Afternoon everyone,
I have been an avid reader of these forums for some time now, soaking it all up. My GF and I are now looking to purchase.
Position:
Cash: $48,000
Equity in existing IP (Valued at $325K) $39,000 - already in LOC
Total funds: $87,000
My girlfriend and I are on combined incomes in excess $170,000
We are both 29yrs old (no dependants)
No other loans.
I understand that you need to pick the strategy which works best with your risk profile and goals.
We are trying to do the opposite of all of our friends, not buy the big fancy house, TV and cars now but live modestly and invest in our future.
Our goals is to derive $50,000 of rental income.
For the sake of this post I wont outline all the workings.
Could I please get some feedback on a couple of strategies I have going round in my head. As every time I get clear on the plan I come up with another.
1. Inner Northern Suburb VIC
Looking at returns etc we feel that if we put all our eggs in one basket on a purchase around $720-$750K we would derive the best capital growth for the future. But mortgage repayments would be close to 900 P&I before rental income.
Looking at returns etc we feel that if we put all our eggs in one basket on a purchase around $720-$750K we would derive the best capital growth for the future. But mortgage repayments would be close to 900 P&I before rental income.
Pros:
Will derive strong capital growth, we are still young enough to sit on this for long period of time.
Will be able to generate equity to obtain deposit for another IP (around $350-$400K)
Cons:
Rental yield is not the strongest in this area as yet
Would require renovations in time
The girlfriend would most likely want to move into this in 2 years time due to proximity to city..
If we moved into it in a couple of years it would affect cash flow due to significant repayments on large principle.
2. 20km Fringe Suburb
Ie Sunshine, Glenroy, Albion, Maidstone, Oak Park
I spent some time looking at buying a dual-occ site and retaining the original dwelling on the front with scope to reno it.
Price range in the $400's to early 500's
Pros
Holding costs until developing would be minimal
Scope to develop and then retain both if capital improvement in the area or sell front and retain new unit, hopefully at 80% LVR
Then use equity generated to go again etc
Would seek to buy another IP before year end
Cons
Selective with suburbs as re-sale of units and front dwellings can vary greatly in diff suburbs (around the same price bracket).
Will need to pay down some of the loan in order to get development loan.
Opportunity cost of not buying in better suburb
3. Undervalued Coastal Suburbs
I have also looked into some of the coastal suburbs that have good infrastructure spending in them but are relatively cheap compared to suburbs close by. Approx $450K, within 1km of the beach.
Pros
Scope for development as would purchase a site that fits the profile for future development
Would seek to buy another again before year end
Cons
Coastal suburbs tend to dip when the market declines.
Given our borrowing capacity there may be better buying closer to CBD
4. Multiple potential dev sites 20km cbd ring
Buy and rent out indefinitely, but ensure IP's have scope to develop if we changed plans. Potentially also purchase in Brisbane due to my GF's knowledge as she grew up there.
Or variations of all of the above.
I guess it comes down to committing to one expensive properties and giving up a lot of cash or buying multiple properties slower.
As you can see I have struggled to commit to just one plan.. Have procrastinated and strategized all of the above with countless excel spread sheets but just have not taken action.
Any guidance and recommendations from members would be appreciated..
Many thanks in advance.
I have been an avid reader of these forums for some time now, soaking it all up. My GF and I are now looking to purchase.
Position:
Cash: $48,000
Equity in existing IP (Valued at $325K) $39,000 - already in LOC
Total funds: $87,000
My girlfriend and I are on combined incomes in excess $170,000
We are both 29yrs old (no dependants)
No other loans.
I understand that you need to pick the strategy which works best with your risk profile and goals.
We are trying to do the opposite of all of our friends, not buy the big fancy house, TV and cars now but live modestly and invest in our future.
Our goals is to derive $50,000 of rental income.
For the sake of this post I wont outline all the workings.
Could I please get some feedback on a couple of strategies I have going round in my head. As every time I get clear on the plan I come up with another.
1. Inner Northern Suburb VIC
Looking at returns etc we feel that if we put all our eggs in one basket on a purchase around $720-$750K we would derive the best capital growth for the future. But mortgage repayments would be close to 900 P&I before rental income.
Looking at returns etc we feel that if we put all our eggs in one basket on a purchase around $720-$750K we would derive the best capital growth for the future. But mortgage repayments would be close to 900 P&I before rental income.
Pros:
Will derive strong capital growth, we are still young enough to sit on this for long period of time.
Will be able to generate equity to obtain deposit for another IP (around $350-$400K)
Cons:
Rental yield is not the strongest in this area as yet
Would require renovations in time
The girlfriend would most likely want to move into this in 2 years time due to proximity to city..
If we moved into it in a couple of years it would affect cash flow due to significant repayments on large principle.
2. 20km Fringe Suburb
Ie Sunshine, Glenroy, Albion, Maidstone, Oak Park
I spent some time looking at buying a dual-occ site and retaining the original dwelling on the front with scope to reno it.
Price range in the $400's to early 500's
Pros
Holding costs until developing would be minimal
Scope to develop and then retain both if capital improvement in the area or sell front and retain new unit, hopefully at 80% LVR
Then use equity generated to go again etc
Would seek to buy another IP before year end
Cons
Selective with suburbs as re-sale of units and front dwellings can vary greatly in diff suburbs (around the same price bracket).
Will need to pay down some of the loan in order to get development loan.
Opportunity cost of not buying in better suburb
3. Undervalued Coastal Suburbs
I have also looked into some of the coastal suburbs that have good infrastructure spending in them but are relatively cheap compared to suburbs close by. Approx $450K, within 1km of the beach.
Pros
Scope for development as would purchase a site that fits the profile for future development
Would seek to buy another again before year end
Cons
Coastal suburbs tend to dip when the market declines.
Given our borrowing capacity there may be better buying closer to CBD
4. Multiple potential dev sites 20km cbd ring
Buy and rent out indefinitely, but ensure IP's have scope to develop if we changed plans. Potentially also purchase in Brisbane due to my GF's knowledge as she grew up there.
Or variations of all of the above.
I guess it comes down to committing to one expensive properties and giving up a lot of cash or buying multiple properties slower.
As you can see I have struggled to commit to just one plan.. Have procrastinated and strategized all of the above with countless excel spread sheets but just have not taken action.
Any guidance and recommendations from members would be appreciated..
Many thanks in advance.