Your opinions would be much appreciated

Vlad,
If I was starting out in this environment, I would most certainly be looking at properties with a higher yield.

Better cash flow from a property allows you to ride out any fluctuations in the property market value and also provides you with a launching pad to secure your next property.

Getting a 3.2% yield on your very first property is a big no-no in my books.. sure others would disagree with that approach.

For me, buying the first property is the start of a new journey and should not be a stumbling block to your next purchase, unless you plan to live in there with an aim of paying it off asap.

Look at outer suburbs - From suburbs like Hoppers, Werribee, Frankston, Seaford, Craigieburn and others. Every piece of objective info (including stats) will tell you that outer wont lag behind inner or middle ring suburbs in medium to long term.

Again, if your heart is dead set on the property or Sandringham, then go for it.

My strategy in your shoes will be following if I was starting out with $650k to spend:

- Buy 2 properties in outer suburbs with strong infrastructure/ located in growth corridor for around $325,000 each

- Each property must be able to be sub-dividable (situated on approx 600sqm or higher) in the future.

- Yields to be in the vicinity of 5% or higher.

You should achieve same growth in the values in the next 3/5/10 years compared to Sandringham (going by past history of all suburbs).

You will have additional compounding growth through sub dividing and building down the future - technically speaking you are creating another 2 properties with land content (almost) free.

I would then do minor improvements on the properties to increase the yield from 5% - 6 % or higher within 6 months.

I would then get ready to buy more knowing that they are not a cash flow drain on my income.

The Sandringham property or others like that must follow down the track - once you have either sufficient equity or portfolio under your belt.

Having said all that, I started my investment journey by buying into blue chip suburbs - only because I did not know any better !

Harris

Looking to buy my first IP.
Been looking at:
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008055970

Vendor is considering private offers, I would have to pay 640k to be in the running.
Rental is around $400-450 per week. Needs cosmetic renovations. Close to Sandringham 2ndary school, 2 blocks away from train and beach.
Would love to hear your opinions...

Cheers
Vlad
 
Would love to hear your opinions...

Hard to say - as per Harris's concerns, it depends whether you have some burn capacity in your income (i.e. can you fund the holding costs comfortably).

Otherwise, a "safe" stable suburb in my opinion (not aware of any local issues). Make sure owner's corp is activated - the costs should only be the insurance on the driveway. Are the units separately metered for water?

Cheers,

The Y-man
 
Both Harris and the Y-man thanks heaps for your prompt replies.
Your advise is both sound and timely as I was very keen to sign up for Miller street property. I suppose my primary driving force is a knowledge of the area. However as an investment it is cash flow deficient and will be so for many years to come. There is hardly any depreciation left (circa 1977). The only hopeful is a potential capital gain in the future. I will be better served by buying in an up and coming corridors as you've suggested.

Harris, is there any chance you can recommend couple of suburbs with strong infastructure and good future potential? (I prefer to stay in this side of town).

Y-man, which suburbs do you favour?
I certainly agree that a house on a good size block will have much more future potential than a smallish unit. Please note: Miller st property is one of two and located on a largi'sh 290sqr meter block.

Thanks again
Vlad
 
Y-man, which suburbs do you favour?

All my current properties are in inner/middle ring suburbs - but I am hoping to "experiment" in outer areas in the near future.

I owned and recently sold (2008) a 2Br/2Bth unit in Cheltenham, and what I did notice was the relative liquidity of the property compared to say an apartment on the CBD fringe.

Cheers,

The Y-man
 
Vlad,
I
My strategy in your shoes will be following if I was starting out with $650k to spend:

- Buy 2 properties in outer suburbs with strong infrastructure/ located in growth corridor for around $325,000 each

- Each property must be able to be sub-dividable (situated on approx 600sqm or higher) in the future.

- Yields to be in the vicinity of 5% or higher.

......

You will have additional compounding growth through sub dividing and building down the future - technically speaking you are creating another 2 properties with land content (almost) free.

I would then do minor improvements on the properties to increase the yield from 5% - 6 % or higher within 6 months.


Harris

Interesting ...

That is almost my strategy for next year down to a T.


Sell the 2 bed house in Nth Fitzroy and probably buy one or two IP's as described in the West where I work and know the market well.

I may just buy one but pay off all PPOR debt as I am planning to subdivide the PPOR .. Plus I will probablly look to pay a bit more as I want proximity to a train station.

I doubt the growth will be as good as in Nth Fitzroy, but I can live off income when not working .. living off capital Growth is hard without a job to suit the financiers ... plus I will probably make more in terms of cevelopers profit.

As for the OP's question ..

I personally agree with Harris, but as he said many others will disagree with us ..

Your money your decision .. just don't be a slave to your IP..

And can you afford to support it if you are without work for 6 months to a year?


good luck with your journey,

cheers

RightValue
 
If you are looking bayside, then I would most certainly recommend Frankston/ Frankston North or Seaford. If you go further in towards Chelsea and Carrum, you will struggle to get a couple of properties in that budget.

Aim for long term and the ability to compound future growth through future sub-divisions.

Find a property (will require you to walk the streets), talk to agents, research but most importantly buy when you find something with decent yield on 600 sqm or above. Dont get into analysis paralysis by waiting for the 'ideal' property and dont just buy anything in haste either.

Set yourself a realistic timeframe (say 30 days) and then work the phone and visit the area numerous times. Prepare to put low ball offers with quick settlement terms. You will be surprised with the results if you are prepared to offer an unconditional contract (only subject to building/ pest inspection) on 60 day settlement in an area like Frankston. Organise your finance in advance.

Almost all of my smart (below market value) acquisitions have been the ones where I put in offers below asking price on a clean unconditional contract with quick settlement. There are plenty of vendors that have either bought else where and have to sell the property very soon or they are motivated for other reasons. If you land one of those, you can buy well.

Just remember that your ability to fast-track the growth of your portfolio / equity is for the most part contingent on your acquisitions that can provide better yield (5% or higher).

Dont settle for ordinary yield.

Harris


Both Harris and the Y-man thanks heaps for your prompt replies.
Your advise is both sound and timely as I was very keen to sign up for Miller street property. I suppose my primary driving force is a knowledge of the area. However as an investment it is cash flow deficient and will be so for many years to come. There is hardly any depreciation left (circa 1977). The only hopeful is a potential capital gain in the future. I will be better served by buying in an up and coming corridors as you've suggested.

Harris, is there any chance you can recommend couple of suburbs with strong infastructure and good future potential? (I prefer to stay in this side of town).

Y-man, which suburbs do you favour?
I certainly agree that a house on a good size block will have much more future potential than a smallish unit. Please note: Miller st property is one of two and located on a largi'sh 290sqr meter block.

Thanks again
Vlad
 
Top