VIC 900k budget, where to buy in Mel

Newbie here and this is my first post , so please be nice

Circumstance: Bought our home in SE Melbourne 5 years ago, now worth around 1m. Mortgage paid out and we have about
200k sitting in a saving account. Looking to buy an investment property and doing my research now.
Will buy and hold as a long term investment and looking mainly for capital gain. There are two choices currently on my mind: far east suburbs like bayswater or boronia, where I can afford a nice house with big block of land; or townhouse in mid ring like Blackburn or oakleigh.

Which one do you think is a better choice? Thank you in advance for your suggestions.

 

G'day Ifox,
If you are looking at passive investment than closer to the city would be better for capital growth. Try to buy below median value for the type of property you are after for the suburb you choose. You can use this to do some more research:
Melbourne Investment Property Market Data

 

Thank you MrFox.

Can you please elaborate on why buy below median value? I was originally thinking to buy something in relatively good condition, as I won't have time to do renovation. And probably less hassle when rented out.

 

Bayswater boronia 900k?

Dont think its a great idea
Unless you get a huge block

 

with that budget. I would be looking at getting two or three properties instead of just one. The west is hot at the moment and there's a thread that highlights a few issues on that side of Vic. Do a search and you will find the discussion about it.

 

Not necessarily 900k, probably I should say up to 900k

 

Thanks for your advice. I am new to property invest and don't want be too aggressive. Buying one IP is a more comfortable choice to me as even if the market goes down, it won't give me too much pressure.

I am personally more familiar with SE and East, knew very little about west. I will read more threads here to find out.

 

You are in a great position with paid off ppor. Are you going to stop at one ip? I would map out strategy depending on income, servicibility etc. plenty of good brokers here and they could help you out. That's what I did anyway. Best luck!

 

im not saying buying two or three at the same time. just keep in mind to not pour your full borrowing capacity to one property. instead buy one in the 450k price range for example. If the market goes down in the area that you bought the 900k property, that is more riskier than spreading your assets to different markets. if the market tanks on one, you still have the other one to compensate.not advice, just something to keep in mind.

but i agree, it will also be dependent on your risk tolerance and being comfortable with the purchase. probably read a bit more here before doing anything. you will have more better understanding if you just stick around the forums a bit more before going ahead with any purchase.

 

Are you planning to use the $200k as a deposit or equity is your existing home?

I wouldn't be using the cash, use the equity - make sure this is done right no x-coll

 

@Ifox
What's the reason for settling on a 900k purchase? What are you hoping for the purchase to do for you?

 

Hi Mr IFox,

Congrats on paying off your home. You are in a good position to build further wealth.

With your equity and cash, have you considered skipping resi ip's altogether and investing in commercial real estate?

You could do this directly or indirectly through property trusts(both listed and unlisted).

Benefits are hiigher yields meaning stronger cash flow. You could also use some of your equity to invest in shares, LIC's, ETF's to generate further income.

Regards Jason

 

Hi there - generally 5 years ago was a great time to enter the melbourne market and glad you have achieved success.

Your next buy will depend on your strategy. What do you want to achieve? for instance, a house in oakleigh will cost you close to a $1m and developers are everywhere so usually people are buying houses for the benefit of sub division.

A TH in blackburn will still cost you around $900k and location will be key. Blackburn has exploded in the last 3 years and now apartments are starting to take effect, areas around the stations are popular with Laburnum selling like hotcakes. You can achieve a 4% yield on a TH here at the right price and still great prospects of capital growth.

Borornia, you can go a house and find something on 500 sqm near a good school. Popular with the chinese as they sprawled past Glen Waverley in the last 2 years. Bayswater - not so sure.

A nice house with big block of land will not provide yield - more a play for subdivision.

Alot to consider and that is the beauty of property investing!

Cheers Ivan

 

Because it's always a good idea to buy the worst house in the best street. ;-)

 

We had the same budget and was looking at houses on full blocks in mid ring south eastern suburbs. Market was a bit colder in winter but has picked up again in the past month or so since we got our finance ready and people are paying what we think are silly money for full block properties.

So we thought why not look at the finished products (townhouses or properties on subdivided block) closer in if the subdividable blocks already had the premium priced in? Ended up getting a smallish (2br, with scope/space to add a 3rd br) house on a subdivided half block (still 300+m2) in inner east (<10km from CBD).

I personally think at 900k you can do better than full block outer east or townhouse in mid ring if you look hard enough. West and North are pretty good options too, but they are not cheap as well these days. May be have a look at Pascoe Vale area you can probably still get a full block property zoned to Strathmore Secondary for that price.

 

Appreciate everyone for your reply. Here are a few answers/more info regarding to my post and my situation.
I am currently running a startup, with a young family, two little kids. So really not be able to/aiming to be a professional property investor or whatsoever.
I've lost a few grands on stock market which I cannot complain at all as I cannot put much time on it.
I thought property investment maybe safer, especially if hold for long time. But this again need time and effort.
I prefer south east or east because it is closer to home. Cannot afford to drive to north or west doing inspection during the weekend.
My goal? To keep my hard-earned money safe and grow a bit, at least more than the interest from the bank, for my kids education and eventually our retirement.

P.S. Just came across a interest website. Apparently overseas buyer are selling due to the bank tightening the loan. Found some townhouses there within my budget in mid-ring Melbourne. Any ideas on these off plan re-sales?

Lot-40, Arve @ 229 Banksia Street, Ivanhoe Vic | 澳房网 - 为华人量身制作的澳洲地产信息平台
Burwood Townhouse @ 136 Highbury Road, Burwood Vic | 澳房网 - 为华人量身制作的澳洲地产信息平台

 

Both of these projects are on a very busy main road.

 

If something goes wrong with your one and only IP, it will give you pressure in spades which is why I've chosen to hold 3 x $300K properties. But if you go with one, I'd suggest that you have ready access to three months outgoings just in case.

 

Are people really paying $800+ /wk to live in a townhouse in those middle ring suburbs?

No wonder the masses are crying poor... sheesh.

 

Thanks. Avoid them then.