Hypothetical question

The LVR available to you from a lender will come into play in determining where you could “afford” to buy. For instance, if you were able to get an 80% loan (or less, eg 70%) then your budget will be capped at around the $400k mark, which will have a big influence on suburbs and dwelling types that are in play.

Hi Yuley,

I would look or even touch Melton to invest. Capital growth is limited due to too many house land packages available.

Coburg is a growing area and the rental demand is high.

Since you have a bit if time up your hands, why not look at what’s the best way to structure your future investments know.

Cheers
Jp

I would stay away from Melton too. I built my PPOR and lived there for nearly 5 years. The CG was awesome to begin with as it rode Melbourne’s wave but soon went backwards and is only just staring to recover now. But… Like someone else mentioned there’s too much vacant land and house and land packages being released that are keeping prices down. To add to that all the vacant land between Caroline Springs and Melton which will be built up eventually will keep the prices down in the long term too. The rail line will be electrified eventually which *may* help prices but the electrification has been talked about a long time now. Will believe it when I see it.

Any particular reason you’re wanting to invest in Melbourne? What’s your long term goals? Is it 1 or 10+ IP’s? Do you currently have a PPOR? You have $100k to play with which is a lot more than what some can say. You have a good base to start with and can go a long way with it.

Not a problem.

You don’t want to be creating a false economy in a way by pumping too much cash into the deal to make it CF+ either – better if the figures work without bucketloads of cash as it helps you leverage for future purchases without getting into negative territory. If you’d prefer a larger deposit you could do an 80% lend and leave the remaining funds offsetting your PPOR (assuming you have an offset account) thus maximising the tax deductibility of your investment property.

At the end of the day, it’s what you’re most comfortable with but sometimes it helps to challenge your thinking and comfort zone with what works best for the long term.

yuley7575 wrote:

Well originally I was thinking of just going Interest only and hopefully pick a great area that is going to grow in capital. Hold for 7-10 years and sell and do it again in another area. Do this with 3-4 properties spread out over 5 years so buy, hold, and sell. Instead of 10+ properties for 30 years paying them off slowly. I don’t work so were only on one salary and I rather not negative gear or lose money even if it might save a tad on the tax breaks. But yeh, tons of things to consider when buying. CRAZY!

Sounds like a good plan. Similar to what I do – buy properties that support themselves (but at 90% LVR) with an IO loan. I then intend to hold until I reach the stage where CG has put my port folio at a ~50% LVR, sell half and live off the rent of the other half. Need to be wary of CGT though. Aiming for this in around 10 years time for me.

I usually go for regional centres that fit my criteria although I do have 2 in Melbourne and none are NG or CF-.

I like to buy cheap and in need of some non-structural TLC, reno and rent. They may be CF neutral to begin with but not for long.

WaitNoMore wrote:

What about the new East Werribee Project. Near by property’s should benefit.
Definitely not Melton.. Boaganville with heaps of land and new House land packages from 249k…??!!

There is always a special scent in the air in Werribee, has this changed?

Cheers, Ivan