1 BR shoebox inner city or family home in regional VIC

[asryan]

Hi,

Interested in your thoughts on whether you would choose a 1 bedroom inner city (CBD, calton, Hawthorn, Collingwood) student type shoe box property that seems to deliver a decent return or a larger suburban home in a regional area (Moe, Portland, Morwell) that seems to deliver about the same return. I am looking for positively cashflow investment property but only want to spend about $200K.

Many thanks
Anne

 

[TMNT]

this is a good start

http://somersoft.com/forums/showthread.php?t=103418

 

[LeoT]

Asryan,

can I ask what are your reasons for wanting positive cashflow investments and why your thinking about this shoebox type investment?

Don't get me wrong, i'm not saying positive cash flow is necessarily a bad thing, just would like to understand YOUR reasons for wanting it. I have met heaps of ppl who say they want to invest in 1 thing, but when you dig deeper to find out what are their actual goals/aims, it becomes clear that the strategy/investment dwelling they are looking at has nothing to do with where they ACTUALLY want to go/end up.

 

[asryan]

Asryan,

can I ask what are your reasons for wanting positive cashflow investments and why your thinking about this shoebox type investment?

Don't get me wrong, i'm not saying positive cash flow is necessarily a bad thing, just would like to understand YOUR reasons for wanting it. I have met heaps of ppl who say they want to invest in 1 thing, but when you dig deeper to find out what are their actual goals/aims, it becomes clear that the strategy/investment dwelling they are looking at has nothing to do with where they ACTUALLY want to go/end up.

Hi LeoT,

OK so here comes my long story....

I have invested in property previously and generally had properties that have had reasonably good capital gains and smallish negative gearing in inner city locations. I have only had a PPOR for sometime now, since having kids actually and now want to get back into property investment. I have been procrastinating for some time as I am now older (40+) and a little more risk averse than I used to be and afraid of going backwards and not having the time to claw back any losses.

Recently all the research I have been doing seems to suggest cash flow positive properties are the way to go and from what I can see there seems to be no down side (aside from the capital gains potential). So being a person who would like it all (and more) I would love to find a property that can give me a positive cash flow (or even break even would be OK) but also capital gains. Hence the reason I am wondering if an inner city shoe boxes may appreciate more than a family home in regional vic.

I have also though a lot about renovating to add value to a property as I have pretty much done that with every house (PPOR and investment) I have ever purchased. To do this I would need to find a property reasonably close to where I currently live. Sadly there are no properties in that lower price range around me so I have decided to just focus on the positive cashflow possibility.

Does that answer your question?

Cheers

 

[asryan]

Hi,

Interested in your thoughts on whether you would choose a 1 bedroom inner city (CBD, calton, Hawthorn, Collingwood) student type shoe box property that seems to deliver a decent return or a larger suburban home in a regional area (Moe, Portland, Morwell) that seems to deliver about the same return. I am looking for positively cashflow investment property but only want to spend about $200K.

Many thanks
Anne

BTW to clarify further, the shoe boxes I am considering are student type accom but not exclusively student only accom if that makes sens.

 

[LeoT]

Hi LeoT,

OK so here comes my long story....

I have invested in property previously and generally had properties that have had reasonably good capital gains and smallish negative gearing in inner city locations. I have only had a PPOR for sometime now, since having kids actually and now want to get back into property investment. I have been procrastinating for some time as I am now older (40+) and a little more risk averse than I used to be and afraid of going backwards and not having the time to claw back any losses.

Recently all the research I have been doing seems to suggest cash flow positive properties are the way to go and from what I can see there seems to be no down side (aside from the capital gains potential). So being a person who would like it all (and more) I would love to find a property that can give me a positive cash flow (or even break even would be OK) but also capital gains. Hence the reason I am wondering if an inner city shoe boxes may appreciate more than a family home in regional vic.

I have also though a lot about renovating to add value to a property as I have pretty much done that with every house (PPOR and investment) I have ever purchased. To do this I would need to find a property reasonably close to where I currently live. Sadly there are no properties in that lower price range around me so I have decided to just focus on the positive cashflow possibility.

Does that answer your question?

Cheers

Hi Aryan,

Personally I think its really fantastic that you have had the courage to invest all these years to build a portfolio to give you more options in life. Really well done! From your answer, I sense that there are some inner conflicts with regards to your investing. You have mentioned that you want to invest in cash flow properties as you are now more risk averse, yet your also contemplating doing renovating (which I believe also has certain risks) and you also "want it all" Don't we all!

I don't know whats your financial capabilities are, income, debt etc, but perhaps find a place in an area that has good fundamentals for CG but is not too lit up on the radar yet and has scope to add value through a little reno to increase the rental yield and hold it medium to long term. Also, try not to only look in the area you live in as that will greatly reduce your opportunities.

Just my gut tells me you can do a lot better then a 1 bedder in inner city which btw DOES carry risks. Depending where you buy,

1. strata fees could be very high
2. Over supply
3. If you buy in a complex with hundreds of units its really not a good thing (and that's an understatement)
4. Much slower CG...

So don't think a 1 bedder has less risks necessarily.

Well done on your journey so far!

 

[tobe]

regional towns, but I think the ones you suggest arent large enough.

Bendigo, ballarat geelong, maybe traralgon. These towns have a more diversified economy IMO.

Avoid student accom. while the gross yeild is ok, management costs make the net yeild much lower, especially in relation to the risks with smaller properties.

 

[gronk007]

I think the fact that you are already calling them "shoebox" investments indicates the value you are placing on this as an investment choice.