. You've started early in life and whatever you do now you'll be way ahead of most. I didn't see the light till I was about 35.

    Cheers
    Carl
     
  4. Billv

    Billv Getting there

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    Davo,

    It depends on where you buy and what you buy.

    Looking at the Melbourne market today, I'd say that sometime in the near future will be a better time to invest than today.

    Don't rush into it, take your time, educate yourself as much as possible and save your money for a good deposit. IMHO

    Cheers
     
  5. 02bsure

    02bsure Well-Known Member

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    I don't expect there will be many who will say this to you so I will just to give some balance of opinion.

    This is absolutely no time for a fresh young amateur to be considering buying real estate. My advice is to wait until at least the end of 2009 and then reassess the situation. By then I'm sure you will have gone completely cold on the idea and will thank your lucky stars that you took the 'wait and see' approach.

    You're 20 years old, go and enjoy yourself. Travel, move around a bit , experience stuff. This is no time to burden yourself with a debt ball and chain ...god knows you'll have plenty of time to get into all of that.
    The peer pressure you've no doubt been inflicted with probably has you hyped with the real-estate-pot-of-gold-awaits-you ideals. In my opinion, there are times to buy and by equal messure times to absolutely not buy.
    We are currently entering the latter.

    Once again, this is simply my opinion. Dangerous financial times are directly ahead the likes of which none of us has ever seen before.
     
  6. davo6253

    davo6253 Well-Known Member

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    Thankyou all for your comments, from the first lot of posts the main message as far as I can see is do lots of research before I do anything which I plan to do ( and this is a part of ). As for resources would the local library have some of the stuff you are recommending or should I be purchasing these sorts of things, are there any good resources for looking at current information regarding house and rent prices ?

    Also in regard to the last poster, the economic situation is of concern, I have done a bit of travelling and I personally am not overly adventerous, just me I guess :D but I hear what you are saying in terms of a risk in the near future. What do you suppose is a reasonable path to take if your prediction was to come true?

    Thanks again
    David.
     
  7. Jacque

    Jacque Team InvestEd

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    Hi David and welcome to the forum :)

    I second Carl's advice- there's no rush, especially where Melbourne's concerned, learn all you can, ask lots of questions and be knowledge-prepared. Property is great as a long term asset but you need to know what it is you're getting into, how much it's likely to cost you and how much you're prepared to sacrifice. :) It's that simple, really.
     
  8. TryHard

    TryHard Well-Known Member

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  9. davo6253

    davo6253 Well-Known Member

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    Cheers that website is quite handy and I will be sure to purchase a copy of one of those magazines you recommended.

    Thanks Jacque, I think my plan of attack is to try to learn as much as I can over the next six months or so, at the same time increasing my deposit and (hopefully) getting a promotion. As I currently work in a bank I have a great source of info there, lender to talk with, other bank staff who have dealt with this on a day to day basis for years, just got to work out what to ask :D.

    I was having a look at the lending power that I would currently have and it is a little lower than what I would be requiring to purchase ( i think ). Is there a safe way to enter an investment property with other people i.e. my parents or friend for example, I don't think I would be ripped off just curious is there a secure process to go through? Mainly to avoid any pain :)

    Cheers,
    David
     
  10. TryHard

    TryHard Well-Known Member

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  11. Jacque

    Jacque Team InvestEd

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    Buying with others is rarely pain free- there are pitfalls and if you do a search on this forum on "joint ventures" you'll see what I'm referring to.
    If, however, your parents can either go guarantor for you on the loan or lend you some money separately this may be better for you. It's really best to talk to a good independent broker to discuss all options open to you. If you're after a recommendation, try Rolf Latham from ASAP Financial Services - Mortgage Brokers Australia I can highely recommend him both personally and professionally as he's looked after my finances and that of some of my clients for quite some years now.
    Best of luck with it all.
     
  12. Chris C

    Chris C Well-Known Member

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    Not that I'm much older than you (I'm only 23) but if buying a property outright is a little too much right now you can always look at starting to build a deposit via shares or managed funds... if you really wanted you could even look at buying LPTs (Listed Property Trusts) if you wanted to keep your focus on property, there are a bunch of LPTs out there are have been hit hard by the recent credit crunch and in my opinion are under valued - though they might not be bouncing back anytime soon.

    Once again, not that I'm an expert, but I think there is going to be a lot stronger growth in the stock market over the next 12-18 months than there will be in the Australian property market - if anything the property market may even drop a little over the next 12 months IMHO.

    Also in regards to getting informed or learning more about investing, I started a thread about people's opinions on good investment books to read here:

    http://www.invested.com.au/24/must-read-investment-finance-books-34261/
     
  13. davo6253

    davo6253 Well-Known Member

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    Hey chris thanks for the tip, given the situation with the share market at moment i am concerned that I may lose out on a deposit in the short term, still i'll consider shares or something similar, as it could be a better option for me.

    That link on books is a great help might go raid my library and see what they have.

    Cheers,
    David
     
  14. 02bsure

    02bsure Well-Known Member

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    I expect the ASX to test the 3000 mark before finding a floor. This will happen within 18months.

    Stay as close to cash or low risk investing for at least the next 18months.
    Stay away from real estate.

    If you're considering buying real estate for the purpose of living in, then save your cash somewhere safe and aggressively low-ball your purchase price at the end of 2009. If you're considering buying real estate as an IP investment , don't (just look to the experience of the fhb's in WA).
     
  15. Billv

    Billv Getting there

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    o2bsure
    How can you be so sure?
    Cheers