Is it better to buy two cheaper properties or 1 expensive property? What are the pros and cons of each?
julie10 wrote:Is it better to buy two cheaper properties or 1 expensive property? What are the pros and cons of each?
Hi Julie10,
welcome to the forum.
I'll answer first up with another question.
How long is a piece of string?
More info needed. Where are you thinking as far as suburbs locations and at what values do you define cheap v's expensive?
Great question however for a first post, just need more info for the members here to help with your question
The chances are that the yield is higher on the two cheaper properties and will put less pressure on your cashflow if that is an objective for you.
Answer:
Cheap properties : your earnings are made from rental incomes
Expensive properties : your earnings are made from equity incomesLike michaelparis said : need more info for some real advice. At this moment however, is not a good time to buy anything.
Hi Michael,
More information is required so here goes,
I am looking to invest in the Brisbane coastal areas Scarborough, Brighton, Sandgate, Woody Point and Margate or within 10km from Brisbane city north side, I have been looking at Kedron and Hendra. $700k is my budget. A cheap house would be $350k an expensive house would be $600k+. I have no problems servicing a loan of $700k.Thanks,
Julie10
Deception Bay is looking good suggest go cheap but you can get top quality water front for your high budget
julie10 wrote:Hi Michael,More information is required so here goes,
I am looking to invest in the Brisbane coastal areas Scarborough, Brighton, Sandgate, Woody Point and Margate or within 10km from Brisbane city north side, I have been looking at Kedron and Hendra. $700k is my budget. A cheap house would be $350k an expensive house would be $600k+. I have no problems servicing a loan of $700k.Thanks,
Hi julie10
I'm not from Brisbane, however am familiar with most of the suburbs you've mentioned.
On those figures I also would go for two cheaper properties. Yield is usually (not always) better and you can diversify the locations. Unless of course you buy two next door to each other and you can land bank whilst receiving two rents.
Never forget the usual fundamentals such as amenity, transport, school, shops, etc, etc. You should secure easier finance with two smaller lends and also be able to use two different providers. Don't x-coll your loans. Hasten slowly. There's no rush in this market. You get some good value in the ensuing months.
Good Luck
bardon, waterfront for 700K are you joking!! apartment yes but houses start at 1.5M on the peninsula, unless you go to swamp front of Dbay maybe you might find something , but its still water reserve front but not waterfront. Id be going 2 cheaper houses for the following reasons.
1. buy below or near suburb average price.
why, you are in the investors market, young first home buyers market , ie.e you have a property that is more sellable to more people and 2 younger people which are moving into the area, which are effectively creating demographic change and growth.
2. easy to sell one cheaper property if need be then one expensive one. You cant sell half a property.
3. Your yeild will be better on a cheaper house , (look at yields in water front Point Piper sydney versus liverpool) 1-2 % versus 5- 6%, yes its an extreme example and there will be acception but generally speaking there is truth in it.
4. Unless it really is waterfront or you can buy with large land value then capital growth will be similar.
having said all of that i would still investigate properties with large land component, (perhaps you buy one for 450K say and an apartment for 250K or something or a house somewhere else.
But back to the point, I would focus on land first particulary in redcliffe scarborough near the water… You realise that anything over 800m2 or 1000m2 (check council) can be a development site and be turned into apartments which will be a very valuable peice of land in the future as there is less land to develop. You could put up your own duplexes for example later on..
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