Ipswich or Adelaide for 1st IP?

R

RoyalBlue

Hi all,

we are currently searching for our first IP ( to buy and hold).

We live in Adelaide so have been looking here to start with as we know the area quite well. Ideally we would like a place with potential to subdivide in the future, within 10-12km from the cbd for around $300K - $330K. Currently looking at Ingle Farm, Northfield, Windsor Gardens, Hillcrest areas. The problem with these areas is a lack of supply, too many buyers looking for the same thing.
After looking through some posts here and from other research, I am starting to wonder if Ipswich may be better for yields and CG. Can anyone offer their opinion for which direction we should head in? And is buying our 1st Ip interstate a bad move?
Cheers
 
Hi RoyalBlue,

It's difficult enough buying your first IP without buying one interstate.

You know Adelaide well so why not start there otherwise you will just be delayed by indecision due to lack of regional knowledge. The first is the hardest so try to keep in your comfort zone.

Cheers,

Bazza
 
I bought my IPs interstate but it was where I grew up and I still have family there, so I visit regularly and always drop in on the PM when in town. If you have no such connection with the area I think buying locally for your first IP is probably a better way to start. It can give you more options as you go, you could even consider managing the property yourself and do your own minor repairs. thus saving a considerable amount. Though to be honest, this is sometimes not as easy as it seems if things go pear shaped. You will also get to have a good look at the properties before you buy as opposed to flying in and making a decision on the spot just because you've gone there. Once you feel comfortable with buying your first one it'll be easier to consider something further afield, should you wish to continue down that path.
 
Welcome to the forum RoyalBlue.
There is enough of a supply problem with houses and units within 12km of the CBD, without chasing a subdivision opportunity. Do you have any idea how many people are chasing the same type of thing you are.
A mate of mine has been chasing the same type of deal as you for 9 months, now. Prices keep rising and the opportunities are getting snapped up faster and faster. In the time he has been looking and not buying, I've bought 4 units within 7km of the CBD. Even the last one has shown great gains. The first of them a huge gain.
My first IP was a 2 BR upstairs unit in Leabrook. Paid $79k in 2000. I've not spent any money on it in that time. Had no downtime on the rental and it's now worth around $230k. I'm not too good at math, but I reckon I've made a buck or two out of it.
The subdivision idea is a good one, but not if you can't get one at the right price. Many of them have the future gains factored into the price, too, making it even harder to get a good deal.
For my money, I'd be looking at units closer to the city. There will always be demand for them. There's a lot of demand pressure from people want to live near lifestyle (cafes, pubs, good shopping etc). They would rather live in a low maintenance unit near the facilities they desire than live the house and land dream further from the city.
Also, as fuel prices keep rising, inner city properties will come under more demand pressure.
That's my 2 cents worth. I've invested within my comfort zone. Each investor has his/her own ideas and comfort zone. However, some factors remain constant:
Buy and Hold. Even if you don't subdivide, you can achieve great gains just by buying well and holding.
Time in the market rules. You may not buy the perfect IP or get subdivision gains, but staying in the market for the long haul is a sure way to acheive wealth and financial security.
 
Royal Blue
Suburb: INGLE FARM
Sale Date: 18/10/2007 To: 18/02/2008
Sale Price: 100000 To: 300000
Area m2: 600 To: 999999.9999
Land Use: All Houses
Zoning: All

