First Time Invester – Where to Invest?

Hi Nick

For 700K in Brisbane you could buy something in a really top suburb with good long term growth but not sure you would get the return you need.

If you are looking for rental income you need to manufacture the return over time.

There are many areas that might meet the need without breaking the Bank.

Personally unless it is a Torrens Title Townhouse in a good suburb (and these get snapped up very quickly due to the lack of body corporate) I would avoid both Units / Townhouses in Brisbane.

Cheers

Yours in Finance
0-40 Properties in a decade. Ask me how.

Nick wrote:

Hi Guys,
I have been dabbling at the idea of getting into the property market. But I have to admit, I was one of the people who said “The market is at its premium now, I will wait when the price declines”. Truth be told, that day has never arrived.
So now, I have decided to put my foot down and look at buying my first investment property. I live in Sydney, but I believe that Brisbane will be the best place to start. Ideally, I would like a property that will pay off my interest only loan through, rental revenue. I know this is achieved able with apartments, but is it possible with houses? I have a borrowing capacity of 700k, ideally I would like to spend no more than 500-550k, for my first investment property.
What suburbs, in Brisbane, should I be looking into that will achieve these results? Or should I be looking in Sydney? I personally think Sydney is over inflated, do people share this opinion with me? Should I hold off and buy a property in Sydney, when the price starts to cool down?
Any insight into helping me get my first investment property would be much appreciated.
Thanks in advance
Nick

Gday @nickstazzy welcome to the forum. Good to hear your honest thoughts on the market, and to be honest I meet lots of people in your situation. The people who wait for many years to see a major market fall are often disappointed. On the other hand I also know a few who purchased right at the end of the current (and previous) Sydney boom and saw 3-4yrs of zero growth (or mild losses) and this is also disappointing. The opportunity cost of not getting some growth in those early years means it matters – if you take a 30+ yr outlook you can buy anytime, but if you need to try and get some growth in the first 2-4yrs to leverage, and get more property then the location of the fist one counts.

As a general rule Sydney media and Sydney folk have a very Sydney centric mindset when it comes to property. I don’t blame them (I was born there and spent the first 30 yrs of my life there before moving to paradise) however once you open your mind to the alternatives there is opportunity in multiple locations around the country. I started in my early twenties investing interstate and don’t regret it one bit. Since then have bought across the country when it suited, and currently doing deals on NSW South Coast as the Sydney ripple effect plus loads of retiring baby boomers make it great timing to do so. Townhouses in central Wollongong suburbs around $500k are so popular with local families and the topography/geography means oversupply isn’t really ever possible. Further south to Shellharbour you can get freestanding homes with development potential (like a dual occupancy) for that money. Yields are lower to begin with but instant 100k equity boost if you get it right.

As others have mentioned South East QLD as an option, I would agree in general terms the timing for Brisbane and Gold Coast is much better now that Sydney, and have been personally travelling to Tweed and NE NSW for investments recently too. If you want to achieve cash neutral payments on a mortgage there it is possible if you know what to look for, perhaps moving a couple of suburbs further out from CBD might give you the balance you are looking for – basically the further out you go the cheaper the homes and the higher the yields. The ratio and total spend is up to you. If location is everything then be happy with units but make sure the location is limited in supply. I have purchased waterfront units well under your budget that were cash neutral (6-7% gross returns, low bc) for clients, but in less desirable or more affordable areas that some folk would avoid as they are by no means trophy suburbs so it totally depends what you are hoping to achieve. Zoom out and consider your goals, and the strategy must fit the goals, not the other way around.

I agree with Richard @qlds007 torrens title or greater land component in quality suburbs will be great from a capital perspective but yields might be not quite what you are hoping for so a little extra effort might help – either with a cosmetic renovation or granny flat or other development. (not sure if this is what you were referring to Richard?)

Check out Beenleigh. Seems to be a bit happening in the area.

Beenleigh seems to be doing ok but seems in a bit of a lull at the moment. I hear there is infrastructure planned there, including a new shopping centre with a cinema, according to the internet (http://gassman.com.au/projects/era-beenleigh/ and http://www.couriermail.com.au/questnews/logan/beenleigh-skyline-set-to-undergo-dramatic-changes-after-logan-city-council-approves-highrises/news-story/354e2dac8353ae7496c19291aa831f84). Cafe culture is on the rise, new coffee shops, town square etc. Rates are a bit steep though, and you kind of need to screen your tenants carefully. Returns for houses should still be around or over 5% at the moment. Anyway, just my thoughts.