Advice; how much to invest for first IP

I know this is a very individual thing and depends on many circumstances such as income, area of investment..... However i'm grappling with how much to invest on my first property. Any advice/personal experience would be greatly appreciated. Ok, so i have
-a deposit of around $40,000
-yearly income of around $50,000 after tax
-paying $80 a week in rent
-have a pre-approval of a loan for around $380,000 max.
Im looking at getting an apartment, and have my eye on one, which will probably go for around $345,000 (probably $290 per week in rent)
Do you think this is too much for a first investment property? Considering i would like to invest in more property in the future. Should i go for something in the 200's or early 300's? Im 50/50 at the moment and would appreciate some advice
Thanks in advance
 
Considering i would like to invest in more property in the future. Should i go for something in the 200's or early 300's? Im 50/50 at the moment and would appreciate some advice

Firstly, there is no right or wrong answer, but here's a thought. If you want to invest in more property in the future, then you need CG to create equity for you to access for deposits.

If the $300K property grows @ 10%, the you have an additional $30K
If you have a $200K property with the same CG then you only have $20K extra
So it is all about the leverage you can apply when using OPM + the CG of the area that you might but one or the other in.
 
Tom,

Will servicability for either the 200k or $300k loan be an issue for either you or the bank ?

Have you run the numbrs to see how much shortfall after rent you might need to chip for say the above property & one $100k cheaper ?
 
I'm investing in my first IP around that mark. If you think it's a good opportunity and it will most likely increase in value, then I say go for it. If you have any doubts (which it sounds like you do), I reckon you should wait for another one that feels right.

But as above, you should be getting a lot more than $290/week for something that costs $345k.
 
Thanks for the advice so far. In regards to the rent, the area im looking at is Footscray/West footscray, so im really going for CG. I agree the rental returns are not high, however after doing research, it seems that's around the price i would probably expect. I calculated the net yield and it was around 4.5%, is that a bit too low even in an area with good capital growth?
 
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