Address Sale Price Sale Date Lotplan Area Year Rms Equiv
Area Style Cond Improvements
18 LEICHARDT AV INGLE FARM 100,000 24/01/08 L349/D9534 641 M 1973 5 107 CONVENL Average 5H CP RV IG
17 MALBARU AV INGLE FARM 125,000 26/11/07 L192/D7897 675 M 1966 5 95 CONTEMP Poor 5H SHED
12 KELVIN RD INGLE FARM ( 160,000 ) 13/12/07 L64/D10061 798 M 1975 6 119 S.CONVENL Average 6H IG V
22 WINARA DR INGLE FARM 170,000 03/01/08 L553/D7960 601 M 1966 5 98 S.CONVENL Average 5H I/G CP
29 YARCOWIE AV INGLE FARM 180,000 24/01/08 L312/D7958 796 M 1966 5 98 S.CONVENL Average 5H G CP
21 MILNE RD INGLE FARM 195,000 15/01/08 L117/D7709 688 M 1972 5 107 CONVENL Average 5H C/P
22 BARON AV INGLE FARM 200,000 14/11/07 L264/D9509 703 M 1971 5 98 CONVENL Fair 5H IG
6 ONKARA AV INGLE FARM 207,000 05/11/07 L101/D7896 677 M 1966 5 99 S.CONVENL Average 5H G CP
2 EVANS CT INGLE FARM 210,000 25/10/07 L372/D9534 697 M 1973 5 114 CONVENL Average 5H C/P G
21 ELINGA AV INGLE FARM 221,500 18/01/08 L125/D7897 613 M 1966 5 92 CONTEMP Fair 5H G CP
44 BALOO ST INGLE FARM 225,000 06/12/07 L2005/D9452 718 M 1971 6 127 S.CONVENL Average 6H IG CP
19 BOTTRELL AV INGLE FARM 225,000 30/01/08 L60/D7895 666 M 1966 5 95 CONTEMP Fair 5H V SP
20 JAKARA AV INGLE FARM 231,500 23/10/07 L447/D7959 617 M 1968 5 101 S.CONVENL Average 5H CP RV SP
19 CELTIC ST INGLE FARM 235,000 20/12/07 L1671/D9393 655 M 1972 5 111 S.CONVENL Average 5H I/G CP
3 TENYA RD INGLE FARM 235,000 10/12/07 L713/D9009 810 M 1967 5 96 S.CONVENL Fair 5H I/G V
28 BEOVICH RD INGLE FARM 237,000 02/11/07 L487/D7960 674 M 1968 5 106 S.CONVENL Fair 5H CP G
4 GIMBI ST INGLE FARM 238,000 05/11/07 L414/D7959 757 M 1970 5 120 CONTEMP Average 5H C/P
41 FAIRFAX RD INGLE FARM 240,000 26/11/07 L245/D9509 605 M 1971 5 105 CONTEMP Average 5H CP TSH
8 DENNING AV INGLE FARM 240,000 28/11/07 L1660/D9393 701 M 1972 5 106 S.CONVENL Average 5H SHED G
82 WRIGHT RD INGLE FARM 243,000 15/11/07 L1260/D9214 659 M 1970 5 96 S.CONVENL Fair 5H CP IG
113 MAXWELL RD INGLE FARM 247,500 24/10/07 L1788/D9338 752 M 1971 5 109 S.CONVENL Average 5H CP RV
16 LAMINGTON ST INGLE FARM 248,000 13/12/07 L1780/D9338 691 M 1971 6 121 S.CONVENL Average 5H SHED RM S/P
18 MARCO AV INGLE FARM 250,000 31/01/08 L276/D9510 607 M 1973 5 114 S.CONVENL Fair 5H G CP
7 GIMBI ST INGLE FARM 255,000 06/11/07 L408/D7959 761 M 1969 5 113 S.CONVENL Fair 5HCP SH P RR RV
10 MALBARU AV INGLE FARM 260,000 15/11/07 L173/D7897 643 M 1966 5 105 CONTEMP Average 5H G
64 AMUNDSEN DR INGLE FARM 260,000 13/11/07 L207/D9548 609 M 1974 5 106 CONVENL Average 5H G
7 PEATON AV INGLE FARM 262,500 07/11/07 L1050/D9190 607 M 1969 5 110 S.CONVENL Average 5H IG RV
8 CRESLIN AV INGLE FARM 267,000 29/11/07 L1549/D9327 719 M 1970 5 122 S.CONVENL Average 5H V SP DCP
23 MARCO AV INGLE FARM 267,500 30/11/07 L298/D9510 775 M 1973 5 111 S.CONVENL Average 5H IG CP VER
13 INDORA AV INGLE FARM 270,000 19/12/07 L430/D7959 633 M 1968 5 117 S.CONVENL Good 5H SH CP
4 ROYSTON AV INGLE FARM 270,000 03/01/08 L1589/D9331 770 M 1970 5 105 CONTEMP Average 5H CP DI/G
74 AMUNDSEN DR INGLE FARM 270,000 03/01/08 L258/D9533 629 M 1973 5 108 CONVENL Average 5H SH G
14 SULLIVAN RD INGLE FARM * 270,000 30/01/08 L2025/D9454 691 M 1971 6 126 CONTEMP N/A
137 BEOVICH RD INGLE FARM 270,000 30/01/08 L1242/D9214 693 M 1970 5 115 S.CONVENL Average 5H D/CP G SP
6 DEBNEY AV INGLE FARM 271,600 18/10/07 L117/D9516 665 M 1971 5 96 S.CONVENL Average 5H CP IG RV
39 ELGAR AV INGLE FARM 272,000 07/02/08 L26/D9432 731 M 1972 5 122 S.CONVENL Average 5H G RV CP
24 SCHUMANN ST INGLE FARM 275,000 18/12/07 L1978/D9451 1016 M 1971 5 96 S.CONVENL Fair 5H G SP
6 BINNOWIE ST INGLE FARM 275,000 14/12/07 L1254/D9214 656 M 1970 5 99 S.CONVENL Fair 5H SHED CP G
43 FINNISS AV INGLE FARM 275,000 23/10/07 L89/D9047 608 M 1972 6 105 CONVENL Average 6H B/G CP
50 TELOWIE AV INGLE FARM 280,000 10/11/07 L846/D9011 796 M 1968 5 122 S.CONVENL Average 5H I/G
17 SLOAN RD INGLE FARM 280,000 07/02/08 L1732/D9337 644 M 1971 5 117 S.CONVENL Average 6H CP SP RV
25 BOTTRELL AV INGLE FARM 285,000 10/01/08 L44/D7895 692 M 1966 6 132 S.CONVENL Good 6H G CP
10 GILBERT ST INGLE FARM 286,900 06/12/07 L2048/D9454 704 M 1971 6 122 S.CONVENL Good 6H I/G CP
2 MARK CT INGLE FARM 295,000 01/11/07 L15/D7333 741 M 1964 5 98 CONVENL Fair 5H G
24 SHACKLETON AV INGLE FARM 297,000 24/01/08 L223/D9548 698 M 1974 5 110 CONVENL Fair 5H CP RV SHED

