First IP in Sydney with 800k deposit?

Hey guys,

Very recently I have sold my business which I built up from scratch and am now left with $800k cash in my account to invest.

I am currently in a position where I am un-employed due to selling my business but am seeking part time employment currently whilst finishing off my University studies for a change of career path. I have no debts, living rent free and have no other investments currently at 30yrs old.

I feel I timed selling my business at a bad time given the extremely HOT Sydney market, as my intentions were to get my profits from the business and buy a house in Sydney for investment purposes.

With savings accounts only paying 3% per year it's making me want to invest (I guess the RBA is getting what they want).

My questions are;

1. Should I potentially wait 2-3 years for things to cool down and hopefully pay less? As I currently am amazed at the prices people are paying which makes me think they might come down.

2. If you were in my position what would you do?


Thank you for any advice in advance!
 
Stay away from the Sydney market till it cools....it is way too hot.....

If you must invest look at the outer Melbourne suburbs or Brisbane....

You will know when to invest in Sydney...when no one is putting in offers...I believe this will happen by 2018-2019.....

When interest rates increase to about 7%...you will be able to hear crickets drop in the Sydney RE market.....
 
Thanks for the speedy replies!

Throughout history has Sydney ever experienced consecutive years of negative growth?

Must be a Sydney thing but everyone keeps on reiterating how Sydney prices never go down.

Also what do you guys use to view real estate data like growth, yield etc.?

Thanks again
 
I am curious ...have these people seen what happened in Sydney... from 2004-2007?

From 1990-1993?

I am sure these people were still in their nappies or in high school when this happened. I plan to be there when this happens...as I will be buying their properties 80 cents on the dollar when they can't hold their acquisitions...when interest rates hit 7%. I don't think very many people have stressed tested their portfolios...

Thanks for the speedy replies!

Throughout history has Sydney ever experienced consecutive years of negative growth?

Must be a Sydney thing but everyone keeps on reiterating how Sydney prices never go down.

Also what do you guys use to view real estate data like growth, yield etc.?

Thanks again
 
I was always told "time in the market beats timing the market" from an Uncle of mine who heavily invests in shares, does this not apply to property investment?
 
I was always told "time in the market beats timing the market" from an Uncle of mine who heavily invests in shares, does this not apply to property investment?

True but if you are unfortunate enough to buy right at the top of a market you can be left with a situation of little or negative equity, negative cash flow and no growth for 5-7 years. Not much fun and it could slow down any future purchases considerably or even put you off investing again
 
So I guess just continue reading on somersoft, keeping an eye on interest rates and property prices on areas I am wanting to invest in for now?
 
My questions are;

1. Should I potentially wait 2-3 years for things to cool down and hopefully pay less? As I currently am amazed at the prices people are paying which makes me think they might come down.

2. If you were in my position what would you do?


Thank you for any advice in advance!

I would not be waiting 2-3 years to enter the Sydney market.

I would be getting into the Brisbane market to take full advantage of the short to mid term CG a head.

Look to purchase in or adjacent to a satellite cbd with the Brisbane metro area.
 
I would not be waiting 2-3 years to enter the Sydney market.

I would be getting into the Brisbane market to take full advantage of the short to mid term CG a head.

Totally agree with this! Just make sure you watch for flood zones, you'll be fine. I believe it's really starting to heat up in Brisbane. Lots of properties hitting the market and under offer very quickly.
 
Totally agree with this! Just make sure you watch for flood zones, you'll be fine. I believe it's really starting to heat up in Brisbane. Lots of properties hitting the market and under offer very quickly.

Yup, I agree.
Most key commentary suggests it's winding up for good growth, at least in the short and med terms.
 
I would possibly consider a unit given the median is 350k? Which is a lot less than Sydney, the yields look better than Sydney too (just brief research).

Maybe buy 2br Unit in Brisbane for the time being then focus on buying into Sydney in the next few years?

Thanks for the responses
 
Echoing others here; I'd avoid Sydney altogether for at least a couple of years.

If I were you... Baring in mind that this would be your first property purchase, I know it seems daunting to buy in another state, but I'd be considering other states beyond NSW. The SEQ area (and yes, I'm bucketing Toowoomba into that) presents great opportunity for you to pick up to properties for that level of spend. I'd go with one house in the mid-outer rings of either GC or Brisbane, and one inner ring ESTABLISHED older property in a SMALL block, in a nice location.

