Hi,
First post, been hovering and reading lots and lots, learning slowly and head absolutely spinning with info and questions! Here goes one…
I’m interested to know what people think “acceptable” performance indicators are for our first investment property in Perth?
I do not need the concept of PI sold to me, but would like to make our first purchase relatively safe and benign so that we can learn the ropes with not too much risk. I’m thinking of approx $250K 1bed units in the established city fringe suburbs… your “solid performers” that will always be in rental and sale demand: Leederville, Mount Lawley, Victoria Park, South Perth, Subiaco, etc… places that appeal to young professional workers in the city which are close to transport and cafes etc. A reasonable mix of rental yield and ‘safe’ capital growth.
To fund this purchase we will be releasing savings (I have assumed I will need 20% deposit, i.e. approx $50K?) which are currently offset against our PPoR mortgage at 5%.
Assuming a rent of $250/wk, my current calcs show that we will become CF+ by year 5 and by year 7 our ‘Net Wealth’ (sorry, not great on financial terminology) exceeds that if we had left our deposit money offset against our PPoR.
What do people think about this? OK? Lousy?
Generally speaking, when evaluating different properties, what performance indicators would investors be looking for in these sorts of suburbs/units (I am not (yet) interested in buying interstate or in mining towns etc.).
OK, even more generally I guess I just need guidance and encouragement to get me on my way, and this seems like a good place to get it!
Cheers
Oh, and feel free to recommend alternative city-fringe suburbs in Perth if you think they have better potential!
Thanks
You need to consider leverage. You are investing 50k and the return is $13,000 is 26% return on your money p/a.
from capital growth you are using 250,000 say 4% growth a year in 5 years time is 304,000 so you have made another 20% on 250,000 but remember 200,000 was the banks borrowed money so the capital return on 50k is 108% return.Generally speaking, when evaluating different properties, what performance indicators would investors be looking for in these sorts of suburbs/units (I am not (yet) interested in buying interstate or in mining towns etc.).
What the growth of neighboring suburbs is as the growth will come to this suburb if the growth suburb is too expensive.You need to be in it for the long term as when your property grows you will be able to borrow against the equity.
OK cool… leverage. So is that good leverage then?
I’m investing $50K and the return is $13K (26%- sounds great)…. but then for the first 5 years i’ll be CF-.
I understand that i’ll need to be in it for the long term
Cheers
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