Hi, I want to buy my first Investment property and trying to be a bit cautious about the first purchase, I do not want to buy an expensive one. Could someone please provide advise on the idea of buying a land in Werribee, Victoria of say 165 sq m and build a townhouse of that costing all in all around 265- 270k. I am thinking of paying 20% LVR on that saving me LMI and also less stamp duty on over all build. In an year or so, after gaining some confidence and getting some equity in the townhouse and my savings, I can look for a better investment property. 2 thoughts in my mind:
1. This will give me some instant equity perhaps as similar tounhouses are sold by developers above 300k in the same area.
2. Since I will be paying 20% LVR, it will give me some positive cash flow.I am a newbie so please don’t be harsh if the approach is not right :-)
Thanks in advance!!!
I think you’re talking about a 80% LVR – aka paying a 20% deposit. You’ve got it a little wrong way around. I wouldn’t necessarily suggest it’s always better to pay 20% and avoid LMI – unless you have large deposit funds to continually make purchases without LMI, it can be limiting to slow your investment portfolio purchase timeline. I’ve written a little bit about the weigh up here: http://www.precisionfunding.com.au/lmi-friend-or-foe/
Stamp duty is also unrelated to your loan amount – whether you pay cash or 95% LVR – the stamp duty is the same.
Buy properties which help you get towards your long term goal and fit your investment strategy. Don’t have one – if you dig through the blog there’s also an article on getting a plan together.
My understanding about Weribee is that there is continuing supply coming on line all the time, which generally doesn’t bode well for capital growth. It’s very common for those buying in these large estate areas to see limited growth indefinitely and stagnant rents – be careful.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi there – lots of opportunities in Melb and Werribee may have great benefits but I do not see them. To assist you – you will need a strategy…why Werribee? the place smells bad and that says it all, lots of opportunities other than werribee….
Cheers Ivan
Redwood | REDWOOD | SMSF | PROPERTY | FINANCE
http://redwoodadvisory.com.au
Email Me | Phone MeSMSF - PROPERTY INVESTMENT - WEALTH CREATION AND FINANCE SOLUTIONS
Hi SydneyGuy,
Corey said it so well :-It’s very common for those buying in these large estate areas to see limited growth indefinitely and stagnant rents – be careful.
By replicating what the developers are doing (but without their cost-savings by building in bulk), you will be limiting yourself severely. In short, you can do a lot better than that. Have a bit more of a “read around”, starting with this article – it is a classic :-
https://www.propertyinvesting.com/how-to-invest-in-real-estate/
Benny
Thanks All, I was going with Werribee as that is the only area I know in Melbourne via a friend staying in Melbourne.
I am living in Sydney but it is all out of pocket as we all now…only areas I can think of looking at wthin 430k range are St. Marys, blacktown, penrith, that too just apartment not home……..@corey thanks Corey, even I wat to look at the areas with higher growth but don’t know how to search those areas and get more info…
Hi All,
Besides tracking listing how would you know if there is a lot of dwelling hitting the market?
Thanks Benny…. Just started off reading the article….seems to be a lot informative….
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