First time investor, inheritance, Melb

[Gendry]

Aged 27, currently with low income, but will be inheriting 200k "when i buy my first house."

I want to invest somewhere and make this grow as much as possible, but due to low income don't want to borrow a lot of money. I also want to buy something which is reasonably low risk, and therefore was thinking inner city. But from what I've read that won't get me much in Melbourne, where I live.

My current ideas:

1) Student apartment - saw some of these for under 200K but have been warned against them due to less capital growth, possible oversupply, etc.

2) Borrowing up to 100k and investing with up to 300k in a one bedroom flat. Would I get anything reasonably central with this? Was thinking reservoir, preston, perhaps.

3) Looking at a different city. Brisbane, or perhaps Adelaide.

4) Somewhere regional. I don't really want to do this, as a first time investor I don't feel I know enough about it to make it work

Thanks for any help or advice

 

[Gendry]

I thought I should add - I don't want to take out a loan if I can help it, mostly from a psychological stand point. I have an unreliable income at present, and while that may change, the stress of larger debt isn't something I want right now. I would consider a small loan at most.

 

[Blueberry]

Regional doesn't mean out in the sticks. There are a number of major regional centres and you could do well with $300k there.

 

[wylie]

You probably should look at overcoming the psychological barrier to borrowing.

If you are being given $200K and borrow another $200K you could buy (offers in the mid $300Ks) a nice two bedroom unit like this (currently rented $370 per week) -

http://www.realestate.com.au/property-unit-qld-greenslopes-117446071

Borrowing interest only $200K @ 6% (you can do better than 6% though) is $12K interest per year or $230 per week.

If you get something for $350K including stamp duty, your loan @ 6% would be around $175 per week against rent of $370.

Renting at $370 per week this puts money in your pocket. You have to allow for BC fees, rates, water etc, but it is an idea of what you could do...

It pays for itself without the pressure or stress of your job.

 

[nhg]

I thought I should add - I don't want to take out a loan if I can help it, mostly from a psychological stand point. I have an unreliable income at present, and while that may change, the stress of larger debt isn't something I want right now. I would consider a small loan at most.

Will these circumstances change in the foreseeable future?

 

[superAndrew]

Borrowing $200,000 shouldn't be a problem since the rent from the unit will easily cover the loan payments.

I would look at buying something in Brisbane but not Adelaide. There are some good units you could buy for $300,000 - $400,000 in Brisbane.

Cheers

Andrew

 

[Brady]

Maybe buying a property isn't right for you?

Maybe take the $200,000 and put it into index shares.

 

[Gendry]

Re my income - it hopefully will be changing soon, but nothing is certain.

Hmm perhaps I should reconsider the loan amount. Maybe something up to the 200k mark

I would much prefer to put the inheritance in index shares, but I believe the stipulation in the will means it must go towards a property. If I invest now, or in 5 years time, I believe the amount I receive will still be the same. Thus I am wanting to invest in something as stable as possible, that I can get for the money.

I will look into Brisbane. The idea of investing nearby in Melbourne appealed to me, since I could inspect many properties easily myself. But I guess it might not be possible. If I do invest somewhere interstate, would this mean I would need to travel there quite a lot?

Thanks for the responses, much appreciated. I have been reading some books on property and investing, but in general am quite new to all this

 

[poordeveloper]

I would look into somewhere like Ballarat where houses quite commonly sell between $200-$300K. Demand for rentals should be fairly consistent due to the hospital and university. I would make sure any property you buy is central to those facilities.

As other have indicated, interest on a small loan would be minimal and easily paid for by rent - even allowing for some vacancy, rates, land taxes, maintenance and repairs, etc.

 

[poordeveloper]

Also, if the 200K is fixed amount and not earning interest, it's essentially decreasing in value every year. Assuming house prices don't grow and they track inflation (at 2.75%), that means it's decreasing by $5,500 every year.

 

[Gendry]

Also, if the 200K is fixed amount and not earning interest, it's essentially decreasing in value every year. Assuming house prices don't grow and they track inflation (at 2.75%), that means it's decreasing by $5,500 every year.

It is for this reason that I am looking to invest soonish. Don't want to jump into something before knowing what I'm doing, but there is a certain impetus.

Thanks for the reply, I'll look into Ballarat too