Hello. I'm in the process of trying to get the courage up to buy my first investment property. I'm in Melbourne and was hoping to get something (a flat/unit) for $175 000 but an coming to the conclusion after having been looking via email alerts for well over a year now that there seems to be nothing that's not in the middle of Springvale or Noble Park. I don't really have anything against these areas, but they do have higher crime and judging by the one that I looked at today, which seemed great online (2 bedrooms, $150k+), what I've heard about these areas over the years seems to be true. One of the other things that I've heard is that it's not such a good idea to invest in 1 bedroom units/flats. Is anyone able to enlighten me on this?.. The thing is, that I'm probably only going to be able to afford a 1 bedroom. Thanks.
Hi yetanothernewbie,
It sounds like a severe case of analysis paralysis. We can always find a million and one reasons not to invest.I'm not in Melbourne so can't comment on the areas you mention.However, there is nothing like actually dipping your toes in the water. Yes you may get wet. Yes it may not be the "perfect " investment. It may even be a dog and you could lose money on it. However you will have experienced the process of buying an IP which will be invaluable for when you want to do it again. I still get nervous about buying and have done it a few times now.First. What is your strategy Are you looking for income or growth and what does your due diligence tell you about 1 bedroom flats in these areas. People invest in all sorts of properties so I would not worry about that Some people probably specialise in B/r flatsDoes it matter about the Socioeconomics? Are you going to be the one collecting the rent or is there going to be a property manager who will do that for you. If the REA doesn't like going to a certain street then maybe that wouldn't be the best place to start. have to talked to agents in the area? I took a street map with me in one area and asked the agent which streets/areas they would recommend looking at and which they would avoid. That proved to be very useful information.Good luck. Deep breath and take action!!JebroHi yetanothernewbie,
Was in a similar situation about 4months ago. If you have done your research and it fits in with your goals then i think why not start now. As Jebro said it depends on whether you are after income or growth as to the sort of property you are looking for.
Personally i knew i wanted to get into property investment but could always find reasons why i couldnt, or others opinions on why they wouldnt do this or that. But if you back yourself, have done your research and have a goal in mind then why not have a shot at it. Either way, starting of small is not a bad way to go. I said okay 100k is my limit, what is the best property that i can find for that money, knowing that it wasnt going to send me broke, and that if for some unforseen reason i needed to get out i wouldnt stand to lose a fortune. I bought a 1br unit with a reasonable return and it is already showing signs of promise with rents and values continuing to rise. Having made a start i can now see where i may improve next time or things that went well that i can replicate. The only way to get over the uncertainty is experience and the best way to get that is to have a go. Hope that helpsHi yetanothernewbie
My wife and I bought our first IP 18 months ago and like Juder and yourself we wanted to keep the first purchase under a set figure which in our case was $200k. I see you are in Melbourne, well we bought our first IP in Melton about 30km away for $155k (3 bed brick veneer). Okay, so it has a reputation for being a rough area and ex-housing commission, but it's predicted to be going ahead area and in fact things are starting to tick along nicely. We've just increased the rent to $185pw and some movement in the lower end of the market seems to be happening.
It's reputation wasn't the best from outside of Melton, but we believed in the figures and we were not going to be living in it. It is becoming a very good investment, so I suppose I'm trying to say don't be put off by reputations. We have had no problems tenanting it or with any property damage. Plus as long as you've got Landlord Insurance then you are pretty much covered.
This investment gave us confidence that everything was going to be alright so we bout again in SA again for under $200k and have recently got very confident and bought 2 properties in SE QLD for over $200k each. As Jebro and Juder say, .. do your research and as long as you stack the odds in your favour then go ahead and take the first step.
