First-time property investor seeking advice from experienced investors

Hey everyone,

I was a left inheritance totalling $300k two years ago. Since then, it has been sitting in a bank on a term deposit, gaining some interest. I am now ready to take the next step and move into investment - property investment in suburban Adelaide is my preference.

Can anybody give me some tips on property investment? What to do/what not to do? I am completely new to this and am keen to get as much advice from experienced property developers as possible!

Any suggestions on promising areas to invest are also welcome!

Cheers :)
 
Why Adelaide?

Is it because you expect it to outperform the rest of the country?

Or just because you live there and know it?

Have a think about what your goals are and maybe the path will become more obvious.
 
KellBell, to add to the above question, are there any areas you're set on investing in?? North, south east or west?? To be honest, areas like Craigmore and such are good investments with the Army moving in. You've also got the Semaphore region, as a lot will want to live near the beach, or the city.

We need to work out how much you intend to borrow as well
 
Simon and Jaggannath:

I considering investment in Adelaide because I want to live in the property for at least one to two years before I start renting it out.

I currently rent a house with my dog and two friends, but the lease runs out in July and I want to be able to in my invested property with my dog while I work.

I'm not entirely sure where in Adelaide I want to invest - all I know is that it has to be relatively close to the city for work - no more than 15ks from the city.

At the end of the day, I am looking to get the most out of my money (yes, aren't we all :)). Therefore I am looking for a suburb that will still hold a promising future two years from now.

I have $350k in inheritance and I consider myself a low/medium risk taker. Therefore I am only looking to invest a maximum of $250 in a property.

I am happy to consider renovation if need be - therefore the property has to have flexible space.

I think Semaphore is a lovely suburb and from what I have heard, sounds quite promising. Areas around Elizabeth, such as Craigmore, aren't my top priority because of the low socio-economic status and distance.

Feedback?? Advice?? :)
 
If you are dead set on living in it first, consider a IO (Interest Only) loan with a 100% offset account.

Eg: Property $350,000. Loan $280,000. You pay deposit of $70k + $20k fees. Your remaining $260,000 goes into the offset account so that you pay practically nothing in interest.

This is an easy, conservative way to give you "free rent" plus capital growth, and still have access to the bulk of your funds for other purposes. When you move out, simply empty out the offset account and there is your IP ready to go.
 
Southern Blair Athol. Southern Kilburn. Broadview. Clearview. Parts of Prospect. You can still get quite cheap units in these areas, and they are close to the city and near shopping, and getting gentrified.
 
look for value
look for unique and distinguishing (desireable features)....veiw, location, close to schools shops and other conveiniences.
Look for land content.......if units ...small blocks...no lifts and swiming pools etc.
there are well over 6 billion folks running around on this planet so well located desireable realestate will always be in demand.
learn as much as you can so that when you see a property that meets your criteria, you will say Hell Yes!...I would be stupid not to buy this one.....any feeling less is a no don't want it.
Si:)
 
IMO, if you have to live there just look at suburbs where you would ideally like to live and forget the rest. It becomes more a matter of your own personal needs rather than a criteria for investment.

For example, I'm in Perth and look at investing in Perths outer suburbs, but I wouldn't live there personally as I like being near the city. So if I was buying a place to live in, I would buy near the city (even though there might be great opportunites further out).
 
Also, if you are young, single and don't mind unit living, look at North Adelaide. The scungy units there are surprisingly cheap but the location is fantastic. Lived in one of them a while back, want to buy one myself in a few years.

Edit: nevermind, the dog probably rules these out
 
Why Adelaide?

Is it because you expect it to outperform the rest of the country?

Or just because you live there and know it?

Have a think about what your goals are and maybe the path will become more obvious.



Co-sign.

Melbourne or Sydney is the place to invest IMHO.
 
Also, if you are young, single and don't mind unit living, look at North Adelaide. The scungy units there are surprisingly cheap but the location is fantastic. Lived in one of them a while back, want to buy one myself in a few years.

Edit: nevermind, the dog probably rules these out


What does this have to do with his goal of investing the $300k to make money? He didn't say he was looking for a place to live.
 
I considering investment in Adelaide because I want to live in the property for at least one to two years before I start renting it out.

What does this have to do with his goal of investing the $300k to make money? He didn't say he was looking for a place to live.

There - in the 2nd post.

Kellbell, if you're looking primarily to live in, but with the intent to make it an IP down the track, I'd also go with bene313 - buy where you want.

And others have said, get your structure "right" so to keep your future options open.
 
My bad, didn't read the replies, only the original post.

Well, investing and buying a place to live are 2 different goals and mutually exclusive in most cases IMO, so they should be kept seperate. Sure, you can buy a place where you want to live and turn it into an IP, but it may not be the best investment.

With $300k, surely you can put down a deposit on a house AND buy an IP, just gotta prove to the banks you can service the loan so they give you the cash.
 
With $300k, surely you can put down a deposit on a house AND buy an IP, just gotta prove to the banks you can service the loan so they give you the cash.

