[VIC MELB] How to narrow down where to buy 1st IP?

Discussion in 'Where to Buy' started by cheesy, 15th Feb, 2015.

  1. cheesy

    cheesy Member

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    Grow up overseas, 25y.o., settled in Melbourne, working FT in Melbourne City. I am buying an IP within half a year with budget maximum is $350,000.

    I have problem finding a surburb to buy.

    -considering geelong and around with its cheaper price to buy 2 bedrooms with some land.

    Should I have a few free meetings with different buyers advocate and see where they suggest?

    I applied for TAFE March IP class, I wish the teacher will tell me about this.

    I read magazines like Your Investment Property and Australian Property Investor, not much to learn about selecting suburbs.

    Thanks a lot.
     
  2. jpcashflow

    jpcashflow Member

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    Hi

    Hi Cheesy,

    Hope you are well?
    Trying to find a property and a suburb is never easy. Before you go looking at a property or trying to find the right suburb, you should be asking your self this?


    Are you looking at renovating a property, just renting out the property for future gain, did you want to do a small development project or are you simply wanting to buy a property.
     
  3. Coota9

    Coota9 Member

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    Cheesy,

    As JP has mentioned above you need to first select what you want from the property-Cash Flow,Capitial Growth,Renovate & Sell etc.

    Once you have settled a criteria for the property use the list below to determine a suitable suburb area to invest in..


    20 Must Ask Questions For Every Property..

    1.What is the cash flow of the area,generally speaking?
    2.What is the vacancy rate of the area?
    3.What are the infrastructure plans for the future?
    4.What is the population,population growth and demographic mix?
    5.What is the competition?
    6.What are the trends?
    7.Is there economic vibrancy in this area?
    8.Is this area close to a large town or city?
    9.Is there diversity of industry in town?
    10.Is this a niche market property,is there a second end use?
    11.Does this property match your personal risk profile?
    12.What financing arrangements can I access for this property?
    13.Is the property at market value?
    14.Who is the builder/developer?
    15.Is there a rental guarantee
    16.What will the property management arrangements be?
    17.What is the age of the property and what condition is it in?
    18.Is the property tenant-friendly?
    19.What are the title arrangements?
    20.Am I being commercial in my approach?


    Remember you are buying a 350K property not a new wardrobe take the time to educate yourself first through books and like minded below..

    A good investment does not happen by chance!!

    Coota
     
  4. JamesP

    JamesP Member

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  5. Mechz

    Mechz Member

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    Can you please explain the logic behind that sort of increase in price given the low demand area?
     
  6. JamesP

    JamesP Member

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    Most of the profits are not from growth, the house was bought below market value (worth around 220k+ purchased for 185k, now worth 250-280k). The area isn't exactly hot investor wise, and you can get a new H&L package (<400sqm) for under 350k so the older places on bigger stca blocks are generally good value.
     
  7. dan_89

    dan_89 Member

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    Onthehouse is telling me 1 Eleanor Ct, Pakenam sold for $185 in 2007 rather than June 2014 which seems a little more realistic.. Good luck finding something of similar quality for that price today..

    Can't imagine buying this now, renovating and being able to flip for reasonable profit given the home being in Pakenham.. Definitely wouldn't get close to the $100k profit in 12 months IMO

    Not sure about you guys but I wouldn't recommend Pakenam for an investment property. Each to their own.
     
    Last edited: 17th Feb, 2015
  8. kmrr

    kmrr Member

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    I just finished this book! Was a good read from Margaret Lomas. To op it is worth checking out.

    I'm going to be looking for something too and am at a similar stage in life. One question I haven't quite figured it yet is exactly what strategy I want to take. Buy and hold or buy and develop. I'd like to follow this post up soon with some more Info soon and hopefully it can help myself and op answer a few questions
     
  9. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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    Hi Cheesy!

    Strategy and goals come first. You need to work out what you want out of this property. If it's your first property investment I'd suggest starting with growth and servicing what ever position the best growth property you can find is.

    Secondly, area wise, stay well away from Geelong. The car manufacturing industry is going to be closed by 2017 which means the backbone of the town is gone. Not good news for house prices.

    Try Bendigo / Ballarat. Forecasts for houses are up to 6% and at $350 you'll have the scope to buy a modest property.
     
  10. rizzle

    rizzle Member

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    Hi Jake, whose forecasts?
     
  11. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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  12. rizzle

    rizzle Member

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    Thanks. In your experience how reliable have they been? Any idea about their methodology?
     
  13. BayView

    BayView Member

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    Buyind anything for around the $350k range, doing a reno, then trying to sell for a profit in a short turnaround timeframe - and make a profit - is almost a myth.

    For a property of that level, the reno would need to be realistically about $10k minimum (doing a lot of the work yourself too, I might add) plus buying and selling costs, plus CG tax at 100% on the gain at your marginal tax rate.
     
  14. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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    I find Residex and RP Data to be the most accurate. As far as I know, both of these companies use hedonic regression methodology. There's always a margin of error in their individual reports which can vary from an arbitrary difference to complete misunderstandings of a property's value. On a large macro scale though they're not too bad. Always use a pinch of salt with statistical forecasts though... Better to use them as indicators while focusing on area fundamentals.
     
  15. Connolly

    Connolly Member

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    Hey Cheesy,
    Goals dictate and underpin the strategy.
    Determine the strategy and then learn how the game is played. Many people here play the game very well.
    Get books, read a few posts everyday and ask questions.
    $350k is a solid sum of money- you want to make sure you are making a well informed, educated decision where you outlay your money.
    Margaret Lomas books are a good start; clear, written in English and free of big words and confusing jargon and offers a non subjective view of property investing. Has been in the game a long time and one of the few with integrity!
     
  16. rizzle

    rizzle Member

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    Yep, Lomas is a good read (I enjoyed he 20 questions book). Lomas is mostly cash flow focused from memory (positive geared properties/areas). I found Yardney's book a good read for the opposing view ("forget cashflow, focus on areas with strongest CG drivers")