Martin
Thanks for the replies.. I appreciate it. Juder, you mentioned what sort of IP I'm interested in.. well, I'm not entirely sure. At the very least I want something to become my superannuation (as I don't have much and am currently not contributing to my old default funds from past employers). I've been self employed as part of 'the' lawn mowing/gardening franchise for the past 3 years but as I stare my impending 40th birthday in it's ugly little face, I have this ever present unsettling realisation that I'm not getting any younger, I want to see the world, I need to renovate our old house, and I'd like to be financially independent.
I was amazed to read that Juder was able to get something for 100k.. was it a bed sit?.. I've been told that they're not a good idea. Regarding the issue of the type of area and my concerns about crime etc. .this place that I went and had a look at had on old TV on the nature-strip with grass growing around it , an abandoned shopping trolley, and a pile of old furniture stacked up around the mail boxes. There was also litter scattered throughout the area (I think there were 6 units in the block, the general garden maintenance was a bit shabby.. ie: there were weeds all over the place, the grass was not cut etc.. The place also was a far cry from the photo that I got from realestate.com.au.
Jebro, you mentioned taking a street map of the area to the local agents and asking their opinions.. I can't see how I could trust any agent to give me an honest answer, as I believe that all that they want is to sell as much as possible.. wouldn't it be the case that they'd tell you that it's all good.. if it meant that you'd 'show them the money'?.
Perera, you mentioned that you've bought places in other states, how can you buy things that you can't readily go and inspect?.. I understand that you get a property manager (a local real estate agent?).. but it still makes me nervous thinking that if anything goes wrong, it's a long way to go to actually get hands on if the need arises. Does anyone know of any web site that shows you crime rates in the various areas, government plans for future development etc?
I've read the 0 to 130+ book a couple of years ago now, and have just bought the sequel. I've also got the 'Reno Kings' book which I haven't finished reading yet. I'd very much like to emulate what Gurus Steve and Reno Kings have done (like so many others) but am aware of the fact that it takes balls, smarts and time. Is it still possible for me to do so?..I'd like very much to phase out the very physical work (which is taking it's toll on my body) and phase in property investing.. am I dreamin'??
The first buy is soooo exciting. and filled with nervousness. I wouldnt be concerned about a one bedder. There are more and more ppl living alone. (I'm quite looking forward to it meself). jump in and have a go. You will learn from the first one.
Just keep putting in offers. Outrageous offers. Someone, somewhere is desperate to sell.Looking at your avatar I woulda thought you would be looking somewhere further afield…….venus perhaps.
Re the avatar..I like to think of myself as being halfway between the gutter and the stars.. (pop culture reference for any train spotters)
Hi yetanothernewbie,
the unit i bought is in cairns. When i started looking about a year ago i too was struggling to narrow it down to something specific, but with a heap of research i was able to narrow it down to a few specific areas in cairns. I was also conscious of the type of area i would be investing in. For me cairns had the potential to be a good place to invest. The current population growth is about 3%p.a. which is quite good and the vacancy rates are at all time lows, below 2%. Also as cairns is bordered by the coast on one side and mountains on the other i felt that this added to the scarcity factor.
I spent quite a bit of time on the local council website where they have a good demographic breakdown of the suburbs, and eventually i realised that i could get a 2br unit in a not so desirable suburb or a 1br in one of the better suburbs. In the end i felt a bit better going for the better location, being close to popular recreation and cultural facilities and local cafes and shops. I guess in the end this was more of a personal choice, and like martin said if you have landlords insurance as well as a decent property manager then it doesnt really matter so long as the numbers stack up.
The place was advertised at $110k so with a bit of guts i offered 90k, knowing it would not be accepted, and eventually got it back to what i thought was a pretty reasonable 100k. I was lucky to have a family member in the area who was able too look at it for me so that got rid of the thoughts of 'was the area in general okay', which is all i would be able to do myself. I then had Archicentre do a building inspection to make sure the place wasnt going to fall down.
I've included the council link for the suburb profiles which may be of interest as i'm guessing most local governments should have something similar. I'm definately by no means an expert, i am only just starting out like you but i guess like the other guys have said you will learn from the first one (as i am doing) and you'll be glad once you make a start.
