When you're buying your first property, you shouldn't go it alone. That's the advice of Ricky Briggs, who just bought his first piece of real estate - at the age of 23! He recently bought a block of land in the Hunter region, and is looking at a great future through property investment as he constructs a duplex. But how did he know how to go about it?
"I found a development site that I liked and looked into the first phase of the development to see what issues came up with the land, who was interested and what the positioning and outlay of the land would be," he told us.
Upon seeing that it was a development worth buying into, he decided to make a purchase and try and get the best out of it. As he was buying his first home and getting government assistance for this through a grant, he would have to spend at least the first six months living on property built there. But did that have to be all he did?
"I did the research through council and a couple of different builders, and was able to find a plan to maximise the return on my investment and still maintain my first home buyers grant."
"I came up with the idea of a duplex site, where I'll rent out one half of the property immediately, and then the other half once I move out after six months, turning it into another investment property" he added,
This isn't a move that everyone decides to make, but given Ricky's situation, it was an option that suited his lifestyle and financial goals.
"I'm currently focusing on my career and renting 2 hours away in the Sydney metro area. This was a good opportunity for me as regional house prices are much lower than in the city."
"I will be better placed financially to afford something in Sydney when I have equity in something else, so in the long run this investment puts me in a better position than if I bought something for me to live in first."
The Value of Research & Using Experts
However, that doesn't mean the process was easy all the way. When researching the property, Ricky found that an incorrect contract overlooked an easement that ran through his block.
"It's key to have someone experienced looking over everything for you. I worked with an experienced designer and we got through this challenge quickly and with minimal cost".
The use of experts is important right along the process. A broker recommended that he positively gear his properties, as the rental yields mean he will make up to $200 a week in profit after weekly mortgage payments.
After paying $208,000 for the land itself, Ricky built the properties at a cost of $350,000. This meant he only needed a 10 per cent deposit of $20,800 to get going with this purchase, which meant his loan was easily obtained, with 6 to 12 months of income proven and his clean credit history.
Add in the first home owner grant and free stamp duty through the land purchase, and it works out that Ricky was also making incredible savings of just over $40,000.
Making these moves in the property market at an early age with clean credit means that if Ricky buys another $450,000 property in the next year, he'll end up being a million dollar investor at the age of 24 - pretty good work by anyone’s standards!
Ricky's 4 Tips for First Time Investors
So clearly, Ricky has a fantastic investment property setup. But how can you do the same? Here are his top 4 tips for any budding investors:
- Do your Research; Find an area that is appealing and will represent good growth. Ensure that they have easy access to Public Transport, Schools and Local Amenities and think about your target audience i.e. growing families, retirees etc.
- Formulate a plan after doing your research and list the pro’s and con’s as well as address in the plan head on and how get your plan into action
- Get a team of trusted advisors around you; share your thoughts and feelings with them and take feedback on board. This experience is great as people have different perspectives and it will highlight any shortfalls in your situation. Find yourself a great broker, as they will get you a better deal than a bank.
- Get at least 3 building quotes, the age old saying goes “if it’s too good to be true, reality is that it probably isn’t”. Different building companies have different inclusions as well as fees and charges - look at these carefully and pick the package that suits you best.
You don't need to rely purely on luck to be successful in property investing. With enough research and preparation you can boost your chances of success in the property market.
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