250k Melbourne First IP

[Arth7919]

Hi Guys and Gals,

Been a long time lurker and first time poster.

Finally about to bite the bullet and buy a first investment.

Looking to spend up to 250k in Melbourne. Looking for something neutral or slight negative which wouldnt take long to turn positive.

I am on 75k and owe 130k on our PPOR work 500k. We have a line of credit against PPOR with 240k in it.

My wife works but is casual and it looks like she may loose her job soon so why we would like to keep the price at 250k due to serviceability. We also have to young boys.

Hard to find many places around this price. I would prefer houses but not totaly against units. What suburbs would people recommend? I am in the North Western Suburbs. Was thinking Sunbury but seems to be many places there. Not interested in Regional or interstate.

Look forward to your suggestions.

Cheers

Arthur

 

[Brady]

Hi Guys and Gals,

Been a long time lurker and first time poster.

Finally about to bite the bullet and buy a first investment.

Looking to spend up to 250k in Melbourne. Looking for something neutral or slight negative which wouldnt take long to turn positive.

I am on 75k and owe 130k on our PPOR work 500k. We have a line of credit against PPOR with 240k in it.

My wife works but is casual and it looks like she may loose her job soon so why we would like to keep the price at 250k due to serviceability. We also have to young boys.

Hard to find many places around this price. I would prefer houses but not totaly against units. What suburbs would people recommend? I am in the North Western Suburbs. Was thinking Sunbury but seems to be many places there. Not interested in Regional or interstate.

Look forward to your suggestions.

Cheers

Arthur

Why are you against regional and interstate?

 

[Arth7919]

Why are you against regional and interstate?

Was looking at Ballarat but just trying to get out there to have a look was not possible.

I am guess I am the type of person that likes to look before I buy.

Any suggestions?

Thanks

 

[Shahin_Afarin]

Who has said that $250k is your servicing limit?

Regards

Shahin

 

[Arth7919]

Who has said that $250k is your servicing limit?

Regards

Shahin

Ourselves. We do not want to overstretch ourselves. on 300k would be looking at paying interest on 70+k (20% deposit + costs). While rent would be nearly covering the ip loan (80%). We also have the 130k loan on PPOR.

I guess purchasing the first IP is always the scariest. Perhaps I am getting cold feet with this. Just worried if my wife looses job and that we dont have a it leased for a while.

Thanks.

Open to suggestions.

 

[Peter_Tersteeg]

Ourselves. We do not want to overstretch ourselves. on 300k would be looking at paying interest on 70+k (20% deposit + costs). While rent would be nearly covering the ip loan (80%). We also have the 130k loan on PPOR.

I guess purchasing the first IP is always the scariest. Perhaps I am getting cold feet with this. Just worried if my wife looses job and that we dont have a it leased for a while.

Thanks.

Open to suggestions.

The tough part will be finding the property. It is possible to find property in Melbourne within your parameters, but it's quite rare.

Mittigating the risks that are concerning you is fairly simple. All you need is enough savings to cover your shortfalls in the even this things occur. Would your wife be able to get another job and how long would it take? Properties are going to be vacant, but it's usually not for more than 4-5 weeks. If you're looking for a cashflow neutral property, then in theory the risk of job loss has no worse conciquences after purchasing an investment proprty than it currently does.

Also, you have one loan of $130k & a second one of $240k. A LOC is just another loan. Given that the deposit & purchase costs are likely to come from the LOC or from savings that could otherwise be put onto your loan, you won't be borrowing 80%, but actually borrowing 105%. When figuring out your costs, you should do them on a loan of 105% of the purchase price, not 80%.

 

[Shahin_Afarin]

Ourselves. We do not want to overstretch ourselves. on 300k would be looking at paying interest on 70+k (20% deposit + costs). While rent would be nearly covering the ip loan (80%). We also have the 130k loan on PPOR.

