$350+ K Equity ! What to do ?

Discussion in 'What to buy' started by CuriousCreature, 19th Nov, 2017.

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  1. CuriousCreature

    CuriousCreature New Member

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    Hi ,
    I live in Truganina Victoria ,Sitting on a home worth $650k-$700k now with 200 k loan .I've got the money but I'm just not sure how to proceed . I've been struggling to buy my IP 1 for 2 years now. . There is just tons n tons of info our there old vs new , house vs units . Melbourne west vs South east ........aarrrgggg !!!

    I'd appreciated some help from the real estate guru's or people with successful IP buying strategy .

    How to proceed ?
    What to buy ?
    Where to buy ?
    How much is good enough for a IP1 property.?

    I live in Truganina area , there is massive construction going on left right and centre. Its just too confusing .

    Need Help !!

    Cheers

    Curious Creature .
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Just do it!

    Think of all the growth you have. Missed out on.
     
  3. wylie

    wylie Moderator Staff Member

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    If I was in your position today, I'd look at another state.

    After many years of investing, even with a small number of properties, land tax is starting to hurt.

    Luckily, we will be developing and changing things, maybe selling something, and so this will not be a long term issue for us. But that is just a fluke. It is not something I gave any thought to when we were buying.
     
  4. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @CuriousCreature

    With clarity comes certainty.

    Make a list of negotiables and non negotiables in terms of what will make a good property for you.

    Talk to a broker who can help you work through your long term goals, and help clarify these; someone who can hold you accountable in terms of whether you are taking action in line with your stated goals.

    Sounds like you really need clarity on what you are aiming to achieve and why you are wanting to achieve this. Without this clarity on what you wish to achieve, all houses will look the same.
     
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  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Too much dependence on data, and perhaps too much input from people that arent you

    The goals stuff referenced above may help.

    PS the issue isnt so much WHAT,, the core issue often is WHY ?

    What is the end goal.. and do you believe its achievable. Low belief mixed with confused knowledge becomes a powerful and logically acceptable delayer.

    Solve the why and the what and how often look after themselves


    ta

    rolf
     
    Last edited: 20th Nov, 2017
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  6. jefn89

    jefn89 Well-Known Member

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    Sage advice, once you remove the noise the answer becomes clear!
     
  7. Lacrim

    Lacrim Well-Known Member

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    I would pick Brisbane at this stage of the cycle. Get a 2 or 3 bed house with parking and with the potential to add another bedroom and bathroom under the roofline < 8kms to city and look to buy extremely well.

    OR if you see yourself retiring to a large coastal area like the GC in the future, perhaps look at that too. There's nothing wrong with throwing the utility of an IP in with your investment hat on. But it depends where - if its some 2 horse town or a small beachside town, then don't.

    OR upgrade your PPOR if you're not happy where u are - sell now and wait for a bargain in the suburb of your choice.

    Thought I'd keep it simple for you.
     
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  8. jefn89

    jefn89 Well-Known Member

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    Everyone keeps saying Brissie, what's the reason apart from affordability why everyone or alot of people are saying this?
    While I'd love to see some big growth in Brisbane, have my 1 IP up there, for me looking at somewhere like middle ring and outer Melbourne suburbs along a train line is more likely to see consistent (if not exciting) growth.. It of course depends on what the person wants to achieve though so different strokes for different folks
     
  9. Anthony Brew

    Anthony Brew Well-Known Member

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    People keep saying Brisbane because long term property values do well, but in the short term (under 10 year period) property values rely a lot on emotion of the population, generally fear and greed.

    You can see property cycles in past data. It is very clear. What happens is that prices are undervalued, then rise and people freak out thinking it will rise forever so fear makes people buy when they otherwise would not thinking they will never be able to buy if they dont buy now (called FOMO or Fear Of Missing Out), pushing prices beyond what the long running average is for that city. It then hits a wall of unaffordable and it just stops and moves sideways for many many years going nowhere. Inflation means this lack of movement is actually bring down the price compared to the long running average. Eventually people think the values will not rise again and fear keeps the masses from investing until it is undervalued again, and people then can afford to start buying and the whole thing starts all over again. Swinging from undervalued to over valued and so on.

    Sydney and Melbourne have had this big upswing and are overvalued compared to their long running average and are ready for their period of going nowhere sideways movement (correction) which will last many years. Melbourne might be at peak or it might be a bit more off peak. Brisbane on the other hand (if you exclude inner ring), has not moved much and the prices really are not much more than the 2007 peak. Compared to their long running average they are under priced and people will start moving in and buying soon.

    Sure issues with rates and APRA and coming interest rate rises and so on may stifle it and it might end up taking a few more years than a normal boom (or it might start very soon, no one knows), but the values are pretty good compared to their long running average, whereas Melbourne are much higher than their long running averages.

    The question you would want to ask - are you willing to gamble that you are enough of a way off peak vs being right near or at the peak in Melbourne? Or would you choose a location that is undervalued and eventually (and I would say likely in the next 5 years max) will move up to where their long running average is and beyond it as normally occurs.

    Of course, property cycles are all based on opinion, so they might be incorrect. It just looks a lot like there is substance to it when you can see it in every market for the last lots of decades.
     
