Where would you buy?
- Thread starter agent007
- Start date
My own picks (personal opinion only, and there are no Melbourne and Adelaide suburbs only because I'm still researching my 'target areas' in Melbourne and Adelaide):
1) NSW: West. Between Paramatta and Blacktown. Older 3 bed houses on big blocks with potential for subdivision, though yields are still low at this stage. As people get pushed from the inner west and Parramatta grows, there will be more need for good accomodation (my own prediction: duplexes are going to be popular for young families who want size but also convenience) for people to commute to Blacktown and Parra, if not the City.
2) QLD: Brisbane / GC corridor. i.e. SE Brisbane all the way down to the GC. Older houses on big blocks. Good yields (5-6%) especially at the lower end of the price range. You get the benefit of the growth that will happen in both GC and Brisbane. I'd also tip some of the Gold Coast hinterland suburbs (just north of Coolangatta, for example) but those would be >$300k.
In general I would go for older houses with potential for future redevelopment. The above is personal opinion only.
Alex
Hi Alex,
What is the min yield that you look for when purchasing an IP? I have heard min 5%? Do you treat yields for units vs houses the same?
As this will be my first IP, I think I will probably buy a 2 br unit in Liverpool (up to $200K).The reasons being : I don't want to overextend myself for the first IP purchase, I know Liverpool quite well as i live close by. Units are relatively inexpensive in Liverpool compared to rest of Sydney. Good infrastrustructure : Railway, recent extension to Westfields, planned development of Liverpool Hospital, lots of new Units being built.. etc..
I am a newbie IP investor.. and would like to know whether I should wait until yield increase, or should I just buy now (my strategy is buy and hold for long term) .. i am itching to get that 1st IP... I don't want to wait too long,,,, but i want to make a prudent decision .... buy now or wait until yields rise ?? What do you think?
Personal opinion only, but I look for the best yield I can in a capital city. Some of the highest I currently know of (limited to my knowledge only) is around 6%, which I think is ok. Remember that yield gives you an indication of relative value. i.e. if every unit in an area is yielding 4% and you find one that yields 5%, it might mean you’ve found a bargain (or there’s a tenant paying high rent). I tend to focus on yield because I want to buy lots of properties, and a 2% difference on yield makes a big difference to my serviceability.
Unit yields should be higher than houses because of body corporate. While houses have repairs what I’ve noticed is that body corporate keeps going up so it becomes a higher and higher fixed cost.
Right now I think there are bargains in Sydney if you look hard. If I was there I would be looking for desperate sellers. I would say now is a better time to buy than, say, 2002 or 2003. Don’t know anything about Liverpool, but my general opinion is: buy now, but buy small. $200k won’t be a huge burden, and with rents tipped to rise cashflow should improve.
If someone already had property, I would say wait a bit. Even if you are wrong and the market jumps back up, your existing IPs will still go up (this is what I’m doing for WA). If you don’t have any IPs, I’d say buy a cheap one soon and learn how it works. Sydney has good buying at the lower prices (I’m also researching Newcastle). In 20 years, the only properties you will regret are the ones you didn’t buy (assuming you manage to hold for 20 years, but that’s all about cashflow, LVR, etc).
In general, if you don’t have any IPs and want to buy one, then a $200k unit in Liverpool is not a bad idea. Even if the return is ordinary, you’ll learn a lot about IPs. Just remember to keep an eye on cashflow and deposits and plan for your next one! Aim for lots and lots of properties.
This is all just my opinion, by the way, limited by my own experience and understanding. I don’t know what’s going to happen to the market tomorrow, but I’m almost certain property will go up over the long term.
Alex
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Sorry, typo. I meant that if you don't have IPs then buying a relatively cheap unit in an area with good fundamentals (such as Liverpool or Newcastle) is a GOOD idea.
Alex
Thanks for the advice Alex.
I agree that buying small for the 1st IP makes sense. I intially wanted to buy a house in Hinchinbrook (where i live ; approx 10mins drive from liverpool), as the Resdiex CG prediction was something like 14% p.a.. (and liverpool units CG prediction was lower).
However, being the first IP, an affordale unit will definitely make it financially easier to enter the real estate market.
I agree that buying small for the 1st IP makes sense. I intially wanted to buy a house in Hinchinbrook (where i live ; approx 10mins drive from liverpool), as the Resdiex CG prediction was something like 14% p.a.. (and liverpool units CG prediction was lower).
However, being the first IP, an affordale unit will definitely make it financially easier to enter the real estate market.
The 'Price doesn't make sense' criteria to buying
I'd research houses first before convincing yourself that you can't afford one.
Don't let 'I can't afford a house so I must buy a unit' become a limiting belief without sufficient cause.
There are outer suburbs (don't know about Sydney but certainly in Melbourne) where you can find houses on full-sized blocks for similar (if not lower) prices than units in the same area.
