What's an example of high CG, high yield and high risk?
Can't we do high CG, high yield and low risk? Market arbitrage is bliss
3 months of uncertainty and no purchase. Any suggestions?
- Thread starter RedCat
- Start date
What's an example of high CG, high yield and high risk?
Can't we do high CG, high yield and low risk? Market arbitrage is bliss
Well that's true, but I didn't have the income 10 years ago at 15 years of age to be thinking about property.
No, but you do now.
Hi Redcat
Well done for being so pro-active and investing in the first place- sounds like you've been very busy! Our buyers agency services outer suburbs here in Sydney (so I'm sorry I can't comment on other areas) and you can easily get a house for under $500K in many suburbs- though you need to be a little choosy on which ones
Ditto units closer in to the city, though with many recent investors favouring Parramatta and surrounds (affordable, Australia's 3rd largest economy, strong yields 5-6%) you may want to consider not spending your entire budget and limiting it instead to conserve cashflow. I've bought for clients recently in these areas and, if buying units, anywhere from late $200K's to $400K+ will get you a decent unit that you can easily rent out. Obviously, position and condition (as well as the usual host of other factors involved in due diligence) will vary as to what your final purchase will be, but I'm sure I don't need to tell a seasoned investor such as yourself that
You also need to watch your land tax, as this will insidiously creep up on you if you limit yourself to one state instead of diversifying. It's a cost that investors can overlook and one that can seriously erode cashflow, especially if purchasing in an entity other than your personal name.
Oracle makes a salient point indeed regarding debt servicing. Investing in property is all about managing your risk and ensuring you have buffers in place as well to cope with the more difficult times (higher IR's, vacancy rates, maintenance costs) So many investors don't factor in all the real costs of owning property and it's vital to do this from the very beginning.
Well done for being so pro-active and investing in the first place- sounds like you've been very busy! Our buyers agency services outer suburbs here in Sydney (so I'm sorry I can't comment on other areas) and you can easily get a house for under $500K in many suburbs- though you need to be a little choosy on which ones
Ditto units closer in to the city, though with many recent investors favouring Parramatta and surrounds (affordable, Australia's 3rd largest economy, strong yields 5-6%) you may want to consider not spending your entire budget and limiting it instead to conserve cashflow. I've bought for clients recently in these areas and, if buying units, anywhere from late $200K's to $400K+ will get you a decent unit that you can easily rent out. Obviously, position and condition (as well as the usual host of other factors involved in due diligence) will vary as to what your final purchase will be, but I'm sure I don't need to tell a seasoned investor such as yourself that
You also need to watch your land tax, as this will insidiously creep up on you if you limit yourself to one state instead of diversifying. It's a cost that investors can overlook and one that can seriously erode cashflow, especially if purchasing in an entity other than your personal name.
Oracle makes a salient point indeed regarding debt servicing. Investing in property is all about managing your risk and ensuring you have buffers in place as well to cope with the more difficult times (higher IR's, vacancy rates, maintenance costs) So many investors don't factor in all the real costs of owning property and it's vital to do this from the very beginning.
Thanks for the sound advice Jacque. 3 weeks ago I prepaid 12 months interest on my Sydney property, so I'm quite comfortable that should something go wrong the cash flow will be there to get us through. Of course property is long term and I need to ensure I can cover the losses every year until they become neutral then positively geared.
We also took out extensive life, trauma and income insurance 'just in case'.
I'm aware of the potential land tax problems, but being that we've got 2 x VIC, 1 x NSW and 1 x QLD I don't anticipate it getting too difficult. I'm pretty good with budgeting and I have made allowances for 5% maintance for each property and 4 weeks vacancy annually.
We also took out extensive life, trauma and income insurance 'just in case'.
I'm aware of the potential land tax problems, but being that we've got 2 x VIC, 1 x NSW and 1 x QLD I don't anticipate it getting too difficult. I'm pretty good with budgeting and I have made allowances for 5% maintance for each property and 4 weeks vacancy annually.
I think there's a bit of window opening up in Sydney, but probably worth waiting a little to see what happens to the economy overall. Chances are it should be ok. That said, the earlier you enter (ie the less you see the economy pan out), the greater the time value component of your investment (thinking from the viewpoint of option pricing).
