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Update #2 On My First IP - The Sweet Taste of Success.

Discussion in 'Real Estate' started by Sk3tChY, 18th May, 2009.

  1. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
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    Location:
    Sydney, NSW
    For those of you who haven't read my prior 2 threads and are interested;

    1. So I've bought my first property.

    2. Update - My First IP

    ----------------------------------------------------

    I figured I'd give you guys another update on how things have progressed for me and my first property since my initial purchase almost 12 months ago.

    First and foremost I guess I'm still finding it a little hard to come to terms with how amazing everything turned out, it seemed like I chose the PERFECT time to buy in property.

    I bought the property for a steal at $228,000 and then not long after, interest rates began to plummet to the all-time lows they are now, and now, just as I've put the place up on the market to rent out, we are in the midst of a rental/housing crisis. It truly seems like all the cards have been dealt in my favour.

    I've been living in the property for almost 12 months now, and so have well surpassed the minimum 6 month period where you can't rent the property out due to claiming the First Home Owner Benefits. In that time all that has been done to the apartment is that it has been given a fresh coat of paint which only cost me $200 all up. (My father is a painter by trade, so I only paid for the cost of some of the paint. He had some already.)

    For those of you who might want to see how it looks now here's an archived copy of the advert on domain.com.au;

    http://www.domain.com.au/Public/PropertyDetails.aspx?adid=6161358#

    The pictures really don't do the place any justice at all and they make it look much smaller than it actually is, but I guess it'll give you a bit of a look/idea at the improvements.

    With the way the market currently is, and going off sales of other apartments in this very block recently, I've already made some Capital Gains on the place. :)

    I decided to take on the advice given by others in my previous threads on this forum and decided to invest in a property manager, which although may not be necessary, will save me a lot of headaches in the long run.

    I put the property up on the market for rent about a week ago for $310pw, and received a call today from my agent saying they've found great tenants who are more than happy to lease the property for that price, and are ready to sign a lease contract immediately, and ready to move into the place in 3 weeks. (they need to finish up a lease at another place first, so need to legally give 3 weeks notice.)

    Which will then leave me with my first official positively flowed IP, at the age of 22 and all within 12 months, and it has the ability to stay this way even if interest rates were to rise as high as 9.4%. :)

    So overall, I think things have worked out great. I've now managed to build up a very healthy amount of equity and would most definitely recommend that anyone else who's thinking about doing something similar to do it now, it's a GREAT time and one I personally feel should be taken advantage of.

    My short-term plans/goals:

    Well, in the short term I plan to move back home to my mothers place, and pump as much money as I can into my mortgage over the next 12 months and build up as much equity as possible.

    After that I plan to keep an eye on the property market in Parramatta and try find an older style 2br unit >$300,000 to purchase as my next IP and rent it out immediately.

    With the market the way it is currently, if you buy the right place and have enough equity it doesn't seem all that hard to score yourself a positively flowed investment property, so I plan to take advantage of it.

    In essence my short-term goal is to have half a million dollars to my name by the age of 23-24. (asset wise of course. :p)

    Mid-term would be to have about $1mil+ to my name by the age of 30. (asset wise)

    And Long-term would be to have $1mil+ worth of equity by the age of 40.

    Whether or not I'll ever achieve these goals, only time will tell, but I think I'm off to a good start.
     
    Last edited by a moderator: 18th May, 2009
  2. joanmc

    joanmc Well-Known Member

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    Awesome! Congratulations and keep it up. That is just fabulous. I love to hear how excited other people are about investing:D

    After 10 years in the property market I still get that thrill with a new purchase. Keep going and you will beat me! (free at 40)
    There's a challenge for you....go for it.
     
  3. Sk3tChY

    Sk3tChY Well-Known Member

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    Hehe.. My goal is to have $1mil+ worth of EQUITY by the time I'm 40.

    At this rate it should hopefully be feasible, especially if I find myself a partner that earns a decent wage. :)
     
  4. joanmc

    joanmc Well-Known Member

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    if you are starteing now at 22 you should have 2 million by the time you are 40!!

    I started at 31 with 120k personal debt and about 30k equity, now have $0personal debt (and I can't begin to tell you how good that feels:)) and over the 1m equity yippee!!

    GO go go!
     
  5. Sk3tChY

    Sk3tChY Well-Known Member

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    Inspiring words.. :)
     
  6. Sashatheman

    Sashatheman Member

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    A noobie question.
    With your Parramatta Investment property, are you only going to pay the deposit and all the upfront fees, before renting it out? Because as you said you are putting all your earned money into the current property you own now. Or you somehow going to transfer the equity from that property to the new one?
     
  7. Sk3tChY

    Sk3tChY Well-Known Member

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    Well I haven't done much research yet as it's still a good 12 months away, but I'm going to do one of the following;

    1. Use the Equity on my Caringbah place as Collateral & Deposit on a new place. (Shouldn't be an issue if I stick with the same lender, not sure if it will be if I use 2 different lenders.)

    2. I have a redraw facility on my current mortgage with the Caringbah unit. I'll just redraw the required amount of equity needed to lay down a 20% cash deposit on the second place. (20% means no LMI.)
     
  8. Sashatheman

    Sashatheman Member

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    Okie thanks for answering that.
     
  9. Jacque

    Jacque Team InvestEd

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    Well done Sketch- you should be justifiably proud of yourself!
    Using the equity is exactly what you should be doing at this stage, both to maximise your borrowings and minimise your cash input into each deal.
    You may want to investigate offset accounts as an alternative to redraws, as they may allow you more flexibility to move money around.
    Best of luck with IP no. 2- where are you looking to buy this time?
     
  10. Nigel Ward

    Nigel Ward Team InvestEd

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    Well done Sketchy!

    Great things often have small beginnings...you're on your way!

    Keep up the good work!
     
  11. JudgeDreadz

    JudgeDreadz Well-Known Member

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    Sketchy! Awesome awesome awesome.
     
  12. Sk3tChY

    Sk3tChY Well-Known Member

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    Thanks Jacque.. You've given me some pretty awesome info previously, much appreciated. :)

    I have already looked into offset accounts, and the thing is with them you generally have to pay a higher interest rate, as opposed to having just a basic mortgage with a redraw facility, which in essence is exactly the same as having an offset account when you think about it. Either way I will still always have access to my funds, offset or redraw.

    My next IP will almost DEFINITELY be in Parramatta. It's already had plenty of development in recent years with new buildings and what not being constructed, several companies are now choosing to reside in Parramatta and other places rather than the heart of Sydney itself. It's the second largest CBD after Sydney in NSW. I've also heard they doubled the legal building height there recently, so there should be even MORE construction in the coming years. Plenty of reasons to buy in Parramatta, I can foresee plenty of CG there in the coming years. :)

    Although, I'm also considering Pyrmont, outskirts of Sydney CBD, and perhaps Granville too. I have my heart set on Parra though.

    Cheers Nigel.. :cool: I'm hoping this is just the beginning of bigger and better things..!! :)