How would you investment $1.7m

M

MYDomain

How would you invest $1.7m in VIC?

Hi Everyone,

I wanted to get thoughts from the seasoned investors on here regarding Albert Park Vic as an investment from a CG perspective.

I am looking at purchasing period stock around the $1.7m mark with a buy and hold strategy.

Cash flow is not important to me and only seeking CG. I may also move into this property down the track, however would like to treat it as an investment for purchasing purposes rather than a lifestyle decision.

I would also like to avoid land tax implications as I am heavily invested in Victoria. Any suggestions on how I could avoid this? I don't currently have a trust.

Any advice would be much appreciated and keen also get your thoughts on how you would invest $1.7m in a property. Which suburbs? I am also very time poor so not looking for multiunit developments. Cosmetic Reno is ok, however looking for low maintenance options.

Please let me know if you have any questions.
Many thanks
 
Last edited:
MYDomain said:
I am looking at purchasing period stock around the $1.7m mark with a buy and hold strategy.

Cash flow is not important to me and only seeking CG. I may also move into this property down the track, however would like to treat it as an investment for purchasing purposes rather than a lifestyle decision.

I would also like to avoid land tax implications as I am heavily invested in Victoria. Any suggestions on how I could avoid this? I don't currently have a trust.
Click to expand...

Instead of buying one 1.7m property in Vic, have you considered buying multiple investment properties in other states? Is the fact that 'you might move into this property down the track' clouding your judgement?
 
MYDomain said:
Hi Everyone,

I wanted to get thoughts from the seasoned investors on here regarding Albert Park Vic as an investment from a CG perspective.

I am looking at purchasing period stock around the $1.7m mark with a buy and hold strategy.

Cash flow is not important to me and only seeking CG. ................it might be when interest rates start going north........ I may also move into this property down the track, however would like to treat it as an investment for purchasing purposes rather than a lifestyle decision.

Personally, I would only purchase something like this if there were a very strong chance it would become a PPOR.

I would also like to avoid land tax implications as I am heavily invested in Victoria. Any suggestions on how I could avoid this? I don't currently have a trust.

This would be so land rich that the trust won't help that much. Indeed a family trust would be a hindrance as your heavy negative gearing losses would be quarantined and you would be funding the shortfall with after tax dollars from your pocket.

Any advice would be much appreciated and keen also get your thoughts on how you would invest $1.7m in a property. Which suburbs? I am also very time poor so not looking for multiunit developments. Cosmetic Reno is ok, however looking for low maintenance options.

Please let me know if you have any questions.
Many thanks
Click to expand...

I would look at another state if you wish residential to continue to be your investing stock and possibly a small block of units at that price level. Otherwise maybe look at commercial for a better yield to continue your high land content negatively geared residential style investments.

Albert Park is a blue ribbon suburb and should continue to see capital growth well into the future, HOWEVER, in the event another GFC type scenario or other left field event unfolds (not totally unlikely), this suburb will be hit hard and so your negatively geared (high value) asset will be costing you to hold whilst losing value in the short to medium term.......if another left field event occurs.

If you are holding similar investments already, I would look at a multi or a commercial asset.

If it is purely for period/heritage PPOR then Albert Park ticks all boxes.
 
Albert Park

Many thanks for everyone's prompt responses.

I should have articulated my current circumstances a little better.

I am 30 yo and hold 8 investment properties in VIC, mainly in the inner west.

One of the objectives of the next investment is to diversify into a different market and interstate is an inevitable possibility. My investments to date have been in up and coming areas like Seddon, Footscray etc. I want to balance the portfolio with some blue ribbon acquisitions.

The purchase will be made through leveraging equity. No interest in commercial real estate.

If the next purchase is made in Melbourne which blue ribbon suburb would you invest in for CG? Also, how would you structure the purchase so as to minimise tax implications?
 
MYDomain said:
Many thanks for everyone's prompt responses.

I should have articulated my current circumstances a little better.

I am 30 yo and hold 8 investment properties in VIC, mainly in the inner west.

One of the objectives of the next investment is to diversify into a different market and interstate is an inevitable possibility. My investments to date have been in up and coming areas like Seddon, Footscray etc. I want to balance the portfolio with some blue ribbon acquisitions.

The purchase will be made through leveraging equity. No interest in commercial real estate.

If the next purchase is made in Melbourne which blue ribbon suburb would you invest in for CG? Also, how would you structure the purchase so as to minimise tax implications?
Click to expand...

Congratulations on holding 8 properties at age 30. Remarkable effort. You must have started early and/or be on a strong income.

It's pretty uncommon to see someone with a portfolio that size so state-centric. What would it take for you to consider spreading the $1.7m into a few assets interstate? You could use that to grab a few properties in NSW, QLD and WA, if you wanted.
 
The only way I can think of to reduce land tax is to diversify across different states. If you've already got 8 in Vic then you've already likely got a significant land tax bill.

If you're looking to get capital gains, then I'd be investing the $1.7m across several properties. Certainly there's some great inner city blue chip suburbs which will likely have good gains, but the price point is quite high and unaffordable to all but a few. This reduces the pool of potential buyers and tenants alike. I think there's more gains overall to be had by purchasing properties in a more affordable price range, say $400k - $600k. There's plenty of premium suburbs throughout Australia where this price range gives you some excellent options.
 
Diversification

In addition to the suggestions above of buying mid range properties interstate, have you considered other asset classes?

Adding LPTs, and shares to the mix gives you exposure to other industries, not to mention liquidity, and avoids land tax. You could the further leverage by margining on that again (of course not gearing too highly).
 
Personally I would not throw $1.7M at one blue chip property, for starters blue chip is not a bullet proof investment and whether it provides the xx% growth over the next x years who knows??

What about looking at other investment strategies where you are not dependent on growth and you get to hold positive cash flow properties which also provide equity, best of both worlds. Properties with development potential/opportunities where you can add value.

Sure, it requires more work/skills but the rewards can also be greater. Check out posts by oc1 who is a developer from Melb he has posted some of his projects to get an idea on what returns etc can be achieved.

Cheers
MTR:)
 
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