Total Properties: 45

There are a lot of good opportunities in Ingle Farm - These are the sales for the last 4 months, under $300k with 600m2 of land or greater. There out there just keep trying,
 
Hi all,

Thanks for your replies, it certainly helps to have people with experience giving me feedback. I do feel more comfortable buying our first purchase in an area that I am familiar with, and with a house that I can look at, so Adelaide it is for IP #1.
To Rob - I have looked into inner city units, but seem to always see the message that buying land is a better long term option. Your feedback is very useful thanks!
Thanks also Matt for the Ingle Farm data, I think this suburb will continue to grow in the future so I will keep an eye there also.
To be honest, I think the hardest thing about the first IP is deciding where and what to buy. It's like standing in front of a huge buffet of dessert and wanting to have it all at once ...!! But you are all correct that indecision is probably costing me money/gains, so it's time to take action. Thanks again
 
Robwilliams590 said:
A mate of mine has been chasing the same type of deal as you for 9 months, now. Prices keep rising and the opportunities are getting snapped up faster and faster. In the time he has been looking and not buying, I've bought 4 units within 7km of the CBD. Even the last one has shown great gains. The first of them a huge gain.
Click to expand...

Sounds like he's trying to pick up a bargain. That's not going to happen in the current Adelaide climate. If he was prepared to pay fair market price - he would have had no problem picking up a future subdivision site 9 months back and would already have seen growth since then.

Agree with you about units. There are still quite a few good units around close to the city for the low to mid $200k's.
 
Steveadl
I currently buy apartments/units and do very well but in the back of my mind I feel like I should be looking to purchase homes on larger blocks with the potential for future subdivision. I want to continue to invest in Adelaide but as Adelaide apartments and apartments in the burbs are still fairly new to the apartment market compared to other states. I would be interested to hear your thoughts and maybe a slight insight into your strategy.
 
Matthew,

Your strategy sounds good to me. The lower entry price of units will let you get more early on to hold for future growth. Problem I'm finding now regardless of units or houses, is the increased interest rates make the holding costs much worse than 6 months ago, and the rising prices have made the yields realtively worse despire rents going up.

My strategy has changed a bit since I started. At first I was the typical newbie afraid to buy old places because they'll fall apart and you'll spend so much in maintenance etc. So the first 3 I bought were new or 1yo houses in the northern suburbs. I thought about units at first, but didn't like the idea of sharing walls with other people (unless I could get the whole lot, but then as a beginner that was out of my league).

I then decided to change my strategy as I liked the idea of land banking for future development. So I tried to get the cheapest possible house again with good land content. I did the same again end of last year by swapping my first property (Northgate) for an old house on a triplex block in Enfield.

So my last 2 purchases now give me 5 future development dwellings (plus my GF bought a duplex size block last year as well). Basically the theory is the land will go up in value faster than the houses. Not to say buildings won't go up too, but if I can 'create' my own units down the track, then I get them even cheaper. The longer we hold before developing, the relatively cheaper the land gets as well.

Also, I believe it will offer me more options in the future. I still believe Adelaide has strong growth ahead of us, but I'm also realistic and know that at some point it will level off again. When that point comes, I then plan to be able to develop my land bank so I can continue growing my portfolio in a flat market.

I'm hoping to get one more development block later this year, but it depends on a number of personal as well as market factors. Been quite annoying seeing a few houses sell recently in the areas I like going for pretty much land value. :(

What suburbs have you bought in Matthew? Also, how do you see our market at the moment? I still believe it's powering along and has a fair bit of growth left, despite some experts saying 2007 was our year. I'm expecting another 20% year for 2008.
 
Steveadl,
1. I have bought my IP's in Mawson Lakes and Salisbury East. My strategy for Mawson Lakes is simple but slightly speculative. I say slightly speculative because I have been researching and keeping a very close eye on Mawson lakes for approximately 6 years with previous experience developing with-in the suburb as well.
Buy apartment off the plan for 5% deposit. Minimum construction time is 18 months. Save like hell. Come time to settle, value has increased and rental return is good, 3 apartments all around 6.7% yield. As soon as I settle on one I'll put another deposit against another and so on...

