Hi, this is my first post in the forum so sorry in advance for any newbie questions.
I'm 23 years old and currently living at home and currently in the process of saving a deposit for my first IP. I'm working two jobs and saving around $800-$900 a week at this rate I should have about 60k by March. Not exactly sure how much the banks will lend me but I'm hoping for 350k to 400k.
My strategy is is to have an IO loan attached to an offset account. I'm hoping by 5 years down the track that the property will have had enough growth that the equity and what's in the offset account is enough to get a second property. I'm also hoping that by 5 years down the track the first property is positive geared or at least neutral to help cashflow. Overall I'm looking for maximum growth.. what's your opionions on this strategy?
Over the last month or so I've been looking for a two bedroom around Marrickville, ashfield, campsie, etc, but for my price range i can only get really old units that need work which i don't really have the time or money to do, unless it's just small things like paint, carpet etc. Not sure how this will effect it's rental appeal being along side so many other units. What do you think of these areas?
A few people have insisted that i look a little further west in the new housing estates, I've been looking around Glenmore Park, i can get a 3 or 4 bedder near new house for under 400k with rent around 450 + a week. What's are your thoughts on these areas for growth and rental demand?
Please, any opinions on strategy and location are welcome.
Help!
Hi Mat
Firstly welcome to the forum and I hope you enjoy your time with us.
Without having any details on your income / expenditure it is difficult to ascertain how you would go with serviceability but all being equal at 360K – 400K purchase price you probably would be able to go to 90% lvr + LMI so would need between 36-40K plus your acqusition costs i.e stamp duty etc.
Coming from Brisbane i can't comment with much conviction about the area but have to say that sounds fairly expensive for a Unit entry price. Are you sure you want to commit that much of your savings to a single purchase especially being your first IP.
Personally i would look to buy something a little cheaper that you can give a lick of paint to and maybe update some fixture / fittings and increase the yield as well as improve the cash flow. We are starting to source properties for investors and look to improve the cash flow for them by adding value.
Certainly in SE Qld you could buy a decent unit for a lot less than $350K and look to spread your investment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You need to run through the numbers and see which fits in with your strategy. Marrickville is going gangbusters. I personally have a semi in the marrickville and the capital growth has been fantastic. If you are chasing rentals yields then its not so good. I have just worked on a loan for an applicant who has purchased a house in Quakers Hill (under his SMSF) for $280k and then rental is $360 per week. I would look at areas around Mount Druitt which have the benefits of the shopping centre, train, hospital, etc. The only problem I have with units is the strata. They keep rising and you have no control over this.
Also re finance – if your investment strategy is aggressive (i.e. you want to purchase another property within the next 12-24 months) then you may want to consider borrowing as much as possible (finance permitting) and leaving cash aside as a deposit for the next purchase.
Whatever you do – make sure you look at the numbers.
Regards
Shahin
TheFinanceShop | Elite Property Finance
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You might be able to pick up a unit in the north side of ashfield for about 400k if your lucky. It might be worth a look at lakemba, belmore, harris park and granville. You could pick up units for around 250 -280k returning about 330 – 360 per week.
I have a friend who is an agent in Bankstown – I had coffee with him a few weeks back and he said that there are no buyers in Bankstown at all but there is a massive shortage of rental properties – the rental yields are also quite good so I agree with the above post.
TheFinanceShop | Elite Property Finance
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Thanks for all your replies, really appreciate it.
To be honest 'm finding it all a little confusing at the moment with all the different options, houses, units, west, inner west, one property or two? I really need some guidance.
Out of the above areas, where would you recommend in terms of CG, but at the same time have decent rental return?
Would you say i'd be better off with a house out west than a unit in the inner west for CG?
I know i'm probably fishing for an answer that's not there but I really want to make the right decision with this first IP so I'm in a good position in a few years time to possible get another.
It comes down to your IP strategy – sounds like you want a mix of good CG with stable rent? Make sure you do the numbers but one possible strategy is to look at larger blocks of land in the west/south west that are showing good rental yields and have the potential to develop by either subdividing and selling the land in the back or putting a GF or a second dwelling in the back. These are ways to get decent CG on the property but you need to do plenty of homework. Again comes down to what type of a strategy and IP you are after.
Some folks just want to land bank, get the organic CG whilst having decent cashflow and there is no problem with that. Horses for courses. I would personally would stay away from units though due to their limitations in CG. In my personal portfolio I have only experienced strong CG on houses but then again I have developed most of the properties.
TheFinanceShop | Elite Property Finance
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That strategy sounds great but i just wouldn't have the time with my two jobs to organize and keep track of something like that.
Hopefully i can head down that path a few years down the track when i'm a more established and have a little more knowledge about the preperty market. Firstly I just want to get in to the market with a good quality high CG property to get me started.
Are you able to give me any example properties in the areas you've stated above. just so i can get an idea of what I'm looking for?
Thanks again for your time!
Im not a buyer's agent so perhaps investing in a BA is the way to go for you. A lot of investor activity (based on the loans I have written) has been in the western suburbs Seven Hills, Blacktown, Quakers Hill and South West areas as well. There are existing houses that don't need renos, and provide solid yields. Sounds like you should be looking at properties that you can start developing in a few years when you have the time. This may mean properties with good land size and/or zoning. There are plenty of properties that fit this category. For example, a member on the forum just purchased a property that has been converted to 2 dwellings on each side of the property. The dwelling is located right near the front of the property providing an opportunity to bang something on in the back.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Again, thanks for all your help, much appreciated.
I'll keep reading and researching and hopefully all goes well.
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