Bendigo for IP

[bigbear]

Does anyone have any current advice/research on IP's in Bendigo? We're considering investing $200-300K. We're in our early 50's, semi-retired, own our home outright and are wrestling over the idea of whether we should draw down about 1/3rd of our unpreserved (tax free) super to fund an IP so as to spread our investment risk.

Our current thinking is to purchase a rental property somewhere close to Bendigo's inner CBD, hold it for 2-5 years and then depending on the market and the property type we might consider either of two alternatives: (1) fixing and flipping the IP or (2) we may decide to sell our primary home in Melbourne and convert the IP to our primary residence. There is a 3rd alternative (of course) which may be to sell both the IP and primary residence (at the 5-year interval) and locate elsewhere.

In any case, we'd be looking to hedge our bets - looking for good rental return and potential capital growth so that we've got room to move according to any change in our 5 year plan. This modest approach would help us pass the sleep test as we're conservative/balanced investors - not currently relying on rental returns to supplement our living costs however by the 5 year mark, we anticipate that we will need to liquidate some capital so as to generate some cash flow to cover living expenses.

Has anyone got any ideas, advice or experience that could help our thinking along?

 

[BayView]

The buying and selling costs of option 3 in a 5 year window would probably wipe out any cap gains you might enjoy.

In this option, it may be better financially to simply keep both places and rent elsewhere.

Back to the IP purchase; I think Bendigo is a good selection - but research the various suburbs carefully. There are some areas that are cheap, and for a reason.

You want to find the spots that are more likely to see some short to mid term cap growth. They may be more expensive to buy initially.

Also, make sure you buy a place built after 1987 for the depreciation on the building and fittings - you need a quantity surveyor's report to get the breakdowns for your accountant.

The "on paper" deductions can add significant extra dollars to your cashflow, but only if you buy it in your individual names - I doubt you could use the depreciation if you buy through your super fund. I would be speaking to your accuontant (if they are IP savvy) about this. Buying through a super fund may not necessarily be the best way.

It is also adviseable to buy a property that can/may be subdivided later.

 

[our obsession]

I have some IP's in Bendigo, but I'm holding them for longterm, I had built them on what I considered good value (buying of) blocks of land, (they increased considerably in value within approx 18 months).

That increase in equity I used to put toward more IP's.

So, I see a big difference in that I want the biggest base of assets as I can possibly create/have--"as rapidly as I can"---to hold, over a relatively longer time frame than you. I guess I am the apple to your orange.

Just some trivia for you, from Victorian Valuer General Statistics, (it is not what I base my buying on):

1985: there were 1240 property sales in Bendigo--median price was:$47,500---mean price: $51,332

1995: 1,338 sales-----median: $86,000----mean: $95,001

2005: 1,911 sales----median: $$207,000---mn: $220,717

2008: 1,681 sales----median: $227,500----mn: $239,414


Now one of my personal property examples, over 7 year time frame:

3 b/r 2 bth dbl gge 800m2 block/close to schools/cbd/Built for $145,000-(all inclusive walk in-turnkey job, all I did was landscape garden-very basic), 2003 rented I think for $200 p/w

Current: Rented $290, value: $$290,000

 

[amaljaya]

I bought a Terry Rider report of Bendigo not long a go and happy to email it to you if you want. Send me an email to: [email protected]

Amal