Hi guys. I'm a non-pro wannabe investor, with "analysis paralysis" I think the term is, or at least that is what I have heard it called on here. I've read as much as you can read about property investment on the web, and after not following through with my first attempt three or four years ago (thanks to family additions), I am considering it again.
Our goal is not to amass a big array of IPs, but most likely to stick at one, as a long term investment. I have a notion as to what we would like to do, but would greatly appreciate it if you could knock some common sense into me if I am not thinking straight. You seem like a friendly bunch so hopefully you won't hold my inexperience against me!
Firstly, I have a couple of questions which are probably pretty stupid to the seasoned investment expert.
When I speak to people I know who are into investment all I hear about is new properties and negative gearing. I get the whole depreciation thing and the tax benefits, but when I read through threads here, you guys seem willing to take on all kinds of properties, not just off the plan units that will offer higher depreciation. Should I worry too much about looking at older properties? Is it a simple equation of purchase price, rental yield and estimated capital growth? For example, in one suburb, if you had an option of a five year old unit, 1km from the beach, and a twenty five year old unit 100m from the beach, both with similar asking prices and both with similar rental yields, which is the most sensible alternative? Or is this an impossible question and depends on a whole raft of other issues too?
My second query is specific to The Entrance, which is where I'm considering buying. I have reasons for this, but I could be barking up the wrong tree. The way I see it, and from info I have read, The Entrance has taken a bit of a hammering over the last two or three years and prices seem to be roughly on a par with 2003 prices (basing that purely on graphs I have seen). I'm thinking that things can't get too much worse, there is a bit of growth returning to the area, and it might be a good time to have a look. From talking to agents and monitoring online it seems that there is a low vacancy rate in the area, and a property costing 250-270k can get a rental return of 280-300 a week. For a newer unit with a lot of depreciation this can result in a relatively low weekly outlay, I think. A unit closer to the beach costs a bit more, is generally older, and the rental return not a whole lot extra.
So, my basic question is, is there an obvious reason I am missing as to why The Entrance might not be a wise option.
Just to put the above into context, our situation is that we have a house in Sydney, mortgage 500k, worth 800k. Initially I was thinking about getting a unit in The Entrance which might be leased for a few months during the winter and then leased as a holiday apartment during the summer, when we could probably use it here and there ourselves. I realise that is asking a lot and the key to a good investment is getting a solid long term tenant, and we could end up with gaps between tenants etc etc. Also, we have heard some horror stories of holiday apts getting trashed. So, we may end up doing a normal letting, but if that was the case, and we missed out on the lucrative holiday rentals, is it worth having a property in that area as opposed to any other?
Our other notion, probably thinking more with our hearts than our heads, is that down the line it would be nice to have a property that we can use for getaways ourselves, instead of a seventh floor unit in Alexandria or Granville that we would probably hardly ever see. The Entrance seems to currently be one of the more afforable beachside suburbs within that kind of proximity to Sydney, but I have heard stories about the area being a little bit dodgy that might explain that.
Sorry I've probably waffled on a bit. Any feedback would be greatly appreciated, as I know a lot of you are very familiar with the area. Thanks.
Our goal is not to amass a big array of IPs, but most likely to stick at one, as a long term investment. I have a notion as to what we would like to do, but would greatly appreciate it if you could knock some common sense into me if I am not thinking straight. You seem like a friendly bunch so hopefully you won't hold my inexperience against me!
Firstly, I have a couple of questions which are probably pretty stupid to the seasoned investment expert.
When I speak to people I know who are into investment all I hear about is new properties and negative gearing. I get the whole depreciation thing and the tax benefits, but when I read through threads here, you guys seem willing to take on all kinds of properties, not just off the plan units that will offer higher depreciation. Should I worry too much about looking at older properties? Is it a simple equation of purchase price, rental yield and estimated capital growth? For example, in one suburb, if you had an option of a five year old unit, 1km from the beach, and a twenty five year old unit 100m from the beach, both with similar asking prices and both with similar rental yields, which is the most sensible alternative? Or is this an impossible question and depends on a whole raft of other issues too?
My second query is specific to The Entrance, which is where I'm considering buying. I have reasons for this, but I could be barking up the wrong tree. The way I see it, and from info I have read, The Entrance has taken a bit of a hammering over the last two or three years and prices seem to be roughly on a par with 2003 prices (basing that purely on graphs I have seen). I'm thinking that things can't get too much worse, there is a bit of growth returning to the area, and it might be a good time to have a look. From talking to agents and monitoring online it seems that there is a low vacancy rate in the area, and a property costing 250-270k can get a rental return of 280-300 a week. For a newer unit with a lot of depreciation this can result in a relatively low weekly outlay, I think. A unit closer to the beach costs a bit more, is generally older, and the rental return not a whole lot extra.
So, my basic question is, is there an obvious reason I am missing as to why The Entrance might not be a wise option.
Just to put the above into context, our situation is that we have a house in Sydney, mortgage 500k, worth 800k. Initially I was thinking about getting a unit in The Entrance which might be leased for a few months during the winter and then leased as a holiday apartment during the summer, when we could probably use it here and there ourselves. I realise that is asking a lot and the key to a good investment is getting a solid long term tenant, and we could end up with gaps between tenants etc etc. Also, we have heard some horror stories of holiday apts getting trashed. So, we may end up doing a normal letting, but if that was the case, and we missed out on the lucrative holiday rentals, is it worth having a property in that area as opposed to any other?
Our other notion, probably thinking more with our hearts than our heads, is that down the line it would be nice to have a property that we can use for getaways ourselves, instead of a seventh floor unit in Alexandria or Granville that we would probably hardly ever see. The Entrance seems to currently be one of the more afforable beachside suburbs within that kind of proximity to Sydney, but I have heard stories about the area being a little bit dodgy that might explain that.
Sorry I've probably waffled on a bit. Any feedback would be greatly appreciated, as I know a lot of you are very familiar with the area. Thanks.
