Decision time

[strongy1986]

Ok so we have a couple of IPs

Loans of 508, 80k of which we can use as deposit on next ip (loc not drawn down)

So really I guess our loans are currently 428k

We will have rent of 700 per week

Only on about 80k combined income, will be 100k in 6 months

Decision We need to make is wether to go down the cash path next or more 'blue chip' locations
There's a particular property I like which would be about a 5% yield and then there's another property in a regional yielding 10% with probably not great chance of near future growth.

They both would be about 400k

My thinking is that we could purchase the high yield and then because of the increased serviceability via high rent then purchase something with better chance of gains.
Would I be right in thinking we couldn't do it the other way around?

Ie - can you be 'maxed out' but still be able to buy a very high yielding property if you have a deposit

 

[impala67]

There's a certain risk with all "types" of properties, and past returns/gains aren't a guarantee of future returns. There's no reason why you can't do both with one.

Borrowing capacity and future plans are best laid out with a portfolio orientated broker, property orientated tax agent and financial planner prior to purchase.

Out of interest, 10 % net, or 10 % gross?

 

[D_One]

If spending more than $300k, I would take the blue chip suburb with 5% yield any day.

 

[strongy1986]

If spending more than $300k, I would take the blue chip suburb with 5% yield any day.

Yep but theoretically couldn't you keep purchasing if you have the right mix of yields
Only going for 5% on the whole portfolio will stop us very quickly


Impala - 10% net

 

[Paul@PFI]

The regional Ip may have high yield today to reflect it will be illiquid when you want to sell and ha a higher risk for vacancy. Also a poor LVR from the lender may make it a problem buy.

Low or no land tax may reflect poor land values and poor land appreciation in a regional also. Each location should be based on its merits. eg : Mining, industry etc...Dubbo as an example is experiencing job losses from industry closure. Ditto Sheppearton Vic has been nervous about SPC - Now easing but still a long term concern.

 

[strongy1986]

I think I havnt explained myself properly

We would like to get both and my feeling was the only way this could happen is if we purchased the high yield first, or does it not matter as long as you have the deposit and purchase with a high enough yield?