Hello, I am new to the property investing game and like many other people new to the game, I have limited savings/deposit etc as I do not have much equity to rely on yet, therefore I am limited in what I can start with. As many of you are probably well into the game, I was just looking for some advice on the best type of property to start with, eg start with small 1-2 bedroom units close to the CBD (Adelaide), or would I be best to push for standalone houses slightly further out of town?
I know it’s probably a hard question as it depends on many factors, however I guess I am looking for some advice based on the experience of some of you, that if you started over again, where would you start?
Thanks!
DwayneI literally rely on the numbers. For each option, Previous capital gain, future capital gain, rental return, maintenance costs, potential capital improvements, future infrastructure etc. Then I decide based on that. If I can’t afford one now then I look at opportunity cost. For example if I need $40k more savings but the property is likely to go up $40k before I save it then maybe I should look elsewhere or consider mortgage insurance etc.
Hi Dwayne, welcome – I’m sure that this site will impress you.
I know that you are only asking for our ideas on best property types to start with etc. I want you to look at answering some different types of questions because our responses are what’s right for us and maybe not what’s right for you….although I like the first response that you received from “TheNewGuy” to look at the numbers because that is a great way to sift through potential investments…….or not to buy.
You say that you currently have limited savings & equity. Ask yourself why that is & what you can do to increase your savings / equity? There is no need for you to answer that question on this site, you’ll know the truth to that question & it could be for many reasons. (If you are a new starter & good with money then save & give yourself more time. If you are an over spender then live within your means & become wealthy forever rather than act wealthy temporarily). Once you identify why you don’t have savings yet, work on getting the savings & work on educating yourself on the advantages & disadvantages of owning a 1-2 bedroom unit compared to a standalone house (in context of you owning it).
Neither is better or worse, it depends on your situation and what you are looking for. They both have good & bad things. You can make a profit or lose money using either strategy. You need to discover yourself to know which investment is right for you. By the way, this learning never stops because you will always be changing & increasing your skills.
I know this reply is more about sole searching rather than opinions & I am sorry about that. I hope this info helps you.
Cheers & more wealth to you.
Hi @dwayne86
I started off pretty similarly to you. When i first started, I could barely afford houses in any suburb, so did look at units for the same reason you are but end up getting a house and stuck with houses ever since.
I also wrote an article on cashflow vs capital growth for Your Investment Property magazine, which seems relevant to your question – I put a pdf version link to it here http://www.dtproperty.com.au/is-your-property-manager-an-investor-themselves/
D.T. | DT Property Management
http://www.dtproperty.com.au
Email Me | Phone MeAdelaide Property Management - whole Adelaide metro
Generally you’ll do better in Adelaide net yield-wise buying an outer suburb freestanding house over an inner suburb unit, so it depends on what you’re trying to achieve. I’d personally avoid any apartments/multi level units and stick to small groups of 3-4 units if you do want to go down that path, as these give you more potential to renovate and appeal to the owner occupier market compared apartments.
I’d suggest having chat with DT Wayne – he’s an active investor in Adelaide with quite a significant investment portfolio here, I’m sure you could glean some valuable nuggets of info from him.
There’s an Adelaide investor meetup this month too that might interest you – we all generally just catch up for some drinks and dinner and talk about whatever – Seven Stars Hotel, 6pm 23rd of March.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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