Investment Info:
Single-family residence buy & hold investment.
Purchase price: $319,000
Cash invested: $42,000
After a whole year of studying investments, I am finally in the game at the young age of 20! I am one small step closer to early retirement - my goal is 35, I'll keep you updated...
I recently purchased a 2x1 apartment in South Perth, Western Australia - a prime location for tourists or young workers.
This property had over-capitalisation written all over it and I pounced at the opportunity to get in below market value.
What made you interested in investing in this type of deal?
I had limited cash to renovate, therefore decided to buy this property, where the previous owner had overcapitalised.
I plan to continue investing with a similar strategy of buy and hold and refinance, however, I would like to have more cash up front to allow for renovations and forced appreciation - BRRRR strategy.
How did you find this deal and how did you negotiate it?
I found this deal on realestate.com.au
I negotiated by explaining my intentions to buy as an investment, so as to allow the seller to understand my low offer.
I developed an understanding of the seller's reasons for selling and used my position to settle her concerns.
We managed to meet at an agreeable amount that satisfied both of us.
How did you finance this deal?
I financed two loans from the bank at 88.7% LVR, one fixed and the other variable at about 20% of the total loan.
The variable loan is linked to an offset account and my expenses are funded via credit cards.
I received the first home owner's stamp duty exemption to lower my upfront costs.
Lender's mortgage insurance has been added to my loan due to LVR above 80%.
How did you add value to the deal?
By buying below market value.
What was the outcome?
Current tenant paying good rent.
I plan to move in for 6 months to satisfy the stamp duty exemption requirements, then I will use Airbnb as a rental platform to earn more income.
Lessons learned? Challenges?
If I had the cash to renovate, I would have liked to use the BRRRR strategy straight away.
Why didn't I wait for the cash? The market is prime for buyers right now and I saw a good opportunity to get in below market value.
I might have missed out on some forced appreciation and a steeper ROI, however, it might've taken me an extra year to get there. I think in the grand scheme it evens out that I chose to buy now.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Mortgage broker - Prospar Finance
Accountant - Cinch Advisers
No agent was used as I didn't want to give up any more money than I absolutely had to - for this reason, I will manage the property myself also (likely to change in future)
My accountant also acts as my mentor. He is a very successful property investor. We spent many hours discussing the pros and cons of different strategies.
YOUTUBE - I can't stress this enough - I learned 90% of my knowledge from youtube videos and Bigger Pockets!