2. I see the current RE market to have leveled out, this has been obvious over the last 3 weeks (the rate rise before the last one was the one that put the brakes on the amount of buyer activity out there). The big rush to buy has completely leveled out. Since November last year my time on market from first release until contract was 5-6 days, now were starting to see properties on the market up to 3 weeks. Number of buyer groups attending open homes has almost halved and where we were receiving 10-12 offers per property now around 2-3 offers, with people holding off and reconsidering aand withdrawing offers. The supply is starting to open up slightly with more properties being released compared to the last 6 months.

3. You mentioned an increase of around 20%, I hope your right but I would only expect to less than a 10% growth. I say this because we are seeing an increase in Vendor's looking to sell their more expensive homes around $700,000 and move into areas around $400,000 - $500,000 to free up cash flow and reduce mortgage. I believe we will see an over supply in the top end of the market, Vendor's have to reduce to sell thus dragging down the prices of homes in the middle market and so on. Like a reverse snow ball effect. I think we will see interesting times in the next 6 months.
 
Great post Matt, kudos!

1. That's right, I remember you mentioned Mawson Lakes. Some of the prices in there floor me! Are you considering doing the same sort of thing in Northgate once the next stage kicks off there? They are planning to do similar stuff to Mawson Lakes I believe - smaller blocks, lot more apartments and warehouse style projects too incl. 3 story buildings etc.

There's a builder who is doing similar stuff up north in Smithfield etc. (I forget the name), ie. put a $500 deposit on a H&L package, when it's completed in 12 months time you buy it for the set price. My parents and uncle have/are both done it although in their cases, there was only about 2-3 months left in the build before completion.

2. Very intersting! Nice to hear from someone in the know. I was hoping this would happen, as it will hopefully give me a better opportunity to buy at the end of the year. Did you have much interstate interest in your area during the last year, or was it more local?

I'd be happy with 10% growth too, would still let me get another one, but I'm still a bit undecided. Increased cost of finance really hurts the calculations on new purchases. :(

3. Funny you should mention that - I know someone doing exactly that. They have just put their house on the market for mid $600k's in order to swap to a house in the $300k range to relieve the mortgage (unfortunately there's an outside factor severely effecting them). Unfortunately, I think they are asking too much, and before they listed it when they first came to me for advice, I told them probably $580-600k. Since then they have talked to an agent and he reckons he can get $640k+. I hope to God I'm wrong and they get it, but we'll see. I'm not overly joyous about his choice of agents either, but it's a friend of a friend blah blah blah :rolleyes:
 
steveadl said:
1. That's right, I remember you mentioned Mawson Lakes. Some of the prices in there floor me! Are you considering doing the same sort of thing in Northgate once the next stage kicks off there? They are planning to do similar stuff to Mawson Lakes I believe - smaller blocks, lot more apartments and warehouse style projects too incl. 3 story buildings etc.
Click to expand...

I know they have changed the guidelines in Northgate to the original plans I had seen but I didn't hear they were looking at high density apartments, warehousing etc. I may have to go investigate further. If they are considering to create a part of Northgate similar to Mawson Lakes Central I would definitely be interested. I believe there would be a huge market for that type of accommodation considering the distance to the city. Young professionals, singles etc..Thanks for the tip.
 
Well I guess nothing happens till it happens, but I saw diagrams of 3 storey warehouse type buildings in the brochures. It's also what I've been told by a few different people.

So far they've just cut out a few roads and the display homes on Folland Ave are about 70% finished by my guess.
 
Thanks Steve,
I just registered and someone will be contacting me shortly, I'll be looking forward to what they say. I'm good friends with an owner of a building company who is building a display home in Northgate. He believes the interest level should bring the average house price to around $650,000-$700,000. If I could get an apartment or small terrace home in the first stage, I would be very happy.
 
Sounds good Matt, let me know what they say.

I'm hanging out for the first land release to see what they sell the blocks for. I heard mid $200k's.
 
I'm considering purchasing my first IP in one of these areas too (due to my home town becoming prohibitively expensive).

Which do you think would be the better option, or general opinions?
I would've thought that SE QLD would've had been on the go for a long time now and there's not much more to be had. But reading that article posted made me think otherwise. I noticed you can get some big pieces of land for not much money, though the houses are quite old.
For SA/Adelaide I was thinking Salisbury, everyone is talking about Adelaide being the new big thing. But when I checked out the growths in both areas (I think it was Raceview v Salisbury) they were reasonably similar.

Can anyone recommend some good agents for the Ipswich and Adelaide/Salisbury areas that I can get in contact with?
 
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