Time to buy or wait a bit?

[b simpson]

I'm keen to get back into the IP market after a while on the sidelines. I have a bit over $100k in cash and no other loans or rent. Can also probably save $50k a year approx.

I can't buy till after the financial year so I can go over my figures and see exactly where I am at. Ballarat is looking good for me right now.

Although I'm really keen to get back into the market I can't help but think the market will cool a bit so waiting a bit would be best.

Do people think it would be wise to wait a year or so and see how things go?

I'm looking to get something neutrally geared so holding costs hopefully won't be an issue?

 

[Sheryn]

There are properties and there are properties

I think you have plenty of time to look for a good property. The key to thinking you have to rush into buying would be interest rates on loans starting to come down.

There are a lot of properties on the market and not many buyers, so start researching.

What sort of property do you want?
Do you want to reno?
Do you want to develop?
Do you want something that you can add another proeprty to later?

Many variables.

Market entry 3 bedroom one bathrooms house are very slow to sell as no stimulus.


Cheers
Sheryn

 

[silverx]

i wouldnt get anything now... the market looks like its going south, and there is no sign to suggest it would recover anytime soon

 

[lizzie]

note silverx is on the gold coast, which is currently taking a hammering.

personally, if you find a good property in a top location that is neutral geared then go for it ... as it will cost you nothing to hold and the location will hold it strong for the future.

 

[BV]

time to buy of wait a bit?

Hard to tell.
Like Lizzie said, if you find something you really like, go for it but I wouldn't rush into it. It is a buyers market and could get better when interest rates start to move higher.

Why Ballarat in particular?
prices there seem higher than Melbourne.

http://www.homepriceguide.com.au/research/?locationtype=lga&state=vic&lgaid=391

http://www.homepriceguide.com.au/research/Default.aspx?LocationType=Suburb&State=vic&SuburbID=2347

 

[zed_kid]

If you find a CF neutral IP in a good suburb, why not buy now?

 

[Ausprop]

if your structure and the deal is right I think it is a good time to be out there buying.

 

[MrCrumbpacker]

i wouldnt get anything now... the market looks like its going south, and there is no sign to suggest it would recover anytime soon

+ 1

Unless you can find something VERY positively geared, now may not be the time to 'wait a bit', it might be time to...... 'wait a lot!'

 

[mrmonopoly]

Not so sure about Ballarat but personally I think there is some great buying in certain parts of Sydney at the mo providing you're playing the long game and doing your DD. It really depends on your strategy and goals. Personally I'm a counter cyclical investor which has always served me very well.

I wouldn't expect any substantial short term capital gains but you can certainly use the current negative sentiment which is holding so many people back to negotiate a great deal before confidence returns.

This is just my opinion and I could be wrong, but I honestly think 3-5 years from now this period of uncertainty will be looked back upon as a great time to buy into the Sydney market.

 

[piNoob]

What's the point?

Put money in Ubank or similar for 6.51% pa and have better return without any headache.

If markets will pick up in a year or five or ten, you'll have your chance.

 

[Ausprop]

What's the point?

Put money in Ubank or similar for 6.51% pa and have better return without any headache.

If markets will pick up in a year or five or ten, you'll have your chance.

inflation wll slam such an investment. At least with a geared invetment that is somewhat neutral you are banking the deflating debt

 

[zed_kid]

What's the point?

Put money in Ubank or similar for 6.51% pa and have better return without any headache.

If markets will pick up in a year or five or ten, you'll have your chance.

This is a great post. Reflects 90% of the population and their thoughts on investing.

 

[virgo]

Time to buy?

Hiya

FYI, this month's API magazine highlights Sydney as a RISING market...check it out!

 

[Peter_Tersteeg]

I'm not sure on Ballarat, but in Melbourne there's a general concensus that prices are falling (but not crashing).

From what I'm seeing, it's a good time to buy, but don't be in a hurry.

If the figures stack up and you can see where you'll make money out of the property, it's worth buying. If you're buying to get into the market because you're afraid to miss out, you're buying for the wrong reasons.

In the current market there's a lot of opportunities to pick up some great deals, just be cautious about it.

