FIrst IP

Hey guys,

I"m looking to buy my first investment property. (which will happen to be the first property I buy).

I am currently sharing rent and have no intention of buying my own home in the near future.
My goal is to start developing a portfolio which will provide equity to buy my own home in the future and also for business venture about 10 years from now.

I have a bit over a 100k saved and can get a loan upto 1million if required. 10% loan thanks to my professional associatoin. I'm looking to buy in Sydney although Melbourne is an alternative.


Initially I was contemplating buying a nice apartment, or cheap townhouse in a bluechip area (?strathfield) but reading through the forums has given me more ideas. In particular the idea of adding value via renovations etc. seems promising

  1. Buy a older house in outer suburbs (will have to research areas) looking at price point of 600-700k, with potential add value.
  2. Buy two good apartments at around 4-500k with potential to add value.

The problem I see with this is that neither myself or any close family or friends have any experiencing in renovating. Also I have very little time to do much work myself. So I guess I will have to work out if the cost of making an renovations is worth the cost.

My first step is going to be looking at some potential areas for investment and working out whether going down the value adding route will provide reasonable returns.

Are there any suburbs people would suggest. Any advice regarding for a first time investor. (I was thinking potentially auburn/granville areas)

Cheers
ziph
 
If you are looking at undertaking a value adding project I would recommend looking at property closer to where you live so you can cut down on travel time and expenses. Should you have trouble finding profitable opportunities where you live you may want to try Saturn or Neptune.
 
Hey Ziph,

That's a pretty healthy deposit and gives you plenty of options.

Most of those who have done extraordinarily well on the forums stick to the mantra of buying below market value and having the potential to add value. Generally higher land content/value blocks give you greater scope to do this.

While I completely believe in the power of this strategy, I question whether its best suited to someone that is incredibly time poor. Personally I've been working incredibly long hours for the last few years of my life and have wanted more 'hands off investments'. I designed my plan around my life and have found a strategy that works for me and allows me to achieve my goals. Positive cash flow (10k+ per property, NRAS), and a reasonably quantity of properties. As I shift gears professionally, i'll definitely change tacts and move to that strategy that allows me to 'create' - but this generally doesn't suit very time poor investors.

Overall seems like you're on the right track. Depending on your risk profile, i'd personally go for a couple assets in the mid tier range and spread my risk across cities.

Cheers,
Redom
 
Hey Ziph,

Depending on your risk profile, i'd personally go for a couple assets in the mid tier range and spread my risk across cities.

Cheers,
Redom

I would second this - one pricey IP in Sydney at this point in the cycle I would call high risk. Im not saying it can't grow again next yr but gee you have missed a few cracker years. Putting some thought into location could be time well spent. If you get through that process and still want Sydney, fine, but consider the alternatives at least. The ripple effect means Sydney money is moving out in various directions. Other capitals move to different clocks, a lot of big names have been calling Brisbane as overdue for some growth for a while. You have a lot of options worth thinking about.
 
I would second this - one pricey IP in Sydney at this point in the cycle I would call high risk. Im not saying it can't grow again next yr but gee you have missed a few cracker years. Putting some thought into location could be time well spent. If you get through that process and still want Sydney, fine, but consider the alternatives at least. The ripple effect means Sydney money is moving out in various directions. Other capitals move to different clocks, a lot of big names have been calling Brisbane as overdue for some growth for a while. You have a lot of options worth thinking about.

I would second this. Spot on IMO.

Leo
 
Most of those who have done extraordinarily well on the forums stick to the mantra of buying below market value and having the potential to add value. Generally higher land content/value blocks give you greater scope to do this.

Depending on your risk profile, i'd personally go for a couple assets in the mid tier range and spread my risk across cities.

Cheers,
Redom

Great advice!

Leo
 
thanks for the advice so far.

Just to clarify.

I have 100k in savings and can borrow upto 900k.

I note that it may not be the right time in the price cycle to buy in Sydney. (Or other areas may offer better investment options) but from a logistic point of view I want to be able to go inspect the areas I will be buying in and inspect quite a few properties in these areas to get a feel for the area before buying and I don't think this will be practical if i look interstate.
 
Can always jump on a flight and visit interstate. I know lots of investors who do this on the forums - day/weekend trip interstate to hunt for properties.

In saying that, can understand why you want one you can touch and feel for the first one. I know I did :)
 
hello
You say you have $100K cash and can borrow up to $900K. What about stamp duty? That will cut into the amount you can actually spend.
 
When I am investing interstate I always go visit. I get through 18-20 places a day for several days in a row. Its an absolute mission and a logistical nightmare but it is possible and there is no substitute for pounding the pavement (unless you let someone else do it - ala Buyers Agent) Either pay for experience or invest the time, if you are spending a million bucks then some research, followed by some phone calls, followed by a week of your annual leave and some hard work is such a small investment that will magnify your results. Do you want to make a profit? Work once, get paid for a long time.

BTW There are also markets out of Sydney but not interstate you could think of that are easier to access. Wollongong, Central Coast, Newcastle, etc


thanks for the advice so far.

Just to clarify.

I have 100k in savings and can borrow upto 900k.

I note that it may not be the right time in the price cycle to buy in Sydney. (Or other areas may offer better investment options) but from a logistic point of view I want to be able to go inspect the areas I will be buying in and inspect quite a few properties in these areas to get a feel for the area before buying and I don't think this will be practical if i look interstate.
 
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