Where do I start in Melbourne?

Hi

I have been a silent reader for quite a while.

My investment aim is to build equity and looking at a time period of 5years.

I would like to move into a good school zone area using the equity gained from IP in 5year time.

I was told that it's hard to find positive gear properties with perspective of equity gain. They are also expensive to hold on to- easily 10k in deficit (before considering any tax benefits)

Which suburbs should I start looking- likely to perform well in 5yrs time, cash flow is slightly negative (preferably neutral)? Or is this just a wishful dream of mine
 
Hi there,

I think budget is key. Do you have a budget?

I recently moved to a new area, and chose it from scratch. Basically my process:

- Budget
- Location
- Investment Potential

Something that is always good to consider too is rent where you want to live, and buy where you can afford to invest. If your budget can't get you the location and amenities you need, rent there buy where the growth will be.

Good luck!
 
Hi

I have been a silent reader for quite a while.

My investment aim is to build equity and looking at a time period of 5years.

I would like to move into a good school zone area using the equity gained from IP in 5year time.

I was told that it's hard to find positive gear properties with perspective of equity gain. They are also expensive to hold on to- easily 10k in deficit (before considering any tax benefits)

Which suburbs should I start looking- likely to perform well in 5yrs time, cash flow is slightly negative (preferably neutral)? Or is this just a wishful dream of mine
to build equity in 5 years, you will need to look in the most likely areas for cap growth.

Unfortunately, almost all those areas have really cr@p rental returns traditionally.

So, you are more than likely never going to find what you are seeking.

Sorry to be the bearer of probable bad news.

Unless you can buy the worse house in the best street for a song, spend bugger-all on a reno and triple your reno costs overnight.
 
Land appreciates. Bricks and mortar depreciate.

Try buying unfashionable high yielding properties, preferably on a site that has potential dual occ status.

Think low-end Bayside Melb - Frankston, Seaford etc. For less than $300,000, with a rental yield of around 5%, you will be well on your way.
 
Land appreciates. Bricks and mortar depreciate.

Try buying unfashionable high yielding properties, preferably on a site that has potential dual occ status.

Think low-end Bayside Melb - Frankston, Seaford etc. For less than $300,000, with a rental yield of around 5%, you will be well on your way.
I don't think that quite fits the criteria the OP was looking for...CFN or CFP was what they wanted, by the sounds of it.

5% is a cr@p yield in anyone's language - except an R/E agent's language.

They love to tell you how "5% is a good yield for the area" and chances are they will never own a property in that area - because the yield would kill them; cashflow-wise.
 
While I agree that a 5% yield isn't that good if you're looking nationwide; if you're looking in Melbourne 5% is a very good return as most properties right now are below 4%. There are exceptions though...

MeowMeowCat, the problem with your question is that you've not set out your budget and target goal. It is therefore very hard to ascertain whether what you want to achieve is realistic or not.

There are definitely ways to grow your net position over a 5 year period, although, in property terms this is a very short period of time and as such there will be more risk involved if you're looking to invest with such a scale in mind.

I dare say that if you're purely looking to buy and hold something with an aggressive growth outlook (circa +7%) and obtain a yield of circa 5% your chances will be slim.

There are other strategies that you can employ though that can help with creating equity or aiding serviceability... It just depends on how much time you can devote.
 
Havent spoken to the mortgage broker. Gut feel is around 5 - 6ish.

Looking at inner city townhouses- brunswick, clifton hill, North mel, footscray

Eastern suburb like ringwood.

Sorry that I am all over the place. . Still researching before I can zoom into a specific area.

When you guys talk about 4-5% return, is it based on 0 down payment and 100% I/O loan
 
While I agree that a 5% yield isn't that good if you're looking nationwide; if you're looking in Melbourne 5% is a very good return as most properties right now are below 4%.
See? whadidItellya's.

You blokes can't help yerselves.

Jake, do you own anything in Hawthorn, or Brighton, or any other "leafy suburb" with almost guaranteed CG?

I mean; it ticks all the boxes - good CG, and a terrific 4-5% return.

It's just the entry level that'll kill most folk.

When you guys talk about 4-5% return, is it based on 0 down payment and 100% I/O loan
I never talk 5% return, but since you asked; it is usually on the purchase price.

Whether you kick in mountains of cash or borrow the lot is up to you.
 
Id buy the best yeilding apartment in the 'good school zone' now and rent it our for 5 years. In the meantime buy or rent where your family would like to live/can afford.

In 5 years time you have an address for the school, or if you have the capital gain, you can trade up to a family home in the same area.

5 years is too short a timeframe for the capital growth you need to break into the premium/family home end of the 'school zone'.
 
How important is the school? Are you looking for decent primary or high school? And I presume you are looking for a government school?

When we went house hunting we first worked out what the gov high schools were like and then went from there.
 
What is a 'good school zone' in Victoria these days? Glen Waverley? Balwyn? Mount Waverley? All those areas are pretty pricey....
 
Yes, I started off looking at those suburbs.

Looking at a sale price of minimum 1m.

Did a simple mental sum
I/O Loan repayment of say 6% @ 60k
Rental income of say 2k (conservative side) @ 24k
The holding cost is 30 odd k conservatively per year

Too expensive to hold till kid is ready for high school
(Sorry if my maths do not add up, very new to investment; still learning)

Plan B will be to hold IP for long term; rent in school zone
 
I think strathmore high is the best value in terms of results verses property prices. Parts of pascoe vale are in the catchment.

Is coburg getting a high school? Brunswick high is pretty good. Not sure how far the catchment stretches. Thornbury high will probably get better as gentrification trickles down.

uni high, princes hill, northcote and maybe Fitzroy are good too but house prices are high.
 
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