Hi,
I am planning to buy my first investment property around the half a million range. I just do not know how to shortlist the suburbs. I am looking for long term growth with not too much of negative gearing.
Thank you.
Hi Cellphone
Residex offer a report a Best Rent Report which lists 100 suburbs with a predicted return of at least 10% p.a. 5% rental return and 5% capital growth.
http://www.residex.com.au/index.php?content=positive&from=lhsmenu
Well. I got this info from another site. I am looking for some practical advise ???!!!
Some members say that Residex report is based on past statistics, which would not take into account what's happening in the current market. So may be advise from real experience would help. I think I am looking for list of "Can't go wrong suburbs in Sydney".
Thank you
Cellphone,
You have not provided enough information as to what sort of growth you are after or the gearing or cost of funds or your MTR.
$500k is a reasonable amount of money, it will buy a good apartment in most capital cities where rent yields may get to 5% plus but it will most likely be negatively geared. What is too much for you?In Melbourne, depending on cost of borrowings , depreciation and other costs and MTR, you could be cash after tax out of pocket $9k pa. Buying an OTP in Melbourne, you could be $6k out of pocket.
It may be enough to buy two houses in regional areas, returning maybe 6% yield with perhaps not as strong long term capital growth. It could be a buy in ACT and take advantage of the stamp duty deduction on leasehold. You could look at the NRAS deals where they may return positive after tax cash flow due to the tax benefits. DHA is another option where generally higher rent yields can be obtained. Each have advantages and disadvantages and it is about matching the property type to your needs to be able to build a property portfolio where the property type enhances you ability to obtain finance for the next purchase.
Good luck
GregThanks Greg for a very detailed response. Initially I was considering buying anywhere in Australia. But now I am very keen on getting something in Sydney on the Eastern Suburbs along the beach. Maroubra seems affordable. Any advise on this?
Certainly worked with an excellent Buyers Agent that covers Sydney, Central Coast and Newcastle who is also a forum member so let us know if you want his details.
Richard Taylor | Australia's leading private lender
Yes Please. I have researched on a lot of buyers agents in Sydney and I am now totally confused as to which one to choose. Or even wondering if appointing one is worth the money.
I refer clients to a select and small number of buyers agents in Melbourne. I have met them all, gone through what they offer, what type of properties and what areas they cover and whether they specialise in the investor market or OO space.
I then say to clients, go meet them, ask questions and at the end of the day, it is about the service offering suiting your needs and that you can relate to the people involved and that they can develop into that trusted advisor role.My biggest area of concern is that some will buy a property for you that they have access to now, not necessarily what you need to advance your portfolio.
I know only one BA in the Sydney area, she hosts the InvestEd forum (similar to this site) and anyone who spends that time and committment to help investors, is worth considering.
Good luck
GregI've used some buyer's agent before, they only sent us a couple of deals throughout the year. We end up buying one property from them. but I just think the speed they provide deals is not fast enough for me. so I end up doing my own research.
I would say set a financial target first to decide the price range you are looking at, then add other criterias such as transport, schools, shopping, yield etc to filter the suburbs.
it is quite overwhelming to start with. But if you can only afford a mortgage of 500k, why waste energy in the suburbs where everything is over 1 mil? once set up the price range target, the picture will be a lot more clear.
hope it helpsTo achieve good return on property investment, one should be a risk taker and take positions that go against the general market sentiment. Be a contrarians by buying property during any economic crisis and selling during the boom time.
cell phone,
Are you looking for just a buy and hold or would you like to get a return on your investment immediately.
I use wraps or vendor finance as my property investment solution, it gives me peace of mind because no matter how interest rates move I stay positively geared.
Also I mark up the price so harness equity growth immediately. (part of it is the buyers deposit, currently positive cashflow and in a few years time the payout of the backend)
I hope this info was helpful.
Paul, I have no idea what you are talking about. What is wraps and vendor finance? What is marking up the price?
Hi cellphone
I will give you a current example.
There is a couple that my partner and I know and they want to buy a 400k home, but they dont qualify for a normal bank loan.
We step in and mark up the price by 17% to make it 468k
We then create a contract (vendor finance agreement) that says they agree to the marked up price and will put a 25k deposit down, then they pay principle + interest repayments on the remaining remaining amount for the next 25 years.
They are responsible for outgoings such as rates, utilities, body corp so we do not pay for that.
So as you can see their repayments are higher than ours and we have no outgoings as well.
usually they pay out the agreement in a few years once they finally qualify for a mortgage from the bank and then we receive the remaining amount owed.
This is our website if you want more information http://www.vendorfinancehomes.org
Feel free to email me if you like [email protected]
For goodness sake, please do not try to cell any products for me. I am not here to buy anything.
I am not trying to sell you anything.
I am just trying to help, but if you want to take the negatively geared path its your choice, i am only trying to provide information i wish i had with my first property investment. would have saved me tens of thousands of dollars.
I will not reply anymore
all the best with your investment choice.
Paul
What has your Company down with NCCP.
I assume you went the Credit License route rather than ACR.
Richard Taylor | Australia's leading private lender
Hi Richard,
We have already registered for the Australian Credit License so that we are compliant before 31 Dec 10
At the recent Vendor Finance Association meeting Lewis advised us its better to be safe than sorry.
Cheers
Paul
Paul agreed we went that route also at First Home Owners Group Pty Ltd.
Not a matter of being safe rather than sorry more a matter of being compliant or being prosecuted.
Richard Taylor | Australia's leading private lender
Cheers Mate
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