pros and cons for high end surburbs or mid end+ suburbs

[evisional]

Just want to know your opinion for different investment stragegies (cons and pros analysis) for buy properties for subdivision in high end market i.e Kew, Camberwell, Balwyn and mid end market i.e Nunawading, Blackburn, Mitcham, Ringwood?

For high end market:
Potential:
- subdivided units is highly seeked by buyer
- remove competition from other unaffortable investors
Problem:
- higher price means higher stamp duty, higher land tax
- more equity required
- cashflow problem, rent cannot cover the loan interest

For mid ed maket
Potential
- can buy more properties with the same equity
- less tax and stamp duty, it means more equity for investment
- high rent if good location i.e public transport, schools, uni
- better cashflow
Problem:
- never enter the high end market as the price goes up faster than mid end market

 

[Angel]

-
For mid ed maket
Potential
- can buy more properties with the same equity
- less tax and stamp duty, it means more equity for investment
- high rent if good location i.e public transport, schools, uni
- better cashflow
Problem:
- never enter the high end market as the price goes up faster than mid end market

You can see that mid market is the best value. Why then would you want to enter the high-end market?

 

[K_Raheja]

I am still exploring...but I think if I keep buying in middle end areas .
..should be able to get in high end market ...using multiple equities..

If I can make multiple homes available for the masses..some
day I can live with the classes

How is the bi market in cbd? btw...did you update your fancy report showing property prices in diff shades and radius from cbd?

 

[Aaron_C]

In Melbourne the top end of town has suffered, as has the low end. The middle has been steady but not spectacular.

 

[evisional]

You can see that mid market is the best value. Why then would you want to enter the high-end market?

Because I want to own a house in high class suburb one day.

 

[alexlee]

Because I want to own a house in high class suburb one day.

For what, vanity?

You want to live in a house in an expensive suburb, fine. Enter the high end market as an owner occupier, AFTER you invest in the stuff that'll get you the best returns. Don't put the cart before the horse.

 

[oc1]

High end market - cashflow is bad so one must sell. If you get caught out you can be in trouble. With the mid to lower end of the market your rent goes a long way in covering your interest costs. Much safer.

Also, if you have a successful strategy, stick to what you know and keep repeating.

Oscar

 

[evisional]

Yeah, the problem is cashflow in high end market

 

[oc1]

Yeah, the problem is cashflow in high end market

You could mitigate the risk by teaming up with another developer/investor?

Oscar