first time IP help

[TONKA]

ok so im looking to purchase my first IP sometime in the near future and was hoping to get some thoughts on my options. i currently own a PPOR in point cook valued at around $500,000 with $350,000 owing on it. my wife and i have a combined income of between $120-140k (it varies as im self employed). im looking at a budget of up to 350k although we've been told we can borrow more, the tricky part is that we will probably have kids soon and go down to one wage for awhile so the IP i'd assume would need to be as close to cash flow positive as possible to allow enough free cash for living expenses.

ive been looking at:

- house in Ballarat (250k, large blocks, i grew up there so know area well and travel back regularly, good vacancy rates)

- house in Laverton (300-350k, poor vacancy rates, large blocks, close to train & cbd)

- unit/apartment in Sunshine (200-250k, dont know a lot about sunshine still researching!)

 

[hysterical]

If you are looking for cash flow neutral, Laverton would not be ideal , as you mentioned poor vacancy rate might mean the house will be empty for a while, putting strain on cash flow.

Cheers

ok so im looking to purchase my first IP sometime in the near future and was hoping to get some thoughts on my options. i currently own a PPOR in point cook valued at around $500,000 with $350,000 owing on it. my wife and i have a combined income of between $120-140k (it varies as im self employed). im looking at a budget of up to 350k although we've been told we can borrow more, the tricky part is that we will probably have kids soon and go down to one wage for awhile so the IP i'd assume would need to be as close to cash flow positive as possible to allow enough free cash for living expenses.

ive been looking at:

- house in Ballarat (250k, large blocks, i grew up there so know area well and travel back regularly, good vacancy rates)

- house in Laverton (300-350k, poor vacancy rates, large blocks, close to train & cbd)

- unit/apartment in Sunshine (200-250k, dont know a lot about sunshine still researching!)

 

[TONKA]

If you are looking for cash flow neutral, Laverton would not be ideal , as you mentioned poor vacancy rate might mean the house will be empty for a while, putting strain on cash flow.

Cheers

thanks. im leaning more towards ballarat at the moment, there seems to be a few houses <250k near the CBD on large blocks renting for about $240-270 a week

 

[dog]

thanks. im leaning more towards ballarat at the moment, there seems to be a few houses <250k near the CBD on large blocks renting for about $240-270 a week

Unless they're much cheaper than the $250k mark, OR new at the very least, you will struggle to make them work as CF positive. You would need serious deductions to offset the expenses (other then the interest charges) and obtain a better result than slightly negative cash flow.

Unless the interest rates get a big working over in the short term...
Current rates around 6% are the norm.

 

[westminster]

thanks. im leaning more towards ballarat at the moment, there seems to be a few houses <250k near the CBD on large blocks renting for about $240-270 a week

Tonka,
After rates, PM fees, interest etc the above scenario will be quite negative income.
To be CF nuetral you'd need rent around $350-400 on a $250k property.

 

[Property Hoarde]

From that list I would go Ballarat and if you are not going to develop the property look for something newer, to get the Depeciation benefit.

I would also add Bendigo to your list, as the rental returns are better than Ballarat, at the moment.

When I purchased in Ballarat it had the better rental returns but it has now changed and why my last purchase was in Bendigo.

 

[TONKA]

Tonka,
After rates, PM fees, interest etc the above scenario will be quite negative income.
To be CF nuetral you'd need rent around $350-400 on a $250k property.

That's the hard part I guess. Everywhere I'm looking the rent seems to equal the cost e.g 250k property = $250 rent

 

[westminster]

That is the hard part of it. Finding those properties which can do that. I would suggest looking closer to Melbourne at an apartment you can do a little Reno ( use your skills polish floor boards) and increase rent on.

 

[westminster]

For example I think this property has a lot going for it

http://m.domain.com.au/web/client/domain/doPropertyDetails.pagelet?m=b&sId=2437966&adid=2009988424

 

[TONKA]

For example I think this property has a lot going for it

http://m.domain.com.au/web/client/domain/doPropertyDetails.pagelet?m=b&sId=2437966&adid=2009988424

that does look a better option.

browsing through units/apartments in that area and others nearby does show better returns but theres a lot less in my price range. thanks for the tip westminster im going to look a lot more closely these areas now

 

[CHAOS]

That's the hard part I guess. Everywhere I'm looking the rent seems to equal the cost e.g 250k property = $250 rent

That seems to be the general pattern in Ballarat.

 

[dog]

that does look a better option.

browsing through units/apartments in that area and others nearby does show better returns but theres a lot less in my price range. thanks for the tip westminster im going to look a lot more closely these areas now

Don't forget to factor in the body corp fees, levies, etc and do the body corp searches to find out about other potential issues that can be forgotten about such as recent remedial works etc that might rear their heads again in the fiuture and affect your cash flow...

 

[westminster]

Im going to change my advice. Buy an IP in Perth. Heaps more positive/neutral properties here.

I'll send you some links later.

 

[Brady]

Im in the process of signing contract on property in the Bathurst/Orange Area.

Purchase Price $265k, currently rented @ $330p/w going to be increased to $350p/w in December.

 

[hysterical]

Im going to change my advice. Buy an IP in Perth. Heaps more positive/neutral properties here.

I'll send you some links later.

Hi

Can you share the links too ? I am interested as well.

Thank you

 

[westminster]

Here's my pick of some areas I know - I have my favourite pockets of Perth and there may be other areas which have similar properties but I don't know them

Westminster:
I have 3 villas here which rent for $450-500 a week.
Similar to this
http://www.realestate.com.au/property-villa-wa-westminster-106970916

Canningvale:
http://www.realestate.com.au/property-house-wa-canning+vale-108182566?listingType=buy
NRAS in Canningvale http://www.realestate.com.au/property-townhouse-wa-canning+vale-110135693?listingType=buy

Harrisdale - it would be interesting to see what the rental estimate is for these
http://www.realestate.com.au/property-house-wa-harrisdale-111694667?listingType=buy

Rivervale - sold but a good deal
http://www.realestate.com.au/property-house-wa-rivervale-110648933

East Vic Park
$330 rent for $285k
http://www.realestate.com.au/property-flat-wa-victoria+park-111355487

Bayswater
http://www.realestate.com.au/property-unit-wa-bayswater-110605909

 

[heiding]

Westminster, thanks for sharing those links. do you think Fremantle, East Freo and surrounds would be worth looking at? I would like to get an IP there, but its kind of sentimental and I don't want to get in for the wrong reasons!

 

[westminster]

Westminster, thanks for sharing those links. do you think Fremantle, East Freo and surrounds would be worth looking at? I would like to get an IP there, but its kind of sentimental and I don't want to get in for the wrong reasons!

I have vaguely looked there before but I couldn't see any winners. I love the area - love old houses/buildings etc I think the only places you could value add to increase rent and yield would be some very old 1-2 bedroom apartments or doing something in Hilton and surrounds where you can build a house in the backgarden and subdivide.

 

[TONKA]

how do you guys go about buying property interstate? do you travel over there to look at it? do you find a broker who can do it all for you?

 

[hysterical]

how do you guys go about buying property interstate? do you travel over there to look at it? do you find a broker who can do it all for you?

I think you are referring to a buyers agent to source a property interstate for you.

Cheers