600k to spend in VIC

J

jackbak

Long time reader - first time poster!

Hi all, I'd just like some advice on what to do next, here’s a snapshot of my position:

Im 31 and own an 1 IP in Black Rock, VIC that I purchased 2 years ago for $550k and I owe $95k on. Majority of the equity is available in cash via the loan re-draw facility.

I earn around $200k p.a. but I’m self employed so I like to be fairly conservative when it comes to debt as you never know whats around the corner when you’re self-employed.

I’m wanting to buy another IP within the next 6-12 months and looking at spending between $550-600k.

A couple of questions:
1. Would you recommend buying 2 IP’s worth $275-300k each or 1 IP worth $550-600k?
2. Next question is location? Im liking the inner-west at the moment but know little about it – Ive been a Bayside boy all my life and never venture to the ‘other side of the river’.

Any ideas??

Thanks in advance

Jack
 
Hi jackbak,

I suggest looking for a terrace house in Richmond. You can get one for about $650-700k these days and your rental will be about $600 pw. Richmond is becoming more and more popular so you should see some good growth in the near future.
 
Lots of options on that coin, you could look for a land value house on a development site in Highett/Moorabbin for instance and render the brick veneer and build one in the backyard.
Stkilda has plenty of options, do your homework and there might be the odd forced sale. My family has been renting out property round that area for 30 odd years and have had virtually nil vacancy rates.
I like land or 50's blocks of flats with land but not keen on concrete slab stuff for CG.
speaking of a bay-side boy, I was born in Sandy hospital and moved all round Melbourne and ended up down that way. Seems I haven't traveled far!
 
For that sort of income and equity, you're fairly conservative I must say.

Lever up a bit (well, a lot) and you could be looking at certain decent properties.
 
Thanks for the advice people!

Aaron_C - certainly liking inner-city but Richmond might be a little more than Im wanting to spend (650-700k) at the moment. If I was spending that sort of coin would probably be looking at buying something with land to develop down the track.

TurkieSub - also like the Footscray area, thinking around there or maybe go a bit further out...?

pieman - hey pieman, haha, I was also born in Sandy hospital - small world hey!?

Deltaberry - your right Deltaberry, I really have to start leveraging up, will start doing that this year and see how it goes.

Thanks guys, anymore ideas on inner-west or inner-north?
 
You won't get land for $600k unless you venture out to Mordialloc. I don't like the inner-West or inner-North because there is simply nothing there. Lack of roads, infrastructure and people buying for a 'gentrification' which hasn't come at all. You have to pay $700k for a house in Thornbury and as anyone can attest to - the suburb is a crap place.
 
Under $600k you're unlikely to get anything decent within 20km (to the East) of the CBD with a high land component these days. It's a lot easier in the West.

Personally I think there's better opportunities inter-state at the moment.
 
jackbak said:
Thanks for the advice people!

You're right I really have to start leveraging up, will start doing that this year and see how it goes.

Thanks guys, anymore ideas.....
Click to expand...


Yeah, I've got one, how's this for 5 minutes of searching ;

http://www.realcommercial.com.au/property-offices-vic-melbourne-500046436


Use your 450K as a ~ 50% deposit to get yourself a 400K loan secured against this property listed at 825K. Use the other 25K for stamp duty.

Less than 2 years into a 5 year lease.

Location looks OK - heard of Collins Street ??

Your only cost of ownership would be the bank loan. The Tenant pays the lot. 3 months worth of bond available.

Your holding cost would be = 400K @ roughly 8.5% = 34K p.a.

The Tenant currents pays 59K p.a. nett plus GST plus all outgoings.

After you've paid the Bank it's interest, you'll have 25K p.a. (or $ 500 per week) pouring into your pocket for the next 3 years with nothing to do. No lawns, no HWS, no roof leaks.


As a comparison, your 450K cash @ 4.5% interest would produce 20K p.a. (or $ 400 per week).


Holding this appears to be $ 100 per week better off than cash sitting in the Bank. Capital gain / loss ignored.


