Hi All
I am looking to purchase my first IP and would appreciate some advice from more experienced investors.
Basically, I am planning to borrow $200 to 250K and have a decent deposit (more than 20%). After having done some research, it seems that Western Sydney is the only area in Sydney where I would be able to afford to buy.
My plan is to buy a two bedroom apartment preferably for under $200K in Liverpool somewhere close to the train station (Speed & Nagle Streets). I am aware that $200K price bracket would probably buy me a property which will need some renovation, however, I am hoping to buy something in a decent (read rent-able) condition.
The questions that I am trying to answer right now are:
1. Is it reasonable to expect to purchase a two bedroom apartment (preferably with a balcony and garage) in Liverpool for $200K or under. there are few apartments within that price bracket being offered, but anything with a garage and a balcony in a decent condition seems to be priced more than $200K.
2. I am being told by some agents that 'near the station' side of Liverpool is not a good area and that I should pay a bit more and buy near Westfield instead. Do you agree?
3. Having purchased an IP in Liverpool, would you hold it expecting capital growth? (Rental yields seem to be OK in that area, however, I do not think that any of Liverpool properties would pass Steve's 1% rule…. ) Or would you buy something in 'original condition', renovate and try to sell for a profit?
4. Could you think of any other suburbs worth investing in where it would be possible to purchase a 2 bedroom unit for under $200K in Sydney?
Cheers!!!
Hey EvaCD,
The most important thing for you to do is to have an investment strategy. What exactly do you want to achieve from your investing?
Do you want passive income? If so how much?
Do you want capital growth? If so how much?Is it that you want to live in Liverpool or are you just investing there because you can afford it. If you want to live there then it creates a whole separate dynamic to the purchase. But if it is purely investment purposes you have to ask yourself “Why Liverpool?”
Just because it is in Sydney doesn’t necessarily mean it is a good investment. Also if your goal is to retire off your investments your property is likely going to be negative cashflow and go against your strategy.
Think outside the box. Don’t focus on “Liverpool” as the be all and end all of your investing. Don’t even focus on Sydney as the be all and end all. Instead, work hard to develop achievable goals. If you know exactly what you want to achieve you can assess each property and see if it is going to achieve exactly what you want. If it doesn’t you move onto the next.
If you need help finding positive cashflow properties I run a site that may be of help to you. The link is in my signature.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just A Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI bought my second IP in Liverpool 3 years ago and am very happy with it. I bought a house (mortgagee in posession) at a discount and renovated it, making it positively geared straight away. Don't believe the scaremongers saying Liverpool is a bad area (I live in the Eastern suburbs, and was quite worried). I have never had any trouble with tenants, or property damage or any issues at all. The property has gone up 40% in value (partly due to the renos of course) and is now yielding 8%.
So my recommendation is to negotiate hard, look for something that needs a reno, so you can add value and then hold it. As a rule of thumb, I would usually spend about 10% of the purchase price on the reno, and when it's finished, get the property revalued, and it would have gone up 20% in value (basically a 10% gain ).
Spos,
Thank you for the info! Can you tell me where about in Liverpool is your IP? I am also from the Eastern Suburbs so not very familiar with Liverpool….. Would you recommend buying near Westfield or do you think near the station is also OK? Cheers.
Hi EvaCD,
my property is about a 5 minute drive from Westfield and a 5 min walk from the station, basically between the highway and the station, but closer to the highway, opposite a park (sorry if that sounds cryptic, but I don't know if there is a name for that part of Liverpool).
My strategy was to make the property above average through the renos, so that I can ask above average rent from above average tenants, and it seems to have worked (so far, so good). I wouldn't go right next to the station, but somewhere where people can reach the station easily. Just focus on doing a quality reno, so that you can attract a quality tenant. Obviously a security building is important if it's a unit.
Hope this helps.
Thanks again Spos, this does help.
One final question regarding rents.
I noticed that a lot of Liverpool units on the market are currently tenanted but tenants are holding over (month to month tenancy after the fixed term lease has expired). It looks like rents under these holding over arrangements are about $220 p.w. I am being told that this is too low and any half-decent 2 bedroom property should rent for $250+ p.w. with no problems. This seems to correspond (roughly) with what I see on realestate.com rentals for Liverpool.
Can you shed any lights on market rents in Liverpool?
Again, many thanks!
Hi again,
I am not an expert on unit rents in Liverpool, as I monitor house rentals, and those have increased significantly due to a lack of supply. Just have a look at domain and realestate and monitor the number of properties in your category (2 bedroom unit, renovated or not). If you have 50 similar ones available (and they remain on the site for more than 2 or 3 weeks, then you probably can expect to rent yours at the lower end of the range.
What I would do is drive out to Liverpool and attend a number of open inspections for rentals in your category. That way you can pick up a lot more details than just looking on-line and you can see how you can differentiate your unit through a reno so that you can achieve a rent above average.I wish you success!
That is an excellent idea! I will try to fit in a couple of rental inspections with my IP search inspections. Thanks again for your advice Spos.
Hi EvaCA,
I actually live very close to Liverpool, as spos has said, I'd avoid being close to either the station or westfields, but try searching a km or 2 from these. Liverpool isn't a bad area as most people think and if you have a good place (reno'd) within walking distance or a short drive to the station and westfields you should have no problems with tenants…
I have just secured in last 3 months about 6 in Speed and Nagle street.
These were purchase between 160-180k, rents being $280-300pw.
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