Hello all,
I have $550k max to buy my first investment property. This is through my super, the loan has just been approved. I guess the property is a long term investment after capital growth. For a long time I thought I would buy in Melbourne or Queensland. I was going to use a buyers agent as I don’t have the time. However I know I shouldn’t listen to the news but the ‘bubble’ the papers keep talking about has me a little worried of buying in Melb or Sydney at the moment although it is a long term investment.
I understand that this is an open ended question and very hard to answer but does any one have any ideas where to buy, type of property etc. I have actually started looking in Hobart as I grew up there and know it well. It is amazing what $550k can buy there.
Thanks in advance.
Peter.
Hi Peter
Nobody can guarantee you with absolute certainty what will happen in a given market. However reasonable assumptions can be made when considering a set of circumstances.
Your SMSF is going to need a reasonable yield in order to stand on its own two feet.
Your reliance on strong capital growth is somewhat dependent on your age and thus proximity to retirement age, and thus how strongly the property has to perform in the absence of any other assets.
It would be handy if you are able to comment on your age, and the cash position of your SMSF, in order to secure more useful comments in response to your post.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for your reply Jacqui.
I am 38, and in terms of my cash position for the SMSF – I will be leaving around $30k in an offset account for any issues like non paid rent etc.
Please let me know if you require any more info…
Kind regards,
Peter.
Hi Peter
I am assuming you have someone advising you in some regard, since you already have a SMSF setup with a loan pre-approval.
Some prudent things to ponder would be:
Does the SMSF have corporate trustee or personal trustees? There are many pros for corporate trustee and many cons for personal trustees.
Are there other members in the SMSF or are you the sole member?
In terms of choosing a location to buy, it is important to stick to statistics and facts. Talk about a bubble that is not supported by fact can merely be noise. Also be very careful about investing in an area merely because you grew up there and know it well. That does not necessarily make a good investment decision.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Another thing to think very carefully about is rental yield. A property priced at $550k would need to fetch a huge weekly rent to stand on its own two feet. It would be worrying if the ability of the SMSF to service the mortgage on this property relied on you working and thus having your superannuation contributions from your wages dripping into the SMSF. Conversely a property that stands on its own two feet (or close to it) enables the SMSF to start saving for its next investment.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks Jacqui,
I really appreciate your comments. In terms of the trusts, yes all set up by a proper company, a competitor of yours I would actually assume.
Your comment about the rent which I need to cover the loan is a very good point. I certainly need to make that item on top of my property shopping list. For some reason I am leaning towards something in Queensland although I will chat to a buyers agent I was going to use in Melbourne again. I better put another post on here to see who are good Buyers Agents in Queensland.
Thanks again,
Pete.
Hi Peter,
Just to share my personal experience with you.
I am quite new to the property market and am now in Sydney, but I had just invested in Brisbane as an sales agent saw my ad and recommended me her properties in Brisbane.
The developer guarantees 5% rental yield for the first year. I think the rental yield for the next few years is not likely to fall and with the location and quality, those apartments can reach such rental yield even without the developer’s promise because the developer will not trouble themselves.
I can give you the agent’s email address or mobile phone numbers if you like.
Cheers,
Emily
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