Hello, i have been a memer here for a long time and have been interesting in buying a primarily "investment property." Although i may live in it as a shared tennet for sometime to achieve the first home buyers grant an the associated stamp duty exemptions. Depending on the circumstances after this time i may stay or rent out. I live in darwin and feel that with the new gas plant headed our way, we might see some improvement in the property market in 3-5 years. I have recently came across a few properties which offer very good rental returns. These are generally older style properties which are elevated and have a self contained area built in under. or else have some other sort of dual occupancy appeal. For a propery costing 550 000 i can get a rental return of between 650 and 700 dollars a week rent. As i have a deposit of around 350000 these properties would not only be cash flow positive but also allow me to pay off a home fairly quickly. I am on a modest wage at the moment of $46000 a year as an apprentice electrictian.. but i forsee this improving once i complete my training in approx 1 years time. Just wondering if people think these sorts of properties would be a wise investment? Or would i be better off looking at a newer home which would probably give me around 500 – 550 a week.. but better chance of capital gains. Also is my idea that the older home will not support capital gains a valid one? I mean if the market moves.. doesnt it generally move as a whole.. as there are still people trying to enter the market who are willing to buy at the lower end. Anyway.. your response is much appreciated.. thanks for the time to read this.
Hi Young,
Wow – lots of questions.
Darwin looks to offer some reasonable capital growth prospects in the near future. It wasn't that long ago that Darwin was very expensive so you'll need to consider whether or not it can resume forward momentum again in the near future. It is not always a given – Sydney as a single market wallowed for a number of years after their surge in prices in 2002/03.
The borad concept of buying a shared rental facility is sound and taking advantage of first owner incentives is a wise move along the lines you have described.
Congratulations on saving such a large deposit – you will probably find your lower wage will heavily reduce your borroing capacity and a sizeable deposit will be required. Speak to a good broker about this situation. I am not a broker but the projected rental income may be required to sustain the required borrowings.
As a rule of thumb most markets tend to move as a whole unless you are able to utilise some renovation or cosmetic repair or specific improvements to the property to accelarate the growth of the area. Some people swear by buying older and adding value whereas others are content to buy newsih and track the market.
Hope this helps.
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