Which state is best to start buying an investment property in 2010 market conditions?

Hi WC,

All three of these markets offer opportunities, we have had good purchases in all these areas this year.  The ultimate decision depends on your comfort zone, risk profile and personal preferences.  In investing there will always be more than one strategy that will get you from point A to point B however you need to consider each of these and see where you are most comfortable to start.  Where you start does not need to be where you finish, and your strategy will develop more clarity and direction as you start buying properties.

Examples for your budget in my experience this year with our clients:

Sydney:  There are some great buying opportunities at the bottom end of the market, and our clients who have purchased there this year have already received real capital growth, and gross rental returns on average of 7%.  This is a fantastic starting point in the Sydney market where traditionally in most capital growth locations your average gross rental return is 5%.  If your strategy is for 10 years then these investments will certainly be cash flow positive while positioned for even greater capital growth.  There are not many times when an investor is able to achieve both strategies so early in the one purchase.   If you can find a house and land deal there are no stamp duty costs on new purchases in NSW at the moment, this is a big saving however you will be looking a lot wider than the city 20km zone to find one of these.

Close to Brisbane in your price range you get less property, it depends on how far out of the city you want to go.  The outskirts of the city which are only 20 min drive to the CBD and on train lines are offering some great prices.  The capital growth has not really started to move upwards in these areas.  The flatness of the market often turns off investors as they for some reason feel more comfortable buying when there is a frenzy.  I have said it many times before, for some reason Australians like to pay full price for our assets yet we love a bargain when it comes to shoes, tools or other lifestyle expenses.  When it comes to property we only want it when the rest of the market wants it.   This year we have secured splitter blocks, duplex pairs and newer free standing homes in your price range.  The duplex pairs and splitter blocks allow you to manufacture growth in your investment before the market moves.  The newer properties offer an average return of 6% but also have a higher depreciation element providing with a good net return and low holding costs while you wait for capital growth to kick in.  There is high rental demand, large investment into infrastructure and jobs to secure the strength of future values.

Melbourne:  You can buy house and land packages in your price range, receive about a 5% return and depreciation.  There certainly a easy set and forget option.  The other options in this price range are units closer to the city.  Be aware of body corporate and sinking fund as ongoing holding costs in addition to your usual rates.

The main buying costs to allow for are stamp duty which varies in each state:  There are stamp duty calculators for each state you can use as a guide. Obviously you need a deposit for your purchase and need to cover solicitor fees. Also consider ongoing maintenance factors when you assess your potential purchases and make sure you get the right loan product matched to your needs for cash flow and debt reduction strategies.

All the best, don't let the choices paralyze you from keeping your momentum moving and securing an IP as you build your portfolio you can benefit from the flexibility that a large portfolio provides and the increased choices you have in controlling your financial future.

GEELONG, VIC! There is a lot of infastructure projects coming up in geelong i;e armstrong creek and estates in leopold which are major community/master planed estates.
Geelong is still very affordable for your price range and is becoming a well known town, as recent world championship cycling was a great success for the town i would seriously put thought to geelong! its a great place to live
geelong resident.

The news over the week showed some research form BIS Schrapnel- they say Sydney, Perth and Adelaide will do the best over the next 3 years. brisbane not as well – Melbourne will be slow – it’s had it’s run.

Well done WC, interested in any more details you are able to share.