Hi Everyone,
first post here after a few weeks of browsing.
This question is probably more Sydney-centric…
Should my wife and I take the $100,000 in equity we have in our PPOR in Ashfield (inner west suburb of Sydney) and look around Ashfield/Summer Hill? We really love the area, but is it wise to have an IP in the same suburb as our PPOR, or should we spread our wings a little more?
Thanks for the advice in advance.
I think it can be a good idea to buy in the area that you know really really well and think is great – most other people will probably feel the same. It is demand that drives prices as we learned in year 11.
All the best with the purchase!
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Very true – I also earned doing Economics to diversify, and not too put to many eggs in one basket/suburb!!
Hey,
Sounds like the question may be do you want capital gain (profits- commonly know as gambling on the market rising)…. or do you want to get cash in your back pocket today. If you want CG then you wil be able to quickly find the tools to see which areas are growing fastest and you can see whether your suburb is a good risk or are there beter ones out there.If you are looking for the second, then you can also use tools to source and secure your deals…. I was reading an article the other day written by one of the most respected professors in the NZ property sector and the comment was … along the lines of …. how is it most investors do so in thier own neighbourhood when the risks are lower in other areas with the same return on investment…..
Cheers,
KiwiOriginally posted by gronk007:Very true – I also earned doing Economics to diversify, and not too put to many eggs in one basket/suburb!!
You reckon diversification kicks in at IP number one?
Also diversification is not always good – is a security blanket for mediocre performance.
Also diversification means one property already time for cash and shares doesn’t it…?
Sometimes spreading the risk also means spreading the upside too.
If you research and find something that looks a winner the gutsy thing to do is stake everything on it!
An extreme example and not what I suggest, but I do feel that specialisation is better than diversification. I reckon the success stories are usually about people who choose a niche and exploit it.
All the best,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
There is always a debate about whether you should be diversifying your investments or not, I think the answer is that it all Depends on where you are through your investment journey and what you need to create next.
As for the original post, if you can afford to purchase in that area and are comfortable with paying the shortfall of rental yield, you are on the right track their. Just make sure you do your research and purchase something worthwhile..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auI think buying in an area you know well would be a good idea for your first investment. I think the amount you will learn will be as valuable as the financial benefits and as you get more confidence and experience then look outside you area.
All the best
RhysIf you intend to find a place that maybe needs some work and you intend to be involved in that work, then by all means buy somewhere nearby.
If you are only buying locally because you would like to be able to keep an eye on the place and worry about tenants. Don’t buy locally. That’s why you pay a PM to worry about the property and the tenant. And that’s why you take out Landlord Insurance, so you don’t have to worry.
Depening on whether you are after CG or Yield, should help decide where you should buy, and where the different areas are in the current cycle.
You may have $100k in equity, but depending on your current debt, you may not want to purchase something that is going to suck your cashflow that should also be helping you to reduce your non-deductible debt.There was a post elsewhere asking a similar question. A response was: with your equity, it may be possible to offer cash, quick settlement on a property, giving you a potential for a discounted price if this was to help the vendor.
Either way, if at the end of the day after you first venture into purchasing an IP, If you go to sleep with a smile on your face, rather than worrying about the money, then you have done the right thing.
Mal
Getting out of your comfort zone, can help you become comfortable
I used to live in ashfield, great property area but how will you find a cashflow positive place there?
Good question – i guess if i’m solely looking for cf+ properties, that would wipe out the good majority of units/apartments in Sydney then I’m guessing…..
I agree, it’s not a rule that you must only look for cf+ properties, depending on particular situations and what you are trying to acheive from investing, a slightly negative with good capital growth forecast, maybe the better way to go at times, it’s also likely to become +ve after a few years anyway.. and you would have gained advantage of the growth to borrow against.
It it all depends on what stage of your investment strategy you are at.
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.au
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