.....Note : This property is not a high yielding office.....there are far better out there....all about 10km from where you sit.....but then, that's your job to hunt them down.
 
Aaron_C said:
Not really. But you are welcome to challenge me if you want. Been to that side of town and I couldn't wait to get out.
Click to expand...

West Footscray to Nth Melbourne (edge of CBD) in peak hour is 15-20mins. Lack of roads? No more so than anywhere else in Melbourne. Infrastructure, can you be more specific? No gentrification? I guess that depends on your definition. But considering the restaurants, cafes, bars, renovating, developing going on I would say you are wrong. The change in cars is noticeable too - stacks of Audis, BMS, Mercs etc etc now in the streets of the inner West which you would not have seen even 5-7yrs ago.

It isnt the perfect location but its far different from your description.
 
Dazz - thanks for the research but not interested in commercial


tom1000000 - Im an accountant, cheers.

Back to my original question:
1. Would you recommend buying 2 IP’s worth $275-300k each or 1 IP worth $550-600k?

Thanks guys
 
The OP did ask $600K to spend in Vic, so is presumably open to going beyond Melbourne. $300K offers a choice of hundreds of properties in Ballarat, very low vacancy rate and a decent yield. I've now got to where I planned to be - 3 x $300K (approx) properties in Frankston, Melton and Ballarat.
 
$600pw for $650k-$700k in Richmond would be an awesome buy, not many like that anymore. To get $600pw (ie, 3 br or 2br very well presented) you are generally paying +$750k.

Collingwood and Abbotsford are close to the city and you can pick up something for around $650k with 3br. Rental market there is strong and close to the city. It is a little more than your budget but they suburbs haven't seen the gains that its neighbours have (ie, richmond, east melbourne, fitzroy)

I agree with road system much better out east than west, that is a major problem with the west IMO. Footscray (although viewed as a little rough) has the Uni, shopping, main train station and good roads all nearby though and is close to the city. Its cheaper than some of the more south western suburbs (ie, yarraville, newport, williamstown) and maintains good rental demand.
 
Dazz said:
Yeah, I've got one, how's this for 5 minutes of searching ;

http://www.realcommercial.com.au/property-offices-vic-melbourne-500046436


Use your 450K as a ~ 50% deposit to get yourself a 400K loan secured against this property listed at 825K. Use the other 25K for stamp duty.

Less than 2 years into a 5 year lease.

Location looks OK - heard of Collins Street ??

Your only cost of ownership would be the bank loan. The Tenant pays the lot. 3 months worth of bond available.

Your holding cost would be = 400K @ roughly 8.5% = 34K p.a.

The Tenant currents pays 59K p.a. nett plus GST plus all outgoings.

After you've paid the Bank it's interest, you'll have 25K p.a. (or $ 500 per week) pouring into your pocket for the next 3 years with nothing to do. No lawns, no HWS, no roof leaks.


As a comparison, your 450K cash @ 4.5% interest would produce 20K p.a. (or $ 400 per week).


Holding this appears to be $ 100 per week better off than cash sitting in the Bank. Capital gain / loss ignored.


.....Note : This property is not a high yielding office.....there are far better out there....all about 10km from where you sit.....but then, that's your job to hunt them down.
Click to expand...
I like the sound of this Dazz :)
 
Dazz said:
The Tenant currents pays 59K p.a. nett plus GST plus all outgoings.

After you've paid the Bank it's interest, you'll have 25K p.a. (or $ 500 per week) pouring into your pocket for the next 3 years with nothing to do. No lawns, no HWS, no roof leaks.
Click to expand...
The ad says:
* current office rent of $49,965.30 per annum plus gst
* In addition there is further income from the 2 basement car parks which are separately leased.at $9,085.44 per annum plus gst plus outgoings

So then wouldn't the tenant be paying 50K (rent) + 9K (car park 1) + 9K (car park 2) = 68K p.a nett plus GST plus all outgoings?

Or do you take it to read that it's 9K for both car parks together, and the "separately leased" refers to the car parks being leased independently of the office rental agreement?
 
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