Im having trouble finding the next IP.

Hello Somersofters

I am having trouble finding an IP within my price range, as property goes up i feel as though it gets harder and harder to aquire the next IP, I have been investing in property for only 2 years and i have built up a small portfolio in that period.

I feel as though I am only looking in the suburbs that i live around and know of, how do you learn about other properties/suburbs on the other side of town or even interstate properties and how suburbs are performing, rental demand etc?

In saying that i do have a decend deposit and a fair amount of equity available i just choose to keep my IP's within 300-400K.
 
Hi tbinvestor,


1. You can start by searching this forum and reading what other investors have to say about certain areas.

API Mag is also a great source for projected Hot Spots and info. It will give you stats on rental yields and growth - although in most cases by the time you read about it the stats have changed.

realestate.com.au also has some great free info on demographics, yields and medians.

Most of us here have areas that we think are great places to invest but you should back this up with your own research.

2. Perhaps you should start to look outside your area and even into other states.

The best investment strategy involves diversifying your risk. Whether it be with banks, states or type of investment.

Look at the basics and choose your property based on a business decision rather than a personal one. I have bought several times without inspecting the property in person.

3. Once you find the area in your price range with your investment criteria, research the growth, yields and projected growth, yields and infrastructure.

You'll find that you start to narrow suburbs down as you gain more knowledge and get more familiar with them.

4. Don't get bogged down with research. There is definately such a thing as information overload. You would be aware that property moves in cylces and growth has been proven over a 7-10 year period. SO while some suburbs will perform better than others, in the end if you hold for the long term you will get your return. :)

Regards JO
 
Nothing wrong with sticking local. Less risk in my opinion. And you get to know the local prices better and should be in a good position to act quickly on a motivated seller. Not to mention the property management and tradies issues.
 
Nothing wrong with sticking local. Less risk in my opinion. And you get to know the local prices better and should be in a good position to act quickly on a motivated seller. Not to mention the property management and tradies issues.

All true for the first 2 or 3 IPs perhaps. BUT if you are going to grow your portfolio and diversify - you need to move into other areas and even other states to avoid Land Tax.

So when Melbourne goes quiet then your Sydney or Darwin properties might be doing well etc. This way you can get growth from some part of your portfolio while the others are having a breather.
 
All true for the first 2 or 3 IPs perhaps. BUT if you are going to grow your portfolio and diversify - you need to move into other areas and even other states to avoid Land Tax.
Not totally agree...... Buying locally has many advantages. Some investors bought dozens of properties in couple of areas and have done very well. Land tax can be easily avoided/reduced, and hot spotting - don't believe and not into it.
 
No-one said you wouldn't do well buying local but as Propertunity said there are definite advantages to spreading your portfolio (not just land tax). If you buy in one area chances are they'll all be flat at the same time. This can be disadvantageous when you are building your portfolio as you need to wait until the growth starts on all properties. If you have them in different areas you will have growth somewhere and be able to continue buying. The same is true when you want to live off your properties. Anyone living off equity will not want all their properties in the one area.
 
In response to the original poster - have you tried buying an apartment in the inner-city? Something like in South Yarra, Prahran, Richmond etc? You won't be able to get a house for that price range in a decent suburb
 
Some investors bought dozens of properties in couple of areas and have done very well.
Yes, me included. But would I recommend that as a good strategy? - probably not. Imagine if you had all your properties in Sydney for instance. How would you feel when there was virtually no growth from 2003 - 2008, when in 2007 Melbourne & Brisbane were having a mini-boom? :eek:

Land tax can be easily avoided/reduced,
Yes, it can be reduced, but not easily IMO.

and hot spotting - don't believe and not into it.
No-one mentioned hot spotting in this thread. I'm not sure why you mentioned it? :confused:
 
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land tax can be reduced if you operate a trust and your beneficiaries (like your children) have no property assets to speak of. that is easy to do
 
land tax can be reduced if you operate a trust and your beneficiaries (like your children) have no property assets to speak of. that is easy to do

Yes, I know :) But it costs money to set up a trust and do its accounts each year.
Also some lenders will just not do trusts or it takes longer for them to do approvals for trusts.
All I was saying was that it wasn't 'easy'. (I suppose it depends on your definition of easy) :p. Cheers,
 
Depends what the benefits are. If we're dealing with a couple of hundred k it's probably not worth the trouble since the savings are a lot less. But the same trust could operate on a multi-million dollar portfolio, say $10m+. That's when the benefits start to become more apparent
 
land tax can be reduced if you operate a trust and your beneficiaries (like your children) have no property assets to speak of. that is easy to do

Actually holding property in trust entities here in NSW goes against you, as trusts are not entitled to the current thresholds (unlike individuals) and are taxed from $0 land value at the full 1.6% (plus $100). For example, on a median house and land purchase with land value at $400K you pay a whopping $6500 in land tax annually. If purchased in an individual name, the current averaged threshold of $376K applies so you pay 1.6% on the $24K difference ie: $384. Can make enormous difference to cashflow, and certainly not a cost to be taken lightly. Many investors are not fully aware of the ramifications of purchasing via trusts, so please be aware of all of your likely costs here.
 
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