Capital Growth and Postive Cashflow?

[Anonymous]

From: Anonymous


I'm a newbie and I've just bought my first IP, a 2 bedroom villa in Coffs Harbour.

In 2 years I should have approx $80k equity.

Is this enough to buy my 2nd IP?

I'd like to buy in Sydney, hopefully during the bust cycle, spending about 150-200k. I think I'll only be able to afford western Sydney with such a small amount of money.

Does anyone know of any areas including Sydney where I could get capital growth, at least doubling in value in 10 years and positive or neutral cashflow on an interest only loan for this price?

Jenny

 

[Les]

Reply: 1
From: Les .



G'day Jenny,

And congratulations on making #1 happen!! That first step is the important one (many never make it!!)

If you are able to grow $80k of equity, I would be tempted to guess you are a "shoo-in" for #2 - if you're buying for $200k, then $40k for a deposit, and maybe $10k for costs should be all you require. So maybe #2 is available to you even sooner than you think.

I can't help with info re Sydney. Just wanted to say "Well done" for #1

Regards,


Les


- "Eschew Obfuscation" - ;^)

 

[WebBoard]

Reply: 1.1
From: Sergey Golovin


May be Campbelltown and Camden?
Most of it is OK except housing commission ofcourse.

Serge.

 

[lawsjs]

Reply: 1.1.1
From: Jeremy Laws


80k you should be able to get a $400k hovel. Provided you can prove affordability. As a general rule all the banks want is 20% equity, until you get to bigger numbers.

 

[Anonymous]

Reply: 1.1.1.1
From: Anonymous


Thanks for your replies

Jenny

 

[WebBoard]

Reply: 1.1.1.1.1
From: David Le


Hi Jenny

Another method which I am aware to get positive cash flow and high growth is the 'furnished apartments market.' Basically you would fully furnish a property. Then rent them out to executives for a higher rent than usual.

For example, an executive re-locating from London to Melbourne, would need to pay $80-130 per night for a hotel. If his company, required him to stay for 3-12 months, a hotel stay would be extremely expensive. So a cheaper alternative is a furnished apartment, which would rent for around $600-1500 per week.

But be warned this is a VERY NICHE market. I have looked at this method myself. Kay and Burton (in Melbourne) is the company I have been dealing with. Another obvious drawback is that these executives only like living in prestige suburbs like Toorak and Brighton. So you will need to invest a large amount of money for a IP, then furnish it. But I've done my sums, and for $800 p/w rent, I can buy a IP for around the 700K mark and still be positive cash flowed. Plus I will have a property in the blue chip hottest suburbs.

Food for thought

Regards

David

 

[lawsjs]

Reply: 1.1.1.1.1.1
From: Jeremy Laws


David,
DO NOT rely on furnished income. In VERY small pockets it _can_ work, but I would suggest not in a city market. Its way over populated with other people with your ideas. Sydney City ATM gains about $30 week more than unfurnished. That is NOT worth the wear and tear on constant short term lettings. A better idea is to turn it into a small scale brothel. Thats way more successful, and less crowded.

 

[sali]

Reply: 1.1.1.1.1.1.1
From: Lisa Southgate


Were those last two sentences irony? Lisa.

 

[lawsjs]

Reply: 1.1.1.1.1.1.1.1
From: Jeremy Laws


Umm not really! If I ever have problems renting my (furnished) overpriced innercity apartment I am definately going to pursue that option. Currently I see no way of actually getting a half decent return, but I figure it would have to be more attractive for a streetwalker to have a 'free' place to live than the probably nasty pit she would currently live/work in - for a % of takings of course! You would need a good way of policing the earnings, but it would sure beat an empty hovel!