First IP - Gold Coast

[Taratesh]

Hello all,

First time posting and first time considering an IP.

Right now I am considering an investment property, at this stage considering a unit close to the beach somewhere between coolangatta-broadbeach on the Gold Coast. I would consider a house as well but that is also a larger borrowing for a first time. From what I can see a lot of these places would net about 5% income and I have no idea of capital growth prospects if any. Id be planning on holding the property for the long term.

I guess my main questions for those who may know the market a lot better than myself is -

Is it a good or bad time to buy?
Is the market I'm looking in an ok bet in terms of return of income and CG?

Some background info partner and I dual income approx $115k PA. We are in our late 20's. Currently have a PPOR worth approx $600k, owe $460k. No other investments or income stream.

Thanks in advance.

 

[Rixter]

Hi Taratesh, First off welcome to the SS forum...

Your questions are the most asked question here..what & where to buy?

In answer to it, what and where to buy is dependent upon your chosen investment strategy.

You see property is merely the vehicle. Your strategy is how you intend driving that vehicle.

Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

Property investing is not about property rather about the strategy and the way you intend to use the vehicle to get to where you are wanting to go. No good buying a small shopping car if you intend driving interstate on a family holiday.

What strategy/s are best for you is determined by where you are wanting to go (ie end up or investment reason in the first instance), the time frame you want to get there in and how hands on along the way you want to be - all based around your personal risk profile.

I hope this provides some food for thought.

What is your chosen investment strategy?

 

[R377]

You have $140k in equity - You could buy a $5-600k house. the more you pay, generally the rental returns are less.

Buy a house in the Gold Coast, the market is warm atm. There are too many units in the GC, I would buy a house

 

[Taratesh]

Thank you both for the replies.

I guess that is the thing, I'm very new to this and to say I have a strategy as such would be lying. The closest thing I have to a strategy at this stage is paying down PPOR as quickly as possible, I also contribute a lot of superannuation pre tax which should see me very well off super wise by the time I hit my preservation age which is 60 (30 years time).

I guess what I want my strategy to achieve is the same as most, some form of financial freedom and ability to enjoy experiences which all costs money. I also wish to retire before preservation age and I'm hoping that I may be able to achieve this through investment outside superannuation, in comes my original question about the IP. I Guess part of my strategy is also having a long term investment timeframe and want to hold the property up to (or even in to) a hopefully early retirement.

That's as far as my "strategy" goes at this point.

Thanks again.

 

[nomadic]

Now is a good time to buy on the Gold Coast because historically it follows after Sydney and Melbourne has boomed. I'm not saying it will again this time around but it will in all likelihood, especially with a weaker AUD which means more tourists and overseas students. Avoid high rises or complexes with lifts and on-site managers which have $80-120pw body corp fees. I would buy an older style unit in a small block (<12) with low body corp (<$40-50pw) in between the highway and beach.

 

[Taratesh]

Yeah thanks, that type of unit is what I was thinking. Small block, walk up, near beach.

R377 as far as equity goes if I want to utilize it I couldn't go past 80% to avoid LMI. So thy really doesn't leave me with much, really only enough for a cheap unit.

 

[R377]

Yeah thanks, that type of unit is what I was thinking. Small block, walk up, near beach.

R377 as far as equity goes if I want to utilize it I couldn't go past 80% to avoid LMI. So thy really doesn't leave me with much, really only enough for a cheap unit.

Actually $140k the banks will lend 80% of that so about $110k of that you can use. LMI is 20%.

My calcs you could do no more than about $500k. $100k deposit, stamp duty will be around $15-20k. Even if you went 17 or 18% you can put the LMI onto the loan (it will prob only be $2-3k anyway)

You prob want to talk to a broker first and get a valuation done before working out your figures

 

[Taratesh]

Ah thanks. My mistake, I was under the impression i had to keep 80% of the property value in my PPOR.

 

[srkp]

Actually $140k the banks will lend 80% of that so about $110k of that you can use. LMI is 20%.

My calcs you could do no more than about $500k. $100k deposit, stamp duty will be around $15-20k. Even if you went 17 or 18% you can put the LMI onto the loan (it will prob only be $2-3k anyway)

You prob want to talk to a broker first and get a valuation done before working out your figures

I am confused ..
Value - 600, owe - 460
80% of 600 = 480.
Though equity is 140k, bank will lend 480-460=20k without LMI.

What can you buy with 20k for deposit + stampduty?

Or am I missing something here?

 

[R377]

I am confused ..
Value - 600, owe - 460
80% of 600 = 480.
Though equity is 140k, bank will lend 480-460=20k without LMI.

What can you buy with 20k for deposit + stampduty?

Or am I missing something here?

Yes this correct, sorry. You would of needed 10% or 20% deposit to begin with - you can't double dip twice !!

 

[Taratesh]

Yes, that's what I was referring to. And no your not missing anything, that's why I'm looking at a unit. I also failed to mention I have a small amount of cash, on a cheap 1 maybe 2 bed unit of approx 250k the stamp duty is about $6500 and I would borrow 90-95% so LMI of about $5500. I would be able to cover these costs with the small amount of cash I have. And the 20k equity would cover the deposit.

Very close to being unable to do it at this point but that's why I've joined the forum, for advice and to learn. Alternatively if it's pushing it I'll wait about a year to where I'm in a position to have about an extra 20-30 k equity on top. Or I might wait 2-3 years and have enough to buy a house rather than unit. Would anyone care to take a guess on what the market may be like if I had to wait a couple of years?

Thanks