First time investor needing some help

[achessell]

Hi,

Long time lurker, first time poster.

I'm currently looking to purchase my first IP and am looking at the Murrumba Downs and surrounding areas.

I've picked this area as it:

Seems to be a nice residential area with a mix of families, couples, retiree, homeowners and renters;
It is in the path of the new northern rail line;
It is within my budget;
Lots of new infrastructure being built (Costco, Bunnings, Ikea, North Lakes shopping);

All this I'm hoping will lead to increases in CG in the short to medium term.

I'm looking at a buy and hold strategy initially, trying to buy something that will be easy to rent out and also potential for CG. I want to be able to pull equity out of it within the next 12-18 months to buy a send. The plan is to try and repeat this.

I have a max budget of $450K, lower if possible.

I have a few questions:

How far should I be looking from the main train stations, local shops, schools for it to be desirable from a renters perspective?
I see a lot of places that I wouldn't necessarily live in myself and don't know if they would be a good investment.
Conversely, there are many properties that I would live in (usually) at the upper end of my budget) but am not sure these would be good investments either.
What are some other good suburbs around that area that I should also be looking at?

Any help much appreciated.

Cheers,
Aaron

 

[albanga]

Hey Aaron,
Very good detailed first post, sounds like you have thought about a lot.
I cannot comment on the area personally as I do not know it but sounds like a couple of the big chains are moving in and as per other posts it's not a bad strategy to piggie back of their market research.

If you want to pull equity in that short of a time frame you may struggle unless employing a strategy such as renovation. Remember you need to sink in about 5% closing costs so your going to need a fair CG to draw any decent equity.

How much of a deposit do you have?

 

[SaberX]

Aaron, im looking at my first property too... potentially signing this weekend... lot of land... don't know $hit too in comparison to some as to what will work and what won't....

my advice from a logical pov (should tell myself this - i want to pull out and get a second one around there in a yr or two too...) would be to go for something you can afford financially to repay , or could potentially live in if you are forced to rent it at a low price if demand is weak....

SPeaking to a few people in a rush to make my buy decision this last week or two... seems like people do pay for the more up market furnishings and fittings (i thought money overruled and cheap was king) so do pay attention to that. Of course I am just passing on like a parrot what i've heard, so admitedly i can't speak from experience.

Speaking to bankwest.. my initial thoughts were a 500k borrowing capacity meant that if I secured and built a house which was worth $540k after construction (when the estate progressed - im getting in stage 1, so hoping that prices are cheaper by 10-15k in the short term as a result, so that i'm already on the front foot) or even if it as worth $500K... that this would meant the bank would free up a significant part of another $500k for me to borrow... and then I could rip the $40k in additional equity out....

bankwest have basically come back to me and stated that it is purely income servicing they look at ... so long as my income remains the same i may be positively geared, or positive cash flow, but the total borrowings is still the same...

Not ideal.... a $10k drop in income when i move back from regional next week shaves off $80k borrowing power... to put figures into perspective. Invest iny our education, get a good job for $20-25k more pay and you'll likely be able to pull off a second place.

 

[Jess Peletier]

Saberx that doesn't sound right - if the new prop will be an IP, you can use the rental income for servicing too which will help. Also, bank West are a pain in the butt for cash out so if this is the start of your investment journey there are probably better lenders out there for you.

 

[achessell]

Thanks for the feedback.

I have about $45K to cover both deposit and closing costs.


I am looking for a detached house, on a big block, with a view to buy and hold to reap any CG. Rinse and repeat. It would also be good if the property had the potential to be developed/subdivided in the longer term after I have cut my teeth on a few of these.

I just can't seem to get my head around what property to purchase. I have rented houses before, and from my own experiences there were many that as a renter I wouldn't have set foot in. However, a lot of advice from the forum goes along the line of "...it's an investment, you're not going to live in it....".

So, from my perspective, I'm finding it hard to rationalise between the two.....something that appeals to renters, but also putting my hat on as a "renter" that appeals to me as well.

Some advice on how people have overcome this would be really appreciated.

 

[Jamie M]

Speaking to bankwest..

Bankwest and investors don't usually go together.

Their borrowing capacity calculator is one of the least generous out there.

As Jess mentioned - their cashout policy is pretty lousy too.

Any particular reason why you're considering going with them?

Cheers

Jamie

 

[achessell]

Somebody........anybody.......?

 

[Jess Peletier]

Thanks for the feedback.

I have about $45K to cover both deposit and closing costs.


I am looking for a detached house, on a big block, with a view to buy and hold to reap any CG. Rinse and repeat. It would also be good if the property had the potential to be developed/subdivided in the longer term after I have cut my teeth on a few of these.

I never buy a property that isn't a standard that I would live in myself - that said, I'm no snob

That said, if you're going to demo in a a few years, paying a lot for a nice house makes no sense, so I think you need to be pretty clear on what you're looking for. If it's a split and retain, the quality of the house is more important. I think generally, as long as it's clean (or cleanable) and not falling apart, you're all good.

 

[HillsGirl]

I struggled with this issue as well, and at the end of the day I had to buy something I would be happy to live in myself.

I am a bit of a soft touch, and definately not hard nosed, so whenever I looked at places that were a bit "rough around the edges" I always felt sorry for whoever had to live there.

I know that is a pretty silly thought rationale, but I need to sleep at night, so I bought something that was decent. Nothing flash, but decent.

Having said that, now that I am looking for a 2nd one, I am feeling slightly stronger and wanting this to be a really good investment, not an emotional one.

 

[Nattl3s]

I work in Kallangur. The new railway is being built and should be finished in 2016 (hopefully). Costco has opened in North Lakes. Ikea is supposedly on its way. New extension coming to Westfield. There is a lot of development around Murrumba Downs - Griffin, Dakabin, Mango Hill and North Lakes are all being developed. Lots of land prepped for new builds. So check these out.
IMO Murrumba Downs is a more upmarket suburb compared to these. Handy to Brisbane - about 50 minutes down the hwy all going well, usually heavy traffic mornings and evenings. Lot of locals feel prices havent moved much in MD so you may get a good deal. I just wonder what sort of long term CG you could get with all the new housing being developed in surrounding burbs? Beware of midges closer to the river. I purchased closer to Brisbane.
I guess a generalization with IP purchases - a more expensive house should attract a decent tenant with a car who wont find it a problem to commute or will drive to the train station. A more "economical property" may benefit from proximity to rail links and shopping centre etc.