20 yr old looking to invest

Hey to all of you, I’m a 20 year old living on the Far North Coast of NSW.
for the past 8 months I have been saving everything I can to scrape together a deposit for an IP with my brother ( I realise this isn’t optimal but it's the only way we can afford to enter the property market).

I have gotten together 17k (saving approx 450/wk), while he has ~26k. My parents are also interested in investing.

I am in the process of reading Michael Yardley’s "how to build a multi million dollar Property portfolio in your spare time" and I have to say it has raised more questions than it has provided answers. If any of you have read this book, you will know he strongly encourages investment in the capital cities, and warns against investment in regional areas. However, I have never lived in the city, do not have any knowledge of the property markets in Brisbane (my closest capital city), and have no time to do the legwork and research necessary to make a calculated decision as to what would make a good IP.

This leads me to think that it might be my only option to invest in a regional area, as its better to have my money doing SOMETHING rather than nothing at all in my bank account. Additionally if I invested locally I could take advantage of the FHOG.

I guess I could also wait but I don’t want to miss the boat with property investment as Yardley has indicated in his book that right now is a buyers market (though I don’t understand why). Please keep in mind I have very little financial knowledge and a lot of the jargon I don’t quite understand yet.

I'm Sorry to ask such a broad question but what would you do in my situation?

Thanks very much in advance. I appreciate any input

Hi Matt

It's definitely a common theme of a lot of property investment books that you should stick to the capital cities. The main reason for this is really that the capital cities is where the most demand for rentals exists, and where capital growth is more likely to occur. That said, there are regional areas which do have strong rental demand and have seen historically good capital growth.

As long as you do your research, I do think it's possible to make good investment decisions outside regional areas. Start talking to real estate agents in your area (both selling and letting properties) and local property investors to see what you can find out... and don't rush into anything!

Regards
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Hi Matt and welcome to the forum

Congratulations on being so wise at such a young age- planning for investment and future financial independence should begin early but, alas, most people neglect to do this. So you're one step ahead already in the way you think!

If you're comfortable with regional areas, there's little to stop you from investigating your own backyard first. Speak to a good lender/broker about your lending options, budget for your costs and likely cashflow and ask lots of questions. There may be those here who've invested before in your town of interest and may be able to assist.

thaks for the reply
what sorts of questions do you think i should ask?

Hey, thanks very much ive worked pretty hard in the family business to get this deposit together. Its not been so much fun as all my friends have had at uni in brisbane but i know its been a smart decision.

I have heard that my town ( Ballina) has a very low vacancy rate and i know it has achieved very good capital growth in the last 7 years. between 2001 and 2005 the median house price doubled but since then its stayed around the same maybe dropped some. This is in line with my parents home in Lennox head ( about 15 kms away).

im not sure how to confirm something like vacancy rates. Would i just need to approach an REA? what kinds of information is available to them? is that information available to me only through them? I have had a look at some websites such as rpdata.com and have looked at the free suburb report, are the more detailed reports worth paying for?

how much should i look into demographics? i know as it isnt really a business centre that my town is mostly attractive to sea-changers. I also know that currently my postcode has 29% 40-59's and 25% 60+(Managed Funds - Superannuation Funds - Managed Investments)
and with the increasing number of baby boomers looking to retire i assume more people will be drawn to my area ( safe assumption?). would you adjust what kind of property your looking for based on this? i.e. smaller 2 bedroom 1 bath home or a family home or a unit?

if anyone knows much about ballina that would like to offer any input i would greatly appreciate it

thanks
matt s

I am sorry I cannot add more to your research, but i just have to second what jacque says with congrats on looking into this at such a young age.

i would not have known you were so young if you didn't tell us so. you are probably well ahead of your age group.

thanks dreadz! means a lot to get some positive feedback from experienced investors

Firstly congrats on getting involved with investing and taking an interest in your future when you're at an age when most are just living for today!

I think these few sentences sum up what your should be doing. Right now, I'd say the most important thing you should be doing is investing more of your time into learning and "understanding" what you don't understanding and though this process you will know doubt find more things your don't understand which you should look to learn about.



Like everything in life you have to start somewhere and it seems like this investment property book has got your mind thinking. Now whilst I think it's awesome your actively seeking to learn, it's also critical to learn about the issues and topics that are raised but not elaborated on in this book, because the reality is there are 100 things that influence property prices that have nothing to do with the location of the house or whether it has 3 or 4 bedrooms and a pool.

So if you are going to become a property investor your should look to not only understand the things that directly influence the prices of houses but the things that indirectly influence the price of houses.

Also there have been thousands upon thousands of books written on investing, and this investment property book is just one of them, and before making a decisions on what you should do with your money I'd encourage you to go out and read more diversely of the different ways to invest your money, from cash/bonds, stocks, commodities, business, etc. Understanding as much as you can about all these different investment options will actually help you understand property investment as well as give you a wholistic view of what investing is really about.

I'm not saying buying property is bad, I'm just saying that getting 5% interest in a bank account while you are immersing your self learning about the world of making money though investing is probably a better idea in the short term.

Honestly there is no such thing as easy money, and the most important aspect of making money is knowledge, and investing in your own knowledge is the best investment you will ever make.


In my opinion one of the primary rules of investing is sticking to what you know. The fastest way to lose money is to invest in things you don't understand.

With that said capital cities generally are a good place to invest, but if you aren't planning to get knowledgeable on the capital cities you are looking to invest in then I wouldn't recommend you invest your money there.

If you're working hard and working smart down in Ballina don't worry about what your friends are doing in Brisbane, the grass isn't greener up here, even though your friends might paint the picture that it is.

I only just graduated last year after 6 years at uni, and I only just finished paying down my $25,000 HECS debt! And the reality is that I am now working for myself in a profession that has absolutely nothing to do with my studies. And there are quiet a few of my friends that are in similar positions...

I'm not saying that uni is a waste of time, it's actually a great way to build knowledge, but it can be a waste of time if you are young and don't really know what you want out of it and are more about just having fun.

Anyway I'll stop ranting, I wish you all the best. Keep us updated with what you decide.

hey Chris thanks for the reply!

The book has definately raised a whole lot of new questions and so has this website, the articles are great! im finding the glossary handy too

i'm not the kind of person to enter into this sort of thing lightly. im definately doing my research on property investment mostly but since coming to InvestEd ive been looking into shares a whole lot too. I realised almost as soon as finding this site that my current knowledge was only the tip of the iceberg. luckily its so interesting to me that i could read on here all day!

I'm trying to be as thorough as possible in my research. i'm just finding it difficult with the specifics as to WHAT thorough research means in terms of property investment.

I know what you mean about uni, have several friends in similar positions. i actually went to uni in 2008 after i finished school. I did a year of Human Movement and decided that its not for me. I did learn a lot, but $8000 for answers to a few hard questions at a trivia night isnt really worth it haha. Problem was my mindset upon entering uni. i should have had a gap year to get some perspective and have a think about what direction i really want to go in.

I definately want to go back, i'd love to do some marketing or something. i've always been interested in business, but its not even a priority atm.

Thanks again for your reply and your advice!

Have you looked at the First Home Owners Grant in addition to your personal savings for the Grants & Concessions available?