ABSOLUTELY - that's where I'd be! The OP mentioned "low/medium" risk and I read into their post that they intended putting $250k of their cash into this property. That to me is medium/high risk - something about eggs and a basket? :D
 
Simon and Jaggannath:

I considering investment in Adelaide because I want to live in the property for at least one to two years before I start renting it out.

I currently rent a house with my dog and two friends, but the lease runs out in July and I want to be able to in my invested property with my dog while I work.

I'm not entirely sure where in Adelaide I want to invest - all I know is that it has to be relatively close to the city for work - no more than 15ks from the city.

At the end of the day, I am looking to get the most out of my money (yes, aren't we all :)). Therefore I am looking for a suburb that will still hold a promising future two years from now.

I have $350k in inheritance and I consider myself a low/medium risk taker. Therefore I am only looking to invest a maximum of $250 in a property.

I am happy to consider renovation if need be - therefore the property has to have flexible space.

I think Semaphore is a lovely suburb and from what I have heard, sounds quite promising. Areas around Elizabeth, such as Craigmore, aren't my top priority because of the low socio-economic status and distance.

Feedback?? Advice?? :)

Maybe try looking just outside Adelaide proper... Hindmarsh, Bowden and the inner Western suburbs (along with North Adelaide) will all definitely improve in value with the tram line in the short to medium term (if you don't buy a dog). Avoid Port Road itself. They're not too expensive, but you'll definitely win.

Another area to look at may be the strip between Semaphore and North Haven (I'd avoid Peterhead though)... the Defence Hub should increase desirability, and you'll get two years before it's finished and interest piques. The bridge onto the Expressway makes it more desirable for defence types working up north, and it's a short hop to the city. Plus the completion of the later stages of Newport Quays should continue the upwards prices, especially for established blocks.

How about this one? Largs North Unit

The one next door sold for $300k, only bc expense is for insurance, no rules.
 
I'm not ready to buy a house yet - in fact, I'd be more than happy to rent out another property and buy an investment property and begin investing straight away - if that is what is better financially.

What do you think about this?

Also, could somebody please explain to me 'interest-only loans'?

Also, I want to buy in a suburb that is obvioiusly close to transport, cafes and entertainment, but I also fear spending too much money...

I have a total of 350k in inhertiance, and don't want to risk putting it all towards an investment property. Is there a chance of taking out a loan? Would that be wise? What is the best way to go about this without spending too much?
 
Hey everyone,

I was a left inheritance totalling $300k two years ago. Since then, it has been sitting in a bank on a term deposit, gaining some interest. I am now ready to take the next step and move into investment - property investment in suburban Adelaide is my preference.

I'm not ready to buy a house yet - in fact, I'd be more than happy to rent out another property and buy an investment property and begin investing straight away - if that is what is better financially.
Which is it? Or do you mean you're not yet ready to buy a house for yourself?
What do you think about this?
Sometimes you have to make up your own mind. Get the options in front of you and work out the pros and cons. If you can do some basic excel spreadsheets, you should be able to work out the financial pros/cons, but there's more to it; lifestyle, risk appetite, future plans such as travel, work commitments.
Also, could somebody please explain to me 'interest-only loans'?
On a "regular" loan, you pay the interest and some of the principle, hence principle and interest. IO, you only pay the interest. :D

eg. $100,000 @ 6%.
P&I over 30 years, monthly repayments = $599.55
IO = $100,000 * 6% /12 = monthly repayments = $500

After 5 years, your P&I loan will be paid down a little bit (say $98,000 - I'm too tired to work it out), your IO loan will still be at $100,000. BUT, you've freed up $100 pm to use for something else.

So for investing, you've not put any of your own money in (theoretically) and maximised your tax deductions.

This structure doesn't suit everyone.

Also, I want to buy in a suburb that is obvioiusly close to transport, cafes and entertainment, but I also fear spending too much money...

I have a total of 350k in inhertiance, and don't want to risk putting it all towards an investment property. Is there a chance of taking out a loan? Would that be wise? What is the best way to go about this without spending too much?

Without knowing your personal details such as income, etc, no one can tell you whether you can get a loan or not.

However, one way to minimise your risk is to put down a large deposit (say $100,000) and then borrow $250,000 (assuming this is for a $350k investment). Your remaining cash could sit in an offset account, waiting for you to use for something else, and you won't pay ANY interest!

Then when you DO spend your $250k on something else, the rent should well and truly cover interest and costs with a bit left over, and the interest will be tax deductible.

Check out some of the blogs for some detailed discussion on finance structures.

I would also recommend you speak to an accountant to help with your decision and structure. Not a financial planner, as they'll probably want you to put it all into managed funds.

Hope that helps.

PS. I'm not necessarily an "experienced investor" as the thread title requests! ;):p
 
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I agree with Bon

I would be looking at two properties, but understand you may not be ready to make that move yet.

You could buy somewhere you like to live and keep it using what is still available with a first home owners grant (if it is still on offer in SA) and when you are ready buy an investment property as you will have equity in your home, but I would try not to use that if possible.

Once you have gone through the process of buying your own home, given time you will probably have the confidence to buy an investment property.
Hope all goes well.
 
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