For the house, consider school catchment areas for decent public high schools. For the unit or townhouse closer in, focus on transport and working node proximity.
 
I'll buck the trend here. If you are not comfortable investing interstate and prefer Sydney then stick with it. Yes the prices are hot at the moment, that however doesn't mean there aren't opportunities. Be patient and do not get caught up in the hype. This likely means no auctions. If you can, buy something that needs a bit of work to add some value. Particularly handy if the market does drop a little you reduce the chances of being in a negative equity position. Patience is the key.

There is of course the opportunity cost of waiting for the right deal, but i think that is much better than diving into another market that you have little/no idea about.

Just my 2c.
 
I was always told "time in the market beats timing the market" from an Uncle of mine who heavily invests in shares, does this not apply to property investment?

I would assume timing the market would be more valuable than time in the market for stock?
Depends what you wish to achieve with your purchase, is it a place for you to live in Sydney, if not why wouldn't you buy in markets that have started to grow so when CG achieved it would allow you to duplicate sooner? However, I would presume more experience and knowledge is required otherwise use buyer's agent if you feel you have insufficient knowledge?
We have to start somewhere, so IMHO, it is better to start, especially if you can afford rather than wait?
 
I am a big believer in timing the market or more accuratly timing the markets, in my time in real estate the initial onset of the GFC was the only time that the Australian Property Market took a hit as a whole. Normally there are various parts of the city/state/country that offer great opportunities for growth.

I wouldn't be buying my first property in Sydney at the moment that is for sure, other areas are more appealing and further back in the property cycle. For the foreseeable future Sydney will be more expensive than Brisbane however many would argue that the gap is way too large at the moment.

We bought this property for our clients last week in Brisbane, what would it cost for a two bed, 2 bath, massive apartment 5-6 kms from Sydney today?

http://harcourts.com.au/Property/613436/QSV150502/5-32-frederick

In your situation I would buy two properties at 80% in different markets and then leave $500k sitting in the offsets until you decide the next steps forward.

Good luck
 
Throughout history has Sydney ever experienced consecutive years of negative growth?

That's not the way it works. Even no growth is negative growth, due to inflation and interest. Compare someone who has paid 7 years worth of interest, with someone who comes in 7 years later and buys a similar property at the same price (even if inflation adjusted) - you've just spent 7 years paying interest, so even though the property hasn't gone down...that's still not a good thing.

Also even if it was growing, say 2% a year - that's not the whole story. If another city performs at 5% a year until Sydney kicks off its next cycle in 7 years, 5% is surely better than 2%?

It's always good to take a step back and look at the bigger picture. Perspective is very important when investing.
 
I was always told "time in the market beats timing the market" from an Uncle of mine who heavily invests in shares, does this not apply to property investment?

Yes that's true, but there's time in the market AND buying at the right time. Wouldn't you rather have both? Be careful of taking advice from people who aren't financially savvy. They like to spout "clever" little proverbs like that without ever really giving it any critical thought (or worse, they recite these proverbs because they've heard successful people say them and repeat them without knowing the full picture, completely missing the point).
 
I'd go Melbourne for the long term despite everyone talking Brisbane up. I think the middle and outer suburbs have a way to go. I see Melbourne where Sydney was 1 year ago.
Or you can go both...

And I'm not sure how many people are on the ground researching in Sydney but demand for new housing has increased more and those growth centres will continue to show good growth and you can still get a good yield if built right..

Invest where you want. I'd go Melb or Sydney first cause you know their economies are great. Brissy third. Atm, Adelaide is showing greater signs than Brissy..if you go brissy i'd go within 10km of cbd. That's the only part I've seen showing signs of decent growth in the last 6 months..

P.s you'll have to accept a lower yield in Syd and Melb. Brissy could be a goer depending on what you want.. You could keep your 800k in a term deposit making you money and be ready to buy off people jumping off the Sydney market in a few years.. These are just my opinions and am not more right or wrong then others :)
 
I was always told "time in the market beats timing the market" from an Uncle of mine who heavily invests in shares, does this not apply to property investment?

All depends on the location,-and time in the market does work with compounding land zone changes,but property unlike the asx top 50 public listed that some have gone down over 18% over the past 16 weeks,property takes a full 18 months turn around maybe that's starting aleady,because over time your more likely to fool yourself then all the others trying to make money..
 
Back
Top