Investment advice

[daniel cunningh]

Hey all,

Just after a bit of advice regarding where to invest next.

My current situation is i own 2 investement properties and weighing up whether to buy a third.

- I own own 1 property at Gracemere (Rockhampton) which i owe $148,000 on and currently rents for $285 per week (probably worth around 290-300K)

- I own a second property at Hassall Grove (Western Sydney) which i owe $305,000 and rents for $370/week (worth about $350K)

I am living at home but in the process of moving out.

So the question is do i just rent and try to purchse IP#3 or am i better trying to purchase something to live in (if i did this it would be a 2 bedroom unit at Narrabeen costing roughly $450K).

I understand that if i buy a unit to live in that will be the end of my investing because any spare money will be paying the repayments on the large mortgage.

- The second part of my question is (assuming that i go with purchasing IP#3)
I am looking at buying in Gladstone but will find it difficult to fly up there before mid February. I know none of you have a crystal ball but would you predict that prices will rise by then and thus i will miss out on some CG and should i just sit back and be patient till then (i could possibly get up there before Christmas but only for 3-4 days).

Any help would be very very appreciated!

 

[Rooster]

I've always believed in renting while i invest elsewhere. It has allowed me not to get bogged down in paying off a PPOR and at the same time i can live in the areas i prefer which may have a prohibitive entry price.

In regards to Gladstone, i think it's fairly certain to have moved by February and quite a bit.

0.6% vacancy rate at the moment and after last weeks announcement land has been snapped up at a ridiculous pace.

That vacancy rate is right now and workers haven't even started to mobilise to the area.

3 to 4 days is plenty of time to snap something up if you go armed with prior research.

Goodluck

Rooster

 

[sfulop]

I agree with Rooster. Keep renting where you WANT to live and continue to build your asset base elsewhere.

S

 

[daniel cunningh]

thanks for the replies,

So rooster are you advising to get up there asap? Still seems like there is heaps for sale up there on realestate.com etc?

Do you think it is preferable to get a four bedroom house of is three sufficient. My budget is 350K so four may be pushing it a bit

Thanks

 

[Rooster]

There is no doubt still plenty of stock on the market. Some of that stock is still speculatively priced too.

I was mainly commenting on the blocks of land being snapped up in the development i was purchasing in. In the two weeks since the announcement from the Federal Government, all blocks of land have now been sold out.

That was over 20 blocks, gone in less than 2 weeks after previously sitting stagnant.

Two other land developments have all but cleared the quality stock on their lists.

I don't think you will miss out on gains if you invest in Gladstone, but may miss a small part of the upswing at the start. How much is anyone's guess.

I don't think you will be hindered by buying a 3x2 either. 4x2's are only a pre-requisite for the corporate leases. The majority of workers coming to Gladstone won't be covered under corporate leases and will need housing closer to the median for the area.

Yields have never been outstanding in Gladstone on initial purchase, but if secured before an upswing should see impressive, yet at times sporadic, rental growth.

Good luck

Rooster

 

[shanh]

Supposing you have about $180-$190k in equity and a $450k mortgage currently.
It just seems like you'd end up with LVR above 80% if you go for a 3rd property in your current situation.

Suppose mortgage goes well, if interest rate hikes up to 8-9%, would it still be sustainable for you to serve the extra mortgage on that third $350k property?

Probably good idea to start looking, but I think may be you just need a little bit more equity to shield yourself from potential risks.

 

[Mark Xpnsit]

I would tend to agree that you are better off with IP3 and keep renting although you also have to look at the downside and remember that you will have to live in a rented property for the next few years - if you are happy to do that and the restrictions that go with it, then it makes sense to rent and purchase elsewhere.