Hi All,
Currently, i cant decide what type of IP should i go for with a budget of $450K in Brissy. Will be staying there for a year before renting it out.
I have been actively looking around for the last 2 months. Friends have told me to go for houses within 10km to the city, as land is the real thing which is valuable. However, with a budget of $450K, it would mostly be Timber houses, and most probably i have to come out cash-of-pocket for some more renovations works, which i want to avoid.
I have been looking at Units also, but noticed that at this moment, most buyers are paying above the asking price, just to secure the properties fast, thanks to Rudd Government of giving $14K and the low mortgage rate at the moment.
For the best capital growth and best rental yields, which type of property should i go for?
Any kind replies will be much appreciated.
Cheers
NitHi Nit,
I’d say that in any market, as an investor you don’t want to be paying over the odds for a property that may deflate in value once the FHOG Boost has disappeared. Since you sound like you are going to rent the property out for a few years after you live in it to claim your FHOG, this may not be such a concern for you. Almost anything in this country will go up over a 5-10year span.
The thing you should worry about buying an overinflated property is that it might drop by the time you want to refinance yourself into your next property in 12 months’ (?) time. Picking something with a high risk of a drop in value if you wanted to do something like this could seriously hamper your equity available to buy something else, and even stop you in your investing tracks for a bit!
If you’re serious about buying a property within 10km of the Brisbane CBD, then you might be better off to buy a renovator and do it up. Especially if you are able to afford to put down your deposit and keep the FHOG to cover your renovation costs. There’s absolutely nothing wrong with a good old Queenslander. They hold their value exceptionally well in spite of the higher maintenance involved (and there are things you can do to reduce this) because they are popular with people who appreciate a bit of history.
The value (I am finding) at the moment is in getting a bargain in a flat market, and value-adding to create equity for later. Once the FHOG Boost is out of the way and we can see where the market is going again after a couple of months, you might be able to consider buying something that will be low-maintenance and will take off in value by itself once the boom-times come around again.
We bought a renovator eighteen months ago, and recently had it revalued at $60K over what we paid for it before the start of the recession. The improvement was all in the affordable renovations we carried out. It is possible in this market to gain massive equity.
I probably don’t know the Brisbane market as well as my husband, who lived there for 15 years, but these ideas hold pretty much Australia-wide, I believe. When he gets home tonight, I will ask if he knows of any areas further out which are set to go off due to infrastructure development further afield. I don’t think there are many capitals in Australia which have only one “CBD”, so you might find more what you are looking for further out near another hub area.
I hope this helps!
Hi Nit
Must admit i havent had any issues with valuations coming back short on unit properties in Brissie although there are certainly some very hot areas around the City at the time.
As long as you structure your loan correctly you wont have an issue when you decide to rent it out.
Normally suggest for clients in your position an interest only loan with 100% offset account attached.
If you want to email any addresses you are looking at i can run up a Residex report for you and email it back.
Richard Taylor | Australia's leading private lender
Are you looking at Brissy cause you want to move there? You'll be flat out finding anything 10km from city with that budget that wouldn't need work done. What about along the train lines out to Ipswich or Caboolture? Ipswich is booming, so much infrastructure being put in place. I am currently trying to decide myself. Goodluck
Thanks guys for your so many constructive replies.
Initially, i was looking at the bluechip areas such as Toowong, Indooroopilly, Taringa, Auchenflower. However lately, the prices skyrocketed to ridiculous prices. 2 bed 1 bath apartment going to $380K – $400K.
With this amount of money, i rather put in another $20K – $30K (~$420K) to go for a Townhouse (3beds 2 baths) in Coorparoo, Greenslopes, Holland Park, which are well linked to M3 highway, to reach city.
When considering Townhouses, again i am asking myself would it be better if i get a house, since land is the ultimate thingy which is worth the $.
I prefer 10km close to the city, as myself and my missus work in the city. Furthermore, missus is studying night classes at QUT, have to pick her up after class.
I have thought of looking for cheap-TLC Timber houses. But to TLC, it needs cash-out-pocket, which i try to avoid.
Q1.) BTW. how much will the annual maintenace for a Timber house like? If it is going to be a lot, i will probably stick with a Townhouse.
Q2.) Also, in terms of rental, both Townhouse and House will have no issues looking for tenants?
Cheers
NitP.S – Still lost with IP
hi,
Timber house might cost you $1000yr but how long is a peice of string really, I have a few timber QLDers, but most expenses are tennant related not maintanence and some years there are no maintanence costs.
Prices are soft in the inner areas from my observations right now . try inner south
450k for inner is a stretch but not impossible for 2 beds on a small block . In general you will get a better growth investment with a QLDer than a townhouse for obvious reasons such as;
limited supply
scarcity value
little depreciation on building
more land (core value for city property).
easy to add value, lick of paint, garden tidy up etc
character home, classic architectural style,
generally surrounded by other inner properties being restored therefore adding value and desirablity offertime to the whole area, highly desirable home type, which will increase overtime,
no oversupply issues.My qlders are pretty basic, with minor 80s 90s renos but they have been excellent performers as far as growth which I expect to continue longterm.
Event Horizon wrote:hi,
Timber house might cost you $1000yr but how long is a peice of string really, I have a few timber QLDers, but most expenses are tennant related not maintanence and some years there are no maintanence costs.
Prices are soft in the inner areas from my observations right now . try inner south
450k for inner is a stretch but not impossible for 2 beds on a small block . In general you will get a better growth investment with a QLDer than a townhouse for obvious reasons such as;
limited supply
scarcity value
little depreciation on building
more land (core value for city property).
easy to add value, lick of paint, garden tidy up etc
character home, classic architectural style,
generally surrounded by other inner properties being restored therefore adding value and desirablity offertime to the whole area, highly desirable home type, which will increase overtime,
no oversupply issues.My qlders are pretty basic, with minor 80s 90s renos but they have been excellent performers as far as growth which I expect to continue longterm.
Hi Event,
Thanks for your reply. Should i consider post-war timber houses/cottages? As these will generally cost less compared to QLDers due to the type of wood used?
Cheers
Nit
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