950k budget - which strategy to choose

Hi PC experts ,

Need some thoughts and advise on our next steps .First of all thanks to all the lovely threads on Perth dummies etc where I have been able to get valuable information .Husband and I own two investment properties one in brisbane and one in Gold Coast which was bought a year and a half back . We already own our PPOR in sydney since last 5 years.
Now we are planning to get couple more investment properties . Our budget is 950k max and below are the options we have after doing some research. Both will be a long term hold strategy and hence looking for cash flow positive properties.
Which option would be the best?
Option 1 - Buy 1 property for 430k max within a km or 2 from beach in Rockingham and surrounds suburbs and 2nd property for around 520k max budget in a similar nearby suburb but with more proximity to beach something like Halls Head or Falcon.

Option 2 - Buy one property for 400 to 430k budget in Rockingham and surrounds suburbs and 2nd property somewhere in Brisbane for 500k to 530k budget. Thinking somewhere in Ipswich or Logan if that budget is possible.

Option 3 - Buy one property for 900k somewhere in a really good suburb in Brisbane north .

please advise which strategy amongst the three will be good. It will be for long term hold atleast 10 years .

thanks in advance

 

Depends on exit strategy. Option one or two maybe better for extracting equity, increasing liquidity and tax minimization by security substition, keeping deductable loans, depreciation benefits etc while putting capital in to franked and growth shares using GC discount and loss off setting. Where probably wont matter as performance will vary at different points in time.

 

Thank you…we are leaning towards option 1 at this stage

 

Considering the recent growth already in the areas (Rockingham etc) you may need to be ready for some less stellar growth, some plateau and some correction if it's a long term hold (10yrs plus). Yes the place is currently going gangbusters at the moment but the yield is already being squeezed by the increases and the market prices seem to be driven by FOMO more than actual true value. True value in the area was 6mths + ago and then reap the reward of this growth phase and probably exit. Not sure I'd be advising the location for a long term cash flow asset as it's traditiionally been quite volatile.

The circa $450k bracket is super competitive as it's popular with investors and FHOG so very prone to FOMO. Which can be good for short term growth but can lead to volatility as well.

At that price point I'd also consider Yanchep, Quinns, Merriwa, Clarkson and surrounds but it's budget level that gets you into some outer volatile suburbs that sometimes don't have quality tenants.

Alternatively Option 4 and look at the $600k price bracket in Perth which will get you a lot closer and quality asset which will appeal to better tenants. It will still likely have good yield.

 

Thank you for your suggestion…we are not that worried about the suburb we go with since usually we go with our BAs recommendation on that and usually go with a good deal , just wanted to make sure the strategy would be a right one.

 

i would really think hard about the final goal. sydney market is now going down hard so for 950k u might find a house in a relatively not too far suburb that might boom in next cycle.

i would also look into adelaide or FNQ. they both booming and had massive growth, but relatively to the rest are considered affordable with good yields.

 

What is FNQ?
Sydney is too risky …almost all predictions are pointing to a drop in prices in sydney and Melbourne …brisbane seems much better option in comparison especially buying in a rising market for long term capital growth …thanks for your perspective though …

 

I like the sound of options 1 and 2. Splitting up your budget across two properties allows you to diversify your risk and will likely lead to greater yields given the lower purchase price. I suppose the more important question is where to buy? I still see value in the areas you have mentioned, although, some of these areas have already seen significant growth.