$1M Borrowing Capacity - Analysis Paralysis

[ritchie77]

Hi All

As the title suggest I probably have circa $1M borrowing capacity with deposit of approx 20%. I have been looking in Syd (mainly inner west) however yet to find something and more than likely overanalysing trying to find specific property.....

I am now thinking of other options and would be greatful of others thoughts/ideas in similar position with regard to the following:

1. Continue looking in Syd for property in the 700-1M price bracket (returns not excellent but hopeful of CG although much of this boom maybe already over hence my indecision to maybe look elsewhere?).
2. Buy 2 x IP's in Western Syd (cheaper but again have these areas already had significant part of boom?).
3. Brisbane - 1 x IP in inner Bris.
4. Brisbane - 2 x IP's in middle ring of Bris around $400-500 Ea?

Thanks in advance guys for any feedback or ideas before I undertake more analysis paralysis in other areas!

 

[D.T.]

5. Give it to dtraeger

 

[ritchie77]

Will you give me a good ROI?

 

[Peter_Tersteeg]

I think Western Sydney has already had its run. There might be some further opportunities there, but people invested there over the past few years chasing cashflow only. The demand caused some capital gains and I'd question if the cashflow now available makes it worth while.

I can't really comment on the $700k+ range in Sydney, but it does put pretty much all or your eggs in one basket.

Overall I think there's a lot to be said for Brisbane. The market has gotten a bit heated but I think there's still some good opportunities.

 

[Aaron_C]

No one can tell you what to buy...just gotta do what you are comfortable with as you are the one borrowing the money.

 

[ritchie77]

Thanks PT & Aaron, I am getting that feeling of Western Syd but just want to get some ideas and thoughts.....
Just not sure re Sydney market now and where it is in the cycle or how long it will continue to show strong growth......

Brisbane still opportunities - closer to the city or middle ring better option? I need to look into this further but again dont want to overanalyse!

 

[nhg]

If it was me... if you can move quick, i'd be looking at mid-inner rings of Brisbane.

Don't know about the higher end in Sydney, but for your price range, I'd stay away from Sydney right now.

This is just my personal opinion, and based on the fact that I feel (and a lot of number crunching) the Sydney market has bolted and Brisbane has a lot of potential.

 

[jim1964]

6. Stay away from Adelaide.

 

[see_change]

We went for the Brisbane option recently after finding sydney was just getting too silly .

At that stage the centre was starting to get hot and now it sounds as though it is getting silly .

We went middle ring and on the bay . Looked at manly wynnum , sandgate Brighton and ended up buying in manly wynnum . At that stage ( around three months ago ) the market wasn't that hot , though properties were moving . Was able to negotiate over a period of around two weeks for three properties in the 4-550 range , so at that stage there was no real pressure

Not sure how busy it is there , however there isn't much on the market ATM . though one property we've settled on was still listed as for sale .....

We thought about buying more but reached our comfort limit .

Wynnum west looked quite good in terms of value / rental return .

Cliff

 

[eeew]

If it was me... if you can move quick, i'd be looking at mid-inner rings of Brisbane.

Don't know about the higher end in Sydney, but for your price range, I'd stay away from Sydney right now.

This is just my personal opinion, and based on the fact that I feel (and a lot of number crunching) the Sydney market has bolted and Brisbane has a lot of potential.

Yeah-id opt for 7-10 km bris and buy 2 if u can afford it-eg a townhouse southeast and perhaps a unit west.

 

[Rolf Latham]

I find clients get clarity with more long term planning with this sort of stuff.

look 10 to 20 years out and the obvious option may pop out

ta
rolf

 

[ritchie77]

Its more the cycles I guess....

ie say Sydney is at 10-11 o'clock on the property clock there may only be a small amount of strong growth left and then it may go back to average growth (ie over the last 10 years when you exclude 2009). Therefore, looking forward 10 yrs it may not grow as strong as somewhere else which may be at 6 o'clock on the property clock - maybe somewhere like Brisbane?

 

[ritchie77]

Thanks See Change, gave me some things to think about.....

 

[see_change]

Its more the cycles I guess....

ie say Sydney is at 10-11 o'clock on the property clock there may only be a small amount of strong growth left and then it may go back to average growth (ie over the last 10 years when you exclude 2009). Therefore, looking forward 10 yrs it may not grow as strong as somewhere else which may be at 6 o'clock on the property clock - maybe somewhere like Brisbane?

Depending on the area I think sydney has a way to go , but most people here like to get in early and get good deals .

Cliff

 

[see_change]

Just checked.

One we settled on , around one month ago , is still on the market for sale .... So about 2 1/2 months after we exchanged contracts ....

Queenslanders can be a bit slow ...

Cliff

 

[devank]

4. Brisbane - 2 x IP's in middle ring of Bris around $400-500 Ea?

I would go '1 x IP's in middle ring of Bris around $400-500 Ea' and then see what your options are after that.

 

[ritchie77]

If I were to go inner/middle ring bris are there any areas with relatively new houses where there would be good depreciation benefits etc..... Or better to stick to established suburb/house (this is what I did in sydney).

 

[devank]

As the title suggest I probably have circa $1M borrowing capacity with deposit of approx 20%.

Which Bank is giving that figure?
To me, ANZ's estimation is seems to the 'fair' one.

 

[nhg]

If I were to go inner/middle ring bris are there any areas with relatively new houses where there would be good depreciation benefits etc..... Or better to stick to established suburb/house (this is what I did in sydney).

It's not really our place to give you the solution, it is all relative to your current situation and expectations. What is your end goal/strategy?

When I started 2 years ago, I only had $40k, so I focused on older properties to buy-reno-hold. With a bit more time/know-how/capital, I am now building granny flats on the back of my blocks, with the aim to do larger resi and eventually commercial developments in 3-5 years.

If I was still working in my relatively well paying PAYG job, I would be focusing on buying and building, the depreciation would be $15-20k almost doubling my original rental income.

However in my current situation, that strategy wouldn't work as my income runs through my PTY LTD and I have nothing to write off my personal costs against.

My situation (income/knowledge/wants) changed over the last 2 years and my strategy adapted with it. Renos make no sense to me anymore as I can build for cheap and the costs are 'fixed'. Point being, you have to see what your strengths and weaknesses are and what strategy best suits you.

 

[ritchie77]

Hi nag, thanks for the note. I am a payg employee so either newer houses or reno's sit well with my strategy..... I have previously bought newer h&l packages in bris however growth has been non existent over previous 5 yrs hence probs my current reservations on bris and trying to stick to sydney. Looks like bris turn now so hopefully good for my ip's.

I did look at build new or top but concerns with deductibility of costs/interest when being built. I was advised you can claim the construction costs during the financial year completed however yet to verify this- any advice in this regard how you claim on a brand new property when it is obviously not get erasing any rent? I have previously bought ip's <5 yrs old so still good building and dep costs which is probs a good option now in bris rather than an older established ip in inner west syd (although lt prospects of inner west likely better than anywhere in bris!).