Hi Guys,
I've been in a bit of a dilemma for quite some time and was wondering if I could get some advice.
I'm looking to invest in my first property and have around 100k to put down as a deposit, however I'm having trouble deciding where to invest my money.
I've read good things about regional areas such as Bendigo having great potential for capital growth, but I'm not sure of how big of a gamble this would be. As house prices are still relatively affordable down there, would it be ideal to split my 100k and invest in two houses which are valued at around 240k each? This would mean that my properties will be positively geared relatively quickly if not from the start, and potentially a good money maker to just have on the side.
OR
Should I invest the full 100k closer to Melbourne? I'm looking to hold on to this investment for as long as I can, so I thought perhaps going for something that's low maintenance like an apartment closer to or in the city? I know there's a lot of stigma around investing in apartments, but with house prices becoming more and more unaffordable for first home buyers, apartments seem like the next best thing.
Would greatly appreciate your thoughts
Cheers,
Tracee.
Hi Tracee
Welcome aboard.
With the $100k – is that equity in existing property or cash?
If cash, do you have an owner occupied property?
In terms of how much to use towards each purchase – it's different for everyone depending on their tolerance to risk. I have some clients who would stretch that $100k over multiple purchases using smaller deposit and taking out larger loans. I have other clients who would prefer to use the $100k to cover a larger deposit, avoid LMI, and purchase the one property.
You need to work out what you want to get out of property investing. From there, you need to devise a plan – start with the end goal in mind and work backwards.
$100k is a good start – you just need to use it wisely.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Tracee,
Generally speaking investing close to the CBD would be a safer long term option. Regional properties require a little more finesse in timing the market to see strong capital growth. I think all property types (houses, duplex, apartment, units etc) have their place in the market, its a matter of understanding who wants to live there and what would they need. As Steve McKnight said, see it as a problem solving exercise – provide people with affordable accommodation that services their needs.
There are many resources available online that give you a start in understanding residential markets. http://www.residex.com.au provides a free report for any suburb which includes demographic statistics and price trends for units and houses.
Although i am yet to invest in property, through my line of work I have seen first hand the benefits of government expenditure in regional areas and the impact that has on local prices. I am not familiar with Victorian government processes but in NSW I keep an eye on major project applications, ear marked land for future employment lands and State and local land use strategies. These give you a fair indication on where public money will be spent, leading to increased desireability and ultimately increasing house prices!
Hi Jamie,
Thanks for the advice!
The 100k is in cash, and I currently don't have an owner occupied property. I think my tolerance to risk is quite high – as I'm yet to believe that there is such thing as a property that is 'guaranteed' to make you money – so I know that everything will come with risk.
I guess the main thing I want to get out of my property is having a small cash generator on the side; something I won't sell for at least 10-20 years or more and a property that won't put any strain or burden on me. If I could find somewhere that's less volatile to invest my money and let it run on it's own, it'd be ideal.
Cheers,
Tracee
Hi Paul,
I'll definitely start looking into government projects in regional areas, but will also keep in mind the benefits of the CBD – a great piece of advice, thank you!
Cheers,
Tracee
Hi Tracee,
Reading through your post I am not sure if you are chasing capital growth or cash flow as both rate a mention.
First step for you is to work out how you will use your properties over the long haul – intend to sell and realise gains or live off cashflow.
Once you work out the answer to this question you will then start to identify which property/ies suit your plans in the long term which, in turn, helps you to identify where you buy.
In working out what you want to achieve you'll need to consider a whole range of factors such as your age, income levels, family & career plans and so on. All of these factors, along with your grand plan, will steer you towards your most suitable property.
Sorry for not telling you where to buy – but I simply don't know enough about you.
As a footnote if you are looking for both capital growth and cash flow you may need to look at some sort of value adding strategy.
Hope this helps.
I too am currently looking into Bendigo so anybody with some advice on the area would be good. Thinking close to CBD in Golden square area. Not sure on New or near new 2 – 3 bed unit or older home on good block.
I live in Echuca so only 1 hour drive from home.
Like Tracee I have also considered inner city apartments but there seems to be far too much on the market.
The new regional rail link and great facilities of Bendigo are appealing.
Regional areas also seem to be good place to start investing and cover a mortgage should a property have a vancancy for a few weeks
I have a few investors who have purchased near the uni and getting quite strong yields – I would prefer houses to units though.
It would be good to speak to an expert (whether it be agent or investor) who knows the area inside out.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Tracee,
I definitely recommend that you invest in an apartment, due to the higher affordability and constant rental growth. Also, I believe that a unit of around $450k, in a crowded suburb, with many amenities and high rental yields, can offer more capital gains than dividing your investment into two $240k properties.
If property prices are as low as $240k than the area may not be so attractive, and it may not have a constant economic growth potential. A thorough research is mandatory. Success is determined by investing in a dynamic market, sustained by long term projects that boost the area’s economy.
RP Data, Sqm Research, Property Observer, Residex, and APM Monitor can help you identify good suburbs with high capital gains potential. I recommend you start your research with Darwin and its suburbs, as the region registers to have the highest rental yields and lowest vacancy rates in Australia.
Cheers,
Emil
Emil,
At first I couldn't understand why you would recommend a certain type of unit, in a certain price range, in a certain city? Seemed like very narrow minded advice to be giving to a newbie.
Than I seen your signature and it all made sense!
Generally it's a good idea to contribute to the forum before you try offload one of your developments
Just out of curiosity, how much commission would you receive from the sale of one of the above units?
Cheers,
Hi Tracee
If you have a $100,000 thats great but it also depends on your income. However what you should be doing is buying for capital growth and to do that you are more likely to achieve that in a major city than Bendigo. But avoid the city and areas such as Docklands that will become over supplied. Personally I am based in Melbourne and I am involved in 2 development projects currently but I also think the inner city market of Brisbane is currently undervalued.
Do not buy in an area just because it is close to home. I would also suggest you invest your money rather than buy a home to live in your area.
Sit down and write down what you are hoping to achieve and what your goals are then you will have a clearer view of your vision
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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Have to be honest with a 100K deposit you are far better off sitting down with a Professional and putting in place a structure to enable you to go forward with a spread of investments.
As a Financial Planner if you were a client of mine who had an appetite for 'high risk' i certainly wouldn't let you throw in a 100K to a single property without working out a structure to maximise your return going forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Nathan,
Regarding your objections:
1. Certain City – Darwin is not just a certain city, according to RP Data, Property Observer, SQM Research, and APM Monitor, Darwin is the property market leader since 2004 with highest rental yields, highest employment participation, and lowest vacancy rate. It is a property hotspot according to experts, not a certain city.
2. Price range – the price range was defined in the initial forum post (question "should I invest in two properties around $240k each or in just one property?". I adviced that it would be a better decision to invest in one property. Just one property means that we multiply $240k by 2 and we get around the price range I mentioned)
3. Certain type of units / developments / commission: At this point the company I represent, Sunbuild, does not have anything for sale. If you enter our website you can see that all our developments are sold out, so no commission or development offloading here..
Cheers
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