Cheers, Judehttp://www.cairns.qld.gov.au/community/profiles/cairns_districts_suburb_profiles.htm
oh yeah the place is an actual 1br unit, at the time there were bedsits advertised at 78k, but i really didnt like the idea of a bedsit- low growth prospects, harder to rent out and more likely than not shorter term tenancies.
Thanks Juder.. the council web site is a great idea.. d'oh.. I should've thought of that..
hehe, let us know how it goes
My sister bought a home in Springvale and I thought it was a rough area and wouldn't increase in value. The house has increased in value and she has been living in it for a few years and hasn't had any trouble with the locals.
Springvale has had 19% growth over the past year to 30 April according to Australian Property Magazine August 08 edition. I had family who moved from Western suburbs of Sydney to Springvale and in that time their former suburb declined in value by 2%, so has done well.
Any one have any updates or views on Springvale?
I've just spent the day looking around Springvale, and had similar thoughts to most of the people above. I live within a couple of KM of Melbourne CBD and we've been looking to invest in Melbourne for a while. We mainly look for positively (or neutral) geared properties, and hadn't previously found a lot of value in Melbourne.
Crunching and analysing previous growth figures and the current vacancy rates in Melbourne suburbs threw up Springvale, somewhere I knew nothing about and wouldn't have normally considered. We haven't bought there yet, but what I'm tryingto say is :-
– Don't let your preconceptions get in the way of a good deal !
I agree. Springvale is a great area very popular with Asians and immigrants who come there being close to markets, restaurants and shops. Many come there to live so there is a high owner occupier rate. If you can get a place close to the railway station, you will have a good investment. Renters are easy to find and will pay top dollar. Yields can be 6%. The Central shopping centre is being re-developed as is the road/rail crossing where the rail will go underneath the road. The property prices there have been going strong and there is no sign of a slow down at all. The first home owner's grant is certainly helping. Springvale appears to be a safe area and I have spent a fair amount of time there. I have family living there and they have had no "rough" people or had any trouble at all.
I totally agree with Chief Wigam. I used to lived in S/vale (10 minutes walk to S/vale Shopping center). (With my own experience myself) My Parent bought a wood 3 b/room house in 1994 (they still live there) the land is 710m2 for $260K. i think very cheap at that time. (it cheap coz at that time S/vale reported as the Highest in Crime and unsafe suburd in Victoria). About 3yr ago My parent property got offer $830K by an( Asian International Investor). But my parent reject the offer as they dont want to moved to different place. Majority of them will turn the property into Medical clinic or divide into a few Small consultant office for long term investment. In Now day S/vale is very Safe suburb as council did plan to Re developed S/vale (just like Chief Wigan mentioned). So i guess S/vale property prices does increase. Cheer
These lower economic areas are where tenants are plentiful.
When rents go up due to low vacancy rates renters find it harder to find affordable rent.
In the lower priced areas the rents are lower and your investment property appeals to a large demographic of renters.
The more expensive areas cater to a smaller demographic who can afford higher rents.
The other point is getting your foot into the market and building up equity.Good comments.
Since May 09 when I wrote my last post, Springvale prices have gone from strength to strength. I would say the prices have gone up about 50% in 2.5 years based on what I have seen and I do keep an eye out for Springvale as I now live in the suburb so I believe my estimation is close to the mark.I love Springvale.
I have bought all of my properties sight unseen. I rely on gaining information from the local councils with regards to areas to avoid as well as finding out what developments may be planned and what industries support the town. i also speak to a number of real estate agents to find what rental rates are and how long it takes to lease a property of a certain type. if these factors are good then I apply for my finance, have the bank valuation done and if thats okay then have the standard building and pest inspections done.
By the way, newbie, have you bought a property yet?
cheers
Sonya
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