I guess purchasing the first IP is always the scariest. Perhaps I am getting cold feet with this. Just worried if my wife looses job and that we dont have a it leased for a while.

Thanks.

Open to suggestions.

You can somewhat combat that risk by purchasing in an area that has a strong rental demand or can be easily rented if you dropped the rental price by say $30 per week.

Why not wait a little while longer - build yourself a buffer and then jump in?

You want to be able to sleep at night yes?

Regards

Shahin

 

[Brady]

Was looking at Ballarat but just trying to get out there to have a look was not possible.

I am guess I am the type of person that likes to look before I buy.

Any suggestions?

Thanks

What will looking solve for you?

Are you a builder? What will you see that will decide if its a good investment or not?
Have you purchased several properties that makes you savvy on what to look for?

My suggestion is to get over the fear of purchasing without seeing the property, that way it will broaden your potential for purchasing in your price range. Along with buying in a market that is more likely to grow sooner rather then later.

For me finding a property in a suburb I like (with all the right growth, demand, yield, vacancy rates), in the price range I like is the starting point. A building report will tell me the structure is ok and then I get 3 different local agents to give me their opinion on the property, if im happy with all the responses thats enough for me.

Purchasing an investment property need to remain a business decision for me, looking usual triggers emotional attachments.



On a seperate note regarding the finanace, as others have mentioned I would run some numbers a bit more you may find that you could be comfortable with a borrowing more.

If you're purchasing somewhere with good demand, low vacany rates, you know what the shortfall between the rent and repayments if you have enough cash as a surplus to cover these if something was to happen it makes sleeping easier at night

 

[zed_kid]

try werribee?

 

[FHF]

Corio has plenty of properties in your price range.

Currently it has a bad reputation but this may change in the future which could result in great capital growth.

 

[Fifth]

For a house in that price range you're pretty limited. Werribee, Hoppers Crossing, Melton, Sunbury, Franston North, possibly Frankston proper etc.

If you're interested in Ballarat but want to view properties in person, surely you can spare a day? It takes 1.5 hours to get from Southern Cross to Ballarat on the train, not sure how long to drive. It's not exactly a world away.

 

[Tigerboy]

Arthur what are you after? House or unit?

 

[Jake Milne]

250k in Melbourne is not going to happen... You'll be compromising too much on both location and accommodation.

Generally speaking an investor would be better off putting money into other asset classes until he/she can afford at least $350k for Melbourne

 

[LoneWolf]

I agree with jake here.. if you insist on that budget, perhaps better off looking interstate

 

[Arth7919]

Thanks everyone for your advice.

From chatting to a few people via PM on this forum it has lessened my fears quite a bit.

The consensus seems to be that 250k in Melbourne is not that great of an option considering the suburbs on offer.

I will now concentrate on Victorian Regional towns that have decent yields and tick most of the other boxes such as local vacancy, infrastructure, growth etc.

I guess the title should now change to "Where in Regional VIC for under 250k".

Looking for minimum 3 bedroom houses preferably brick. Any ideas?

Thanks everyone for your assistance.

 

[LoneWolf]

A better question would be "what is your strategy and your expectation of this IP"

Once you have sort it this out, the area should soon follow

 

[Silentforce]

This is just an idea but aim for higher priced properties and aim to negotiate it down. go for 280 or 300k (or even higher) properties and give your offer. This way you are ahead, from step 1. obviously doing your due diligence is key.

From personal experience a friend bought a property for 150k cheaper as the vendor was very desperate to sell.

Good Luck!

 

[strongy1986]

Arthur I guess Geelong might be worth a look - outer suburbs maybe even look at the outer towns on the bay

If not then just keep driving to Adelaide and pick up a house there

Just because you buy interstate doesn't mean you dont see it. A spare weekend is all you need

The reason I don't really like regional vic is because of low incomes which will stifle capital gains.
However I rate regional in many other states, just not vic

If your set on vic then I would go Geelong or Traralgon - I think this will be a good growth area in the future. (maybe Sale also)