600K budget- where to buy

Discussion in 'Where to Buy' started by lettert, 25th Oct, 2019.

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  1. lettert

    lettert Well-Known Member

    Joined:
    25th Oct, 2019
    Posts:
    99
    Location:
    Vic
    Hello! I've been going through recent threads trying to get a grasp on the market, but there are so many options out there I'm a bit overwhelmed...

    I'm looking to buy an investment property. Primary goal would be capital growth. My budget is 600k, though I could probably stretch to 700k if a property is too tempting.

    I live in Vic (inner west) so am tempted to buy within the state. But I know I should consider out of state options too, though I feel uncomfortable buying without visiting the property/area so would probably try to visit before buying.

    Would really appreciate suggestions.

    fwiw, I own a ppor and am in my mid-thirties with young family. Financially, I do save some excess each month but not heaps, so could afford some negative gearing but nothing crazy (ie 2k negative per month is doable, but not 10k per month!)
     
  2. Khoed792

    Khoed792 Member

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    24th Oct, 2019
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    Location:
    West Melbourne
    Townhouse ? house ? 2 bedder or 3 bedder ?
    I've looked through the west vs east vs North and came to a conclusion that i will be settling in inner north I suggest having a look at Reservoir , Heidelberg (West) for a more bang for buck with potential growth or Preston , Thornbury , Northcote if you can afford more and/or living in smaller area. Preston just have its new Preston High School opened up this year with double the amount of applications than predicted (even students living in Thornbury).
     
  3. lettert

    lettert Well-Known Member

    Joined:
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    Location:
    Vic
    Thanks @Khoed792

    I won't be living in the IP, so willing to get something a bit "out there"

    I see a lot of people talking about how buying in growth zones or properties with potential to develop or subdivide down the line is what really drives huge cap growth. I am sure my partner will not be on board with us doing a big development, not sure about subdivision. Most likely we could get plans and permits (at most) and then sell.

    The other option I'm looking at as having good cap growth potential is perhaps a cosmetic renovation? Neither my partner nor I have renovation experience, but partner will likely have the time to manage this next year onward.

    And of course, there's always the "try to buy before big infrastructure project completes" I suppose?

    I am not fussed about the type of property, I'm not convinced that land size necessarily drives the growth, rather in my experience it's usually been location.

    I know folks on this forum have a wide range of experience and do all kinds of strategies well.
     
  4. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    Dual Occ. Set it to P&I. It will pay itself off in 15-20 years, leaving you with an income for life

    More importantly, because it pays for itself and doesn't require you to top it up each month, it wont be any drain on your budget. That allows you to concentrate on paying down your PPOR as fast as possible. You said in your post that you could afford 2K per month in negative cash flow for an INV property ... well how about you buy something that runs at $0 negative cash flow per month, and put that extra $2K per month towards your PPOR instead?

    24K per year in extra repayments towards your PPOR will work wonders for you. You'd have a PPOR paid down very quickly, a Dual Occ INV property that was paying itself off, and from that position you could grow a MUCH MUCH MUCH larger portfolio .


    Doing this
    Pay-Off-Debt-Button-691x691.jpg

    leads to this

    Screenshot 2019-10-25 12.02.31.png



    which leads to this

    Mortgage Free man 2 .png



    Which leads to this

    Freedom .jpg



    and creates the opportunity to achieve this...


    leprehcaun.jpg

    making you this guy...


    einstein .jpg
     
  5. turk

    turk Well-Known Member

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    Location:
    Brighton
    3% interest over 30 years, is that pessimistic or optimistic?:confused:
     
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  6. lettert

    lettert Well-Known Member

    Joined:
    25th Oct, 2019
    Posts:
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    Location:
    Vic
    I'm pretty sure our borrowing capacity will be capped after purchase of IP (or close to it)

    I'm assuming 200k spend to purchase IP (incl purchase costs); this leaves approx 500k PPOR debt and (Depending on valuation!) 700-900k equity in PPOR. We are vaguely planning to sell PPOR in 2021/2022, once the tunnel is close to completion (and hopefully property values in our burb go up) but we might not, since we're quite happy with PPOR for now and future needs.

    Edit to add: @turk 's comment about interest rates is another reason I'm keen on IP with growth potential! Who knows when Australian interest rates will go negative, haha... but as it is, savers are being penalized.
     
  7. Sackie

    Sackie Well-Known Member

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    Location:
    Vaucluse, Sydney.

    I would start from the beginning. The strategy or strategies you ultimately decide on should be in line with a few things imo.

    1. Your goals
    2 . Your financial situation
    3. Your risk tolerance
    4. How much time and commitment you are willing to spend on learning your craft. People like to casually talk about subdividing and developing as though it's an option for them if they wished. Well it isn't that simple.

    I would spend a few months and read PI books, YouTube clips, the forum etc. See what resonates with you and your partner. Then decide on some goals and strategies. The key to knowing better and not be flabbergasted by all the opinions etc is to just educate yourself on it all. Eventually it will all fall into place enough for you to know what direction you want to go in.
     
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  8. lettert

    lettert Well-Known Member

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    Location:
    Vic
    Thanks @Sackie youre absolutely right! I’m sure developing by ourselves is out of the question because my partner has seen (thanks to work) first hand the stresses and risks developers face. I think we wouldn’t subdivide on our own either. And the more I think about it the more I think we’ll stick to vic. I might need to start a new thread with updated thoughts! Though looking through past threads seems sunshine and Epping are popular ideas...