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Just to let you know we've moved our blog to a dedicated site www.MyFreePropertyDVD.com

Revalue at the peak of the cycle

Some experts are suggesting we're going to have a slump in prices in residential property. Some are suggesting it's already happened.

One thing is for sure, we're currently at the top of the cycle. So now would be a good time to revalue and properties you own and pull out the equity ready for the next purchase.

If the market does turn, it will only get harder to access any equity you have sitting there.

You can get your house revalued by the bank and access the equity without having to re-finance (unless you change banks).

For example, if your house is worth $600k, and your mortgage is $400k, most banks will lend you up to 90% of the value of your home which in this case would be $540k. Since you already owe $400k, the difference $140k ($540k - $400k) can be borrowed and put into a Line of Credit (LOC) or taken as an Equity Loan for when you may need it. You may choose to use this as a deposit on an Investment Property or for Shares, or simply as an emergency buffer.

Now is a great time to look an re-valuing, you never know it might just give you that start you need to begin your investing.

So who do you trust?

We are time poor. In fact with 2 kids we are very time poor. We felt whilst we'd read all there was to read about how to pick an ideal property, we didn't have the time to do it.

So we looked at some Property Advisers/Buyers Advocates. We wanted something that matched the following criteria,

• located within 12kms of Melbourne CBD
• 2 bedroom unit
• located in a block of less than 12 units
• close to public transport

Some Buyer's Advocates wanted 4% of the property value, some wanted a fixed fee. We felt the fixed fee approach was a much fairer option - that way they'd be unlikely to sway us into the more expensive ones.

We found a property advisory firm who were very good. They took us out to the property which was currently being rennovated. We plugged the numbers into the PIA Software and we were happy with the results. We ended up purchasing that unit.

Mistake #1 - we bought a renovated property and paid the premium - where we should have bought one that needed renovating and manufactured the capital growth!

We've since learnt from another advisory firm that they charge a fee for finding existing properties that are on the open market, and charge nothing when it's an off the plan property.

These people make their cut from the developers so it's in their interest to on sell to any unsuspecting property investor! Therefore it's wise to select a Buyers Advocate or Property Advisor that has a fixed fee and only recommends properties that are on the open market.

You never stop learning....

I can't remember how or why it happened, but a I got chatting to a colleague at work about Property Investing. He ended up lending me the following books

• More Wealth - Jan Somers
• $1,000,000 in Property in One Year - Steve McKnight
• From Broke to Millionaire in just 7 Years - Peter Spann

Since then over the past 12 months I've read,

• How to achieve wealth for life - Tony Melvin and Ed Chan
• How to Grow a Multi-Million Dollar Property Portfolio - in your spare time! - Michael Yardney
• Secrets of Property Millionaires - Exposed! - Dale Beaumont
• Streets Ahead - How to Make Money from Residential Property - Monique Wakelin and Richard Wakelin
• The Smart Borrower's Handbook - Stuart Wemyss
• How to legally reduce your tax - Ed Chan & Tony Naylor
• How you could biuld a $10M property portfolio in 10 years - Peter Spann
• How To Give Your Kids $1 Million Each! - Ashley Ormond

Plus attended many seminars, watched many free DVDs and subscribed to several email newsletters. The best free DVD was from www.MyFreePropertyDVD.com, very simple, very easy to understand.

I regularly browse the Somersoft forums for keeping up to date with what's happening, and have found a few friends/colleagues that are happy to discuss their journey.

It can be hard finding similarly like minded people to talk to when it comes to investing. There will be those that negatively comment upon your strategy since it doesn't fit their mindset. There will be those that don't understand, and are happy having their employer continue to pay their Super.

One thing you find after reading the amount of books we have, is that there's only a handful of ways you can invest in property. You'll soon discover what's right for you, what makes sense and you feel comfortable with.

But that's not a reason to stop learning. Situations change, interest rates change, loan products change. You have to keep a watchful eye on your surroundings to stay one step ahead. Always have an exit strategy.....what if this happens, what if that happens. Have a pre-determined plan of what you'll do under those situations - then you'll be prepared for anything.

Never stop learning.....

Financial Advisers?

So we began our investing after our first child was born. We thought the best thing to do would be consult a Financial Adviser.

It so happened our Mortgage Broker had recently become a Financial Advising company too, so we got them to prepare a plan for $500.

After reviewing the plan, we discovered he was 'advising' us to switch Superannuation providers as well as swicth Income Protection providers. He stood to make over $6k of commissions based upon these recommendations, not to mention the ongoing commissions.

Worst of all, there was no basis for the recommendations, no reasons as to why we should switch. So I made a couple of phone calls and ended up reporting the adviser to the relevant people.

Onto Adviser #2. A recommendation from a friend put us intouch with an adviser that offered fee for service. Infact, any rebates he received over his fee would be rebated to us. We thought that you couldn't be fairer than that.

Everything was going well, we got advice on setting up a small investment for our daughter - a managed fund. We got our Super contributions on track, and reassesed our insurances.

When I got a pay rise at work, we approached the FA and asked what to do with this spare cash. He told us to wait 6 months until our appointment! He said we'd used up our quota of time and would have to wait.

We were appauled.

But we learnt the most valuable lesson - my wife and I are the only people that are and will be responsible for the success of our financial future.

Consequently, we and our Financial Adviser went our separate ways.

It all started.....

It all started 2 years ago I suppose, when our first child was born. Before that we didn't really have a defined focus on our furture. By having kids, you become focussed real quick! You realise that in 10 years time, you'll still be a parent and your first born will be 10 years old going to school 5 days a week.

In 15 years time, you'll still be a parent, and your first born will 15 years old, still be at school and will be costing you heaps.

In 18 years time, you'll still be a parent and your first born may still be at school going onto University....ouch those fees!

So we're currently 2 years into our investing journey and we thought we'd blog about it. Maybe something here will be found useful by someone out there.

We'll be blogging about our experiences over the past 24 months including our dealings with Financial Advisers, Property Sourcing Agencies, Real Estate Agents amongst others in Melbourne, Australia.

So, stay tuned for the first instalment!