In some areas the relativity between houses and units doesn't make sense and I believe this can be exploited by avoiding the property type that seems expensive.
Peter
I'd research houses first before convincing yourself that you can't afford one.
Don't let 'I can't afford a house so I must buy a unit' become a limiting belief without sufficient cause.
There are outer suburbs (don't know about Sydney but certainly in Melbourne) where you can find houses on full-sized blocks for similar (if not lower) prices than units in the same area.
In some areas the relativity between houses and units doesn't make sense and I believe this can be exploited by avoiding the property type that seems expensive.
Peter
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Hi Peter,
Thanks for the suggestion. I will research affordable houses before purchasing the IP. I recently received a pay rise which will allow me to get a larger mortgage..but i don't want to overextend myself .
I have to speak to an IP Savvy Mortgage Broker .. the broker I was dealing with a few months ago organised a pre-approval for me..but he wasn't a big property fan..and it seemed to me he organised the pre-approval with the least effort possible for himself..without really getting me the best loan (features,rate,etc) for my situation..
Can anyone recommend an IP Savvy Mortgage Broker in Sydney ?
Thanks for the suggestion. I will research affordable houses before purchasing the IP. I recently received a pay rise which will allow me to get a larger mortgage..but i don't want to overextend myself .
I have to speak to an IP Savvy Mortgage Broker .. the broker I was dealing with a few months ago organised a pre-approval for me..but he wasn't a big property fan..and it seemed to me he organised the pre-approval with the least effort possible for himself..without really getting me the best loan (features,rate,etc) for my situation..
Can anyone recommend an IP Savvy Mortgage Broker in Sydney ?
Do a search on Liverpool and Blacktown to get other peoples ( persons ) view on this area.
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The broker does both PPOR and investment loans. But he isn't a property investor himself.. I would prefer to deal with someone who is an experienced and active property investor himself. That way he would understand the particular loan features that are important to investors and arrange an appropriate loan.
Both Simon and Rolf L would work within Sydney though they arn't based their.
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imho
.James,IF I had a spare 300k,and if you understand that the economic cycle
in R/E is not marked so much by falling prices as by the lenght of time it takes
to sell a property,and with the flood of sold sign's is see everyday
on the inner southside from West End to Rocklea in Brisbane then /imho/
i would do your homework on those area's.
The Eleanor Schonell Bridge at Dutton Park opened on the 17th December
it now links the inner southside to the UQ,St Lucia Campus for the first time
from what i am told the overseas student,s will now start to rent in those area's,
IF you look some properties in the inner S/S 7 klm's from the cbd, are now at the sale price of the ucv value only. good luck willair.http://www.realestate.com.au/cgi-bi...eader=&c=38797190&s=qld&snf=rbs&tm=1167874954
TEG. Is your Residex CG Prediction for Hinchinbrook upto date?? I also live here and have seen my PPOR (Brick 4 bedda on 800 sqm) value drop by 19% in the last 14 months. I just had it revauled. Fortunately I bought early 2000 so unlike many others in this area I do not owe more than the property value.
I would suggest more research on predicted CG for Hinchinbrook would assist you with you IP decision. As your probably aware there is an abundance of new houses being built on reasonable size blocks "Wilson Road," Carnes Hill, Hoxton Park road just to name a few and this may continue for a few years.
(New house vrs old house same similar size land and price??)
Just my opinion
Probably within Forest Lake or Acacia Ridge in Brisbane.
Both suburbs are still relatively cheap and decent sized blocks with houses are available within that price range. You would also have slim to none trouble finding tenants, especially considering how tight the rental market in Brisbane is at the moment, with more and more people wanting to rent a decent sized house and not a unit or TH.
I'd probably avoid areas on the fringe or SE corridors like Logan - simply because the people who'd be likely to tenant homes in that area aren't usually the most desirable. I've heard some very awful stories involving domestic violence, drugs and malicious house damage from people who have had IP's in that area.
That said, the eastern side of Logan is quite nice, but its also more expensive, which negates the possibility when I could buy closer to Brisbane.
Both suburbs are still relatively cheap and decent sized blocks with houses are available within that price range. You would also have slim to none trouble finding tenants, especially considering how tight the rental market in Brisbane is at the moment, with more and more people wanting to rent a decent sized house and not a unit or TH.
I'd probably avoid areas on the fringe or SE corridors like Logan - simply because the people who'd be likely to tenant homes in that area aren't usually the most desirable. I've heard some very awful stories involving domestic violence, drugs and malicious house damage from people who have had IP's in that area.
That said, the eastern side of Logan is quite nice, but its also more expensive, which negates the possibility when I could buy closer to Brisbane.
Lots of break-ins and car theft. For some reason crime is unusually high there. Plus there isn't a lot of decent transport options, its in a bit of a dead zone.
Residex Report [Quarter Ending June 30, 2006]
Houses - Hinchinbrook
14% p.a (5 yrs)
13% p.a (8 yrs)