Hey people,
First off, this site is fantastic, has provided me with hours of reading and learning material.

I?m a complete newbie to property investment but after reading a couple of books on the subject, can't wait to get started. However, I don?t want to get caught out and have a couple of questions for the experts.

I'm 32 with an income of $40,000/year and I have a $300,000 home with around $160,000 in equity, plus another $20,000 cash. As my wife is pregnant and doesn?t work, I can?t really afford to put too much money into the mortgage repayments of any IP for probably another 4 years or so. Here in Napier/Hastings there seem to be quite a few places under $150,000 for sale, probably not too flash though.

My way of thinking is to leave it for a few years when I have more money coming in, more equity in my house and can afford perhaps a better standard of house when my wife goes back to work. But at the same time I really want to get started now with something little and appreciate the capital gains and use that as a stepping-stone to the next property.

So, am I better off to buy a cheap place in a not so good area (but all I can afford) with all my money now. Or wait when its not so risky, buy a better place in 4-5 years that?s going to cost more and miss out on capital gains.

Thanks in advance

Hello Kai,
I am no expert so I can only provide an educated opinion. You have got yourself into a good position, that first thing you need to do is to decide what you wish to achieve out of property investing, from what you have written it seems you are looking at what is the best course of action for the next five years, you should also consider the next ten and fifteen years.

No one can say what will happen to property as an investment in the next five years though historically property has always risen over a fifteen year period and if you time it right it can double in around seven to eight years.

What you should consider at the moment is a property with good cash flow, you should do some research on the areas around Napier/Hastings and see what sort of rent you can get for those 150k properties, consider doing some renovations to get better rent, if they return a +ve cashflow before tax then do it.

Even if you buy one property in the next five years you will be in a better position then waiting because if you wait (all things being equal) the prices of houses will go up as well so you will not improve your position, on the other hand by getting a property now you get the experience and some capital gain.
Good luck