First IP in Western Sydney?

[jmillar]

I'm 20 years old and will be buying my first IP around Feb-March 2013 - so I'd like to start familiarising myself with the market.

Due to posting a topic here, I've received some great advice pertaining to how to 'ready' myself. Now I'd like to seek some help in relation to where I should buy.

As my budget will be somewhere around the $200-250k, I was thinking something around the Penrith area, but would be open for suggestions! (I'm from Western Sydney so something local would be good for a start).

I have access to RPData for certain areas around Western Sydney so this may help with my research

I'd like something CF+ so that I can build my portfolio quickly, but also with potential for CG.

Any advice is appreciated!!

 

[Rixter]

I'd like something CF+ so that I can build my portfolio quickly, but also with potential for CG.

Any advice is appreciated!!

JM, what and where to buy is dependent upon your chosen investment strategy.

You see property is merely the vehicle. The 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 your current financial position, where you are wanting to go, 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?

On a side note, sure you need CF so your portfolio can breath, however its the CG thats required so as to leverage against to build your portfolio faster.

I hope this helps.

 

[datto]

Are you after a house or unit?

If you want a house that is CF+ out west you will have go to the Druitt. There is nowhere else out west that is that cheap.

 

[Shahin_Afarin]

I don't think you can buy something in Mount Druitt - think more like lethbridge park. Penrith is a great area but don't think you will find something for $250k. May find something in Cambridge Park. BTW Im referring to house not units.

 

[testingw00]

Have you considered Auburn? It's a lot closer to the city, has well connected infrastructure and rental demand is good.

It will definitely be units though in your price range, not houses. You can pick a fixer-upper 2 bedroom apartment starting from around $240-260k in the current market.

 

[mkbonline]

I am on similiar boat and looking for my first investment property. Already got PPOR in Toongabbie with 100K equity available for investment. Having driven around Mt Druitt,Whalan, Dharruk, Tregear, Bidwill, I got a feel that the area is pretty rough. It may be possible to get CF+ property their but not confident whether capital growth will happen in next 3 yrs time. Any western suburbs experts?

Are you after a house or unit?

If you want a house that is CF+ out west you will have go to the Druitt. There is nowhere else out west that is that cheap.

 

[Shahin_Afarin]

I think you could have easily found a bargain in those areas 6 months ago but there has been a massive number of investors purchasing in the area due to the rental yields so the prices have gone up quite a bit. It will be difficult to find a bargain without having significant competition. You just need to keep looking. How are you calculating the $100k equity?

I agree with Auburn however I would be looking at houses - Auburn is not short of units but certainly getting short of land.

 

[DaveM]

I think you could have easily found a bargain in those areas 6 months ago but there has been a massive number of investors purchasing in the area due to the rental yields so the prices have gone up quite a bit. It will be difficult to find a bargain without having significant competition. You just need to keep looking.

Agree, 2770 has turned into a feeding frenzy for the Mum & Dad market buying places that are renovated for yield, there were some writeups on it earelier this year in a few mags and prices jumped afterwards. Floor price for ex-doh unrenovated has increased significantly. I have to laugh when I get "Property Alert" emails from local agents there with 3br houses in Wilmott or Bidwill for $289k WITH ROOM FOR A GRANNY FLAT (STCA).

There is a 3br run down townhouse in Bidwill I looked at last xmas that sold for about $172k, they wanted a 66W which I could not do. It was then re-listed for sale a few months later for $229k without any improvements, same condition... its still on the market today so i guess not everyone is getting their inflated prices. I did off them the equivalent of 172 + stamp duty but it was turned down heh.

There are bargains to be had if you keep your eyes open but you have to be ready to pounce the second they come on the market.

But yes many parts of 2770 are rough, why else do you think you are getting a house on 700sqmn for $240k? However if you avoid the predominantly HC streets there are plenty of good solid investments. My general rule is the further North from Mt Druitt Westfield the worse the suburbs become. I dont own in 2770 but do in surrounds... for a less hassle suburb look at Whalan and Tregear and southern part of Lethbridge Park, better overall feel than Emerton, Shalvey, Bidwill, Dharruk and Blackett.

