Hi all, Looking for an IP in Sydney aiming for capital growth over 10+ years. Budget is $1 million. Having trouble particularly with the balance between land and location - for example whether to look at houses in a middle ring suburb or 2BR apartments closer to the CBD in blue-chip suburbs like Waverton. Any thoughts or suggestions welcome!
None. Look out west and go buy 3 or 4 houses with that budget and use leverage. Use the banks money to make you more money.
Where do you think growth is going to come from? Gentrification? Redevelopment / rezoning? Income growth? Population growth?
How much capital growth are you after? Who are you relying on to forecast what CG you're likely to receive over 10 years?
From a Sydney property management point of view, presently in this market houses are more in demand than units (fewer students and tourists) and renovated modern properties are renting much quicker (more people working from home). Higher density suburbs have been hardest hit from a rental perspective, although its in theory only temporary. Might assist in your decision marking. Personally I prefer blue chip suburbs close to transport and cafes.
Thinking primarily about growth from population and income growth, and favour blue-chip suburbs rather than trying to predict gentrification etc.
Not all land is created equal. Choose location over land, within reason (no high rise blocks). Apartments are an under-loved segment of the market right now, but that will change.
To be honest you need to consider many things for a $1M investment. Yield and your holding costs play a crucial role. It needs to be a balance of holding costs/growth and yield. Cashflow although not discussed much plays a crucial crucial role if you dont want to be a 1 house investor and wish to continue to grow your portfolio. The last thing you want is to be putting out $3-4k per month out of your own money holding the property because the rent doesn't cover all expenses. That is REAL money your losing out and at the same time if your in that situation you better hope that property is growing at double that rate.
Tend to agree with this. In Sydney for $1m you basically have the choice of house and land further out west, or a reasonable 1-2 bed apartment further in and close to traditional investment drivers. From a very basic PoV, land is better than less land i.e. house better than apartment, but that doesn't necessarily hold true if you're buying a house in a not so desirable area vs an apartment in a blue chip location where demand will come back to be very strong again when immigration commences again (and it will). We buy for clients with this budget and in the location(s)-ish you're suggesting and you'll do very well over that time frame by keeping to a smaller block with a renovated unit in a good location. There's no need to try and be too clever. - Andrew