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  10. Morgs

    Morgs Well-Known Member Business Member

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    Working with others I find that for some people it helps to work backwards to help create clarity on the next steps forward. Self reflecting on questions like:
    - What is your long term objective? (as an e.g. do you have a retirement plan?)
    - What would you require to achieve this objective? (is it a $ amount, passive income, etc)
    - What are the possible ways forward to enable this? (invest for cashflow? capital growth?)

    Make sure you get some good advice along the way by asking plenty of questions and you'll get there!
     
  11. L3ha7

    L3ha7 Well-Known Member

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    @CuriousCreature -you will come across many successful investors on PC who can guide you and explain with different scenarios.

    I am more or less in a same boat as you. I just got my property valuation from cba and now I want to use the available equity to buy an IP (thanks to @Rolf Latham for explaining the 80%lvr).

    I got a young family and live in western sydney. My aim is to live in a good family suburb (meaning is depend on an individual-for me baulkham hills, carlingford, putney and couple of suburbs from north sydney etc.).

    I can't afford in any of the above mentioned suburbs because everything is with or more than a million $ price tag.

    So I want to buy where I can get some CG and relatively good rental yield so that after 3-4 years I can try to get into Sydney market but to achieve that I am aiming to get a job that pays but nore than my current package and wife may start work sometimes mid next year.

    To buy another IP , I know for sure at this stage Brisbane is not in my list (I have my reasons). Sydney is already expensive and Melbourne is flying high (got 1 property there), at this stage I am not comfortable buying in tassi, perth and darwin.

    Only this left is Adelaide so based on how much I can spend I will start my research and read posts from @D.T. and another reputable members.

    At the end it has to be your decision and you need to be comfirtable with it. When I bought my last IP in Melb, I knew this is what I want and this is how much I want to spend and so far I am happy with it :)

    Another thing I want to learn about is develoment process. Many people talk about buy renovate and flip but I do not have much knowledge about the process involved in relation to-demo, council approval, da approval, concept, design, the R3 zoning and stca etc so I will be searching for posts over my xmas break to learn the end to end steps from buying a run down property to finishing and making it look like a dream home or build townhouse etc.

    Above all is my plan and may change in future. Thus is not an advice.
     
    Last edited: 16th Dec, 2017
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Yet

    if this is truly your family's primary goal, I am certain that it is achievable.

    Might not be simple or obvious right now, but by heading in the right direction and planning for the good outcomes, and managing the risks and downsides, most goals that look way out there today can be reigned in.

    I have heard it said and 100 % agree, that we overestimate what we can achieve short term, but way underestimate what we can do long term

    ta

    rolf
     
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  13. Lacrim

    Lacrim Well-Known Member

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    Well, judging from my personal experience, if you can afford to buy close to the city/beach in any of our major cities, then do it (soon)...because one day it will/may become unaffordable.

    I find myself reminiscing/rueing all the houses in great suburbs in Sydney I didn't buy (when I almost could have for xyz reasons) eg a 3x1 terrace in Glebe for $480K, a fully rebuilt and renovated 4x2 house in Alexandria for $660K, a 4x1 house in Lilyfield for $520K which had water views(!), a house in Rydalmere for $260K, a Californian bungalow in Chatswood that went for $640K and I was toying with the agent at $635...obviously got gazumped. The examples are numerous....and you can tell I like something with a decent land component. In some cases, I would have tripled my money. The COCR would be off the charts.

    Properties under $500/600K in great suburbs on good size blocks in Brisbane, and to a lesser extent in Adelaide, are a long term no brainer to me. And they're still available. You can still buy into a decent pocket in suburbs in Brisbane like Carina, or gentrifying Stafford with a $5 in front. Good value IMHO.

    Anyway, just my 0.02.
     
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  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Very transparent and valuable

    ta

    folf
     
  15. datto

    datto Well-Known Member

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    Curious Critter. I don't know Truganina but it sounds like its booming.

    Is there a cheap part of town? You know, some scummy side, close to a creek perhaps and probably floods. Where the inhabitants don't work, look and dress funny.

    Well I'd be checking out a property there.
     
  16. dabbler

    dabbler Well-Known Member

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    Yeah, there are some neighboring suburbs where many would meet that description, and is full of investors from up here, they may find they are all buying at end of cycle ...... has to stop soon.

    Or you could try and buy in Sy Kilda near the beach and hope your not mobbed by hooligans :)

    The Druitt is looking better and better Datto.....
     
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  17. jefn89

    jefn89 Well-Known Member

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    Agreed with everything you've said there.. Ultimately aim of the game is to get those goals set, get clear on how much you can stretch and take the plunge.. Possibly a bit off topic although potentially somewhat on topic :)!
     
  18. hieund85

    hieund85 Well-Known Member

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    Just out of curiousity, when I checked, Carina is in the flood zone. Does it means it is a higher risk investment? I know next to nothing about Brissie apart from a dozens of business/leisure trips.
     
  19. Lacrim

    Lacrim Well-Known Member

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    No. Flooding potential spots are address specific.
     
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  20. jazzsidana

    jazzsidana Well-Known Member

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    It's great you have so much equity available to use. Best to sit down with investment savvy accountant and mortgage broker to come up with good strategy.
    Lot of questions to ask - income/age/goals/future changes etc etc. to be able to guide right!.
    Build a great team around you and see the magic happen!..