21 Year Old Looking for advice

Hi all,



Long time reader here first time poster.



I know the title of this post seems like this about to be another one of those early twenties pipe dream posts, however I hope it isn’t.



I am currently 21 years old living with parents in Melbourne and roughly 8 years ago i was fortunate enough to inherit half of a house in Melbournes south east with another family member (property is mortgage free). This was initially rented out for 230 a week back then and now fetches 300 dollars per week to which i receive 150 - costs. This money has gone into a trust which i haven’t been able to access until now currently 43k. I currently work part time income 32k and study and have saved up and invested 27k into the share market over time which is now worth 20k due to the recent crash. Not that i am worried about this as it is the nature of investing.



I have had the idea of an investment property for some time now and given my position i knew that it could be achievable earlier than most of my peers. I am fascinated by the concept of leverage and that i can gain a greater return on investment by leveraging my portfolio whilst having rental income subsidise the repayments on the loan.



My proposed strategy is to purchase a cash flow neutral property south of Brisbane (logan) 250-300k , and then begin to release equity over time and purchase more properties, and have a balance between capital growth and cash flow in order to diversify and maximise my results.



I hear a lot of negative talk about the Logan area and i am here to ask a few questions



Are the stories surrounding the Logan area as bad as what people say they are or is it a media beat up? Vacancy of my property is my biggest concern.



I myself see some attributes that could contribute to positive capital growth over the long term, (20 years plus) the fact that there seems to be a solid train line that runs down there as well as millions of dollars of new infrastructure being constructed seems that it could be a hub of the future. Can anyone see any similarities between the suburbs of the Logan area and that of Dandenong/Noble Park/Springvale in Melbourne, which have all experienced solid capital growth in recent times?



Should I be looking elsewhere in Australia to get into the market with my current position or Should i be waiting until i graduate and obtain an income of a lot more than my current 40k pa (work + rental)?



I look forward to your responses.

 

What entity owns your half of the property and when do you have access to it?

Usual questions. Why Logan? Why neutral cashflow? Do you believe that the higher the yield, the lower the capital gains? If so, are you better off aiming for capital gains instead for 40 years?

With your part time income you probably can't borrow much. Spend 6 months reading everything you can and understanding how investments work. Thats probably the best thing you can do at this tage.

 

....more like North Frankston.

Congrats on the investing. You can only afford property in the lower socio-economic areas atm. Or you can wait till u graduate and service a better loan with a higher priced property in a better CG area with lower vacancy rate.

 

Own the property in a split with my father, who is not interested in selling at the present time.

To answer your questions
Logan is attractive to me due to the higher rental yields and my own personal sentiment is that long term I see it as a potential location for capital growth due to the infrastructure that is already down there. Whilst I don't think this will be in the immediate future, the foundations have been laid and there has to be some sort of growth over the long term. I am however, very much open to other locations.

The reason why I am interested in neutral cash flow at the moment is due to my current financial position. Being on a low income for at least two more years I don't want to be paying too much out of my own pocket.

I somewhat believe that the higher the yield the lower the capital gains. However, if we look at Melbourne and Sydney in the present, who would have thought that the Median House Price of Penrith in Sydney and Springvale in Melbourne is $630k. Some 20 years ago surely neutral/positive cash flow was achievable with properties in these areas.

Don't get me wrong, Capital growth will be a fundamental goal in my property portfolio in the long term but at the moment I am trying to purchase my first Investment Property with a limited income, I feel as if a cash flow neutral property/positive may be easier to service in the short term.

 

If you're young and have time, then I would be looking at more of an active strategy in your locally accessible area, rather than a buy-and-pray type of strategy.

It worked much better for me when I started out with little money/capital, but plenty of drive and time to do DD and sweat work.

 

Have you considered a high yielding regional property as a starting point?

 

Can you and Dad do something with the house you already own to increase its value and rent?

 

Pretty sure OP wants to buy exactly that, hence looking at Logan and surrounds

 

watch the costs in logan, rates and water can be high compared to some other areas

 

logan has a swathe of lower socio-economic areas, in a band roughly from Eagleby/ Beenleigh to Logan Central, and a bit of a triangle out to Marsden
but it has some higher SES areas, eg east of the M1 - a mixed bag, but good to understand the demographics