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