I am originally from Adelaide and am looking at my first investment property. I have previously only considered South, but with the pending movement of 1200 + pers out to the Northern Suburbs with Defence have been rethinking the Southern approach. New house and land are generally under $300, 000, with a rental return of $300 pw.
Any guidance on the topic or like scenarios people have come across would be very much appreciated.
Cheers Scott
What do you want to achieve?
Defence investment properties guarantee rent but they charge you something like 16% management fee on the rent. If your only getting 5.2% rental return (after the period of 0% rental return while you are building the property) then you are going to be very negatively cash flowed.
This isn’t always a bad thing, but that is why I ask what you want to achieve. If you want passive income and want to be financially free (don’t we all) then maybe you should be looking a positive cash flow property instead of Defence housing with a crappy 5.2% rental return. I can find properties that give me over 10% rental return…but that is my strategy.
So many people invest without a strategy and then ask for advice. But if you know what you want to achieve (a certain passive income, a certain level of growth) then you can look at properties and analyze them yourself and ask for specific advice. So get a plan and assess each property based on what you ultimately want to achieve. If it gets you closer to your goal then invest…if it moves you further away then run for the hills.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeThanks Ryan, I think that clears a bit up. At this stage I am just looking to get my foot in the door, but the more guidence I get through doing that the better. 10% return sounds good, but I have been researching for while now and haven't really got my head around everything, just trying to find the right balance between risk and reward. Thanks for your input though, at least puts me in the right direction.
Cheers Scott
No worries Scott,
It is good to get your foot in the door, but not in the wrong door…and yes in property investing there are wrong doors and right doors.
For example if you wanted to generate passive income from your property investments to fund your lifestyle then buying a negatively cash flowed property would be putting your foot in the wrong door. Yes you might get growth to invest with later, but if you plan was to get passive income you would be taking a huge risk buying a negative property.
So get clear about what you want
Ryan McLean | On Property
http://onproperty.com.au
Email Me
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