 

[lizzie]

What's the point?

Put money in Ubank or similar for 6.51% pa and have better return without any headache.

If markets will pick up in a year or five or ten, you'll have your chance.

you forgot to use the "roll eyeballs" smilie at the end.

with your $50,000 deposit in the bank at 6.51% you'd get $3,255/yr return (less income tax)

with your $50,000 buying a $250,000 neutral geared property, the value would only have to go up in value by less than 1.5% to get the same return.

granted - more risk - but i'd rather have my money conservatively leveraged in a historically good location.

 

[zed_kid]

you forgot to use the "roll eyeballs" smilie at the end.

with your $50,000 deposit in the bank at 6.51% you'd get $3,255/yr return (less income tax)

with your $50,000 buying a $250,000 neutral geared property, the value would only have to go up in value by less than 1.5% to get the same return.

granted - more risk - but i'd rather have my money conservatively leveraged in a historically good location.

Nah lizzie These financial wizards can buy a median house outright (or so they always claim) Leverage is for losers. GO GO gadget term deposit!

 

[devank]

with your $50,000 buying a $250,000 neutral geared property, the value would only have to go up in value by less than 1.5% to get the same return.

Lizzie,
I'm not sure how you caluclated the 1.5% increase
Here is my rough calculations.
Cash 50K- That is 25% (30% deposit + 5% buying cost).
That is 200K property with 150K loan (roughly).

Rent ~ 200K x 5% = 10K
Interest ~ 150k X 7.1 % = 10.65K
Water + rates ~ 2K
Insurance + Maintenance ~ 2K

That is about 4.65K negative.

So the property should be increased by 200+ 4.65 + 3.255 ~ 208K

That is about 4%

There is a negative gearing in property and tax on personal interest earned which are not included in the above calculations. That may narrow down the gap though

 

[piNoob]

Nah lizzie These financial wizards can buy a median house outright (or so they always claim) Leverage is for losers. GO GO gadget term deposit!

Nah mate, I ain't financial wizard, that's true.

I've paid of my PPOR and don't think it's good time for me to buy an IP.

But you go ahead and get in debt up to your eyeballs mate, you can never loose.

 

[BV]

don't think it's good time for me to buy an IP

PiNoob
Good point.
You know your financial position and your investment plans so only you would know when it is a good time for you to buy an IP.
There is nothing wrong with cash in the bank if that suits your investment strategy.
cheers

 

[b simpson]

What sort of property do you want?
Do you want to reno?
Do you want to develop?
Do you want something that you can add another property to later?

Wanting a house to clean up and rent out for long term.

Yes Reno would be good. Thinking kitchen, bathroom, garden and maybe split system install and tidy up electrical since i'm a sparky and air con tech. Should be able to do that with a 2 of my guys in a couple of weeks but pay a tiler. My last bathroom reno cost less than $3k as the pipes didn't move that would be ideal.

If I bought in Ballarat the idea is to be very close to the CBD and suitable for duplex to keep options open down the track.

Why Ballarat in particular?

Just think it's a good long term investment. Has all the requirements for a robust town, and within commuting distance to a capital city.

+ 1

Unless you can find something VERY positively geared, now may not be the time to 'wait a bit', it might be time to...... 'wait a lot!'

That would suck as I am keen to do something with the cash rather than leave in the bank for a long time that's just boring, lol.

Not so sure about Ballarat but personally I think there is some great buying in certain parts of Sydney at the mo providing you're playing the long game and doing your DD.

That is also on my mind. 1 in Sydney and 1 in Ballarat might be a good diversification strategy. ~$120k should get me 2 places for $250k @ 80% loan with $12k each for reno. If they were totally neutrally geared after the reno I would be a happy chappy

with your $50,000 buying a $250,000 neutral geared property, the value would only have to go up in value by less than 1.5% to get the same return.

Yeah, that's in the back of my mind. If it is totally neutrally geared after the reno even 2% pa the IP would be better off.

The way I see it, money in the bank is not doing anything special after tax and inflation, but it would certailnly beat a flat or slightly declining market for the next 5 years as is what could happen.

I have 2 months to watch the market and make a decision to invest or hold out.