 

[Shahin_Afarin]

I like Dharruk too however the same houses that were going for $230k in Dharruk 6-12 months ago are now going for $290k.

Also I noticed a couple of fire damaged homes in Bidwell going for close to the $200k mark.

Just keep your eye constantly on the market, do your DD but do it quickly. Make sure your conveyancer, broker/banker and building and pest inspectors are all ready to go when you say jump.

 

[saiman]

http://www.lsblacktown.com.au/property/98768-46-mort-street.html

sold for more than $500k

ridicluous

 

[Rixter]

Here's my recommendation...

Northern side of South Wentworthville.

It ticks my purchasing criteria check list if you are looking for short to medium term capital growth so as to leverage against and build your residential portfolio faster.

I hope this helps.

 

[mkbonline]

Actually I got 210K in equity

Current value of the property = 330K
Loan Balance = 120K
Savings in Offset Account = 50K
Equity = 330K (current value of the property) - 120K (amount owing on its mortgage) = 210K

Rental yields is fine but in your opinion do you see captial growth in next 3 years? I found are pretty rough. Unit around Mt Druitt station is 230000K. In 330000 i can get older looking but nearby station units in GWH in Parramatta. Which one sounds better in terms of capital growth?

Thanks in advance.

I think you could have easily found a bargain in those areas 6 months ago but there has been a massive number of investors purchasing in the area due to the rental yields so the prices have gone up quite a bit. It will be difficult to find a bargain without having significant competition. You just need to keep looking. How are you calculating the $100k equity?

I agree with Auburn however I would be looking at houses - Auburn is not short of units but certainly getting short of land.

 

[Shahin_Afarin]

That is a common way people calculate equity and its not quite right.

The property value is $330k. You can borrow either up to 95% of the value of the property. Lets just keep it simple at say 80% so you avoid LMI. @ 80% the amount you can borrow will be $264k. Minus the existing loan amount of $120k - this leaves you with $144k in useable equity plus the $50k sitting in your offset. You can borrow up to 90% but you would pay LMI to you would need to deduct that from the available equity. You can also borrow up to 95% but I would recommend against this.

Area might be rough but investor chase yields and the prices in that area has already increased significantly. I would be looking at houses instead of units. Parramatta is flooded with units so I personally can't see a lot of value.

One other thing - when you say your property is valued at $330k. Are you sure about this? A lot of people (including myself) will think that the value of the property is 'x' and when the bank orders the valuation it comes back a 'y' which is why a lot of people like the ability to order upfront vals.

 

[Shahin_Afarin]

Here's my recommendation...

Northern side of South Wentworthville.

It ticks my purchasing criteria check list if you are looking for short to medium term capital growth so as to leverage against and build your residential portfolio faster.

I hope this helps.

Isnt the north of wenty, wenty? lol. But seriously, I like the area too but don't think you will pick anything up for $250k. The thing I like with South Wenty is the zoning.

 

[Rixter]

The thing I like with South Wenty is the zoning.

Exactly..... gentrification at play with the area being redeveloped. Old houses bowled over & replaced with new houses, duplex's, townhouses & villas .

 

[jmillar]

Thanks for all the info and advice, guys!!

At this stage it looks as though Cambridge Park and Lethbridge Park may be good choices, although I'm still open to any suggestions.

Cheers

 

[starter]

I like the Parramatta area as well and I think the proximity to Parra as well the CBD will be sought after going forward. Also I don't necessary agree that units are a no go in the area, it's down to the individual deal.

I just purchased a basic 2 bed unit in Guildford on a 7.3% gross yield on purchase price with no work required at all, at current interest rate it's pretty much neutral before tax at 90% LVR. Would have no issue buying more units like this if I can keep getting this yield.