QLD Around $1m to invest but too confused...

Hi Guys,

I can get a loan upto $1m to invest in property but I'm really really struggling to decide where and what to buy. I have been reading these forums since almost an year and have privately contacted few members as well. I'm totally confused as to how to choose a property to buy and how to decide what price to offer.

So thought of asking the nice people here, what would you buy if you have to invest this sort of money?

Any help will be much appreciated.

Thanks.

 

I think you are looking at it the wrong way

I could get 1m to invest, but that's irrelevant.

Work out your goal, and purchases required to get there. Then hunt.

 

My (obviously biassed) advice, since you have studied for 12 months and are no better off for it, would be to hire a BA and outsource it.

 

Everybody's goals, circumstances,risk profiles and strategies are different, so you could get 20 different answers from 20 different people, and maybe one of those people could be worth listening to if you really knew their true wisdom and experience.

We wouldn't bother buying anything for a mil, been saving for 5 years and can borrow close to 10 mil now.
Next purchase will definitely be commercial for us.

Anyway, keep learning as much as you can and keep looking for where you can get some sort of edge or advantage using your existing skills or circumstance and an opportunity will show up sooner or later.
Just be ready to make a move when that time comes and commit without hesitation.
That's why you got to do all your researching now so that you can be confident about your decisions in future and follow through.

 

I think my main issue is to decide what's the right price for the property and how to decide where to buy? I am ready to make a move...

I've missed on few offers so that have demoralised me a bit...

I have been looking at RP data and onthese etc for prices but they are not accurate guesses most of the times...

 

You mean you don't know how much you should spend on an IP? Have you thought about what kind of yield you want and what level of capital growth or projected? Since you can borrow up to 1 million dollars for an IP, you need to think a bit more, not just the price. You have a lot to read up first before you commit.

 

So there's this other thread called "First World Problems"...

anyway, it sounds like you've got pre-approval to spend or borrow up to $1M and you don't know where to start even after a year of reading here for a year or so.. You've got the yips

I'd suggest going with the SNAF (Sleep at Night Factor) and don't spend the whole million on your first purchase. Leverage amplifies gain AND pain. Maybe spend $450k now (save $50k for a reno when you're ready) and get familiar with the buying and negotiating process. then when you're ready you can go for #2 and you'll have your $1M portfolio.

As for where? Maybe stick local for your first purchase, plenty of info on Brisbane suburbs here.. pick something not on a busy road or too close to the rail, but close enough to good public transport, or schools or shopping centres etc..

Just pull the trigger on something for your first purchase, or you'll be posting back here this time next year asking the exact same thing

 

You need to work this stuff out for yourself really.
Too many variables.
Got to narrow it down a bit.
Will you be an active or passive investor?
Are you investing for the long or short term?

Someone on the forum reckons Tasmania is a good thing, what are your thoughts on Tasmania?

 

Please don't buy an IP for $1M. If you can borrow that, you can likely buy at least 2, and possibly 3 IP's.

Have a chat to an investment savvy broker and make a plan together to work out the best types of properties to look, at based on what you're hoping to achieve over the long term.

 

If I said jump off the harbour bridge would you do it? Thought not.

Don't ask random people on the internet what to do with $1m.

Please.

 

Some good comments already provided. Just a few brief points:

1. Just because you can doesn't mean you should. (as per @Bran & @Ace in the Hole comments)
2. Spending all your serviceability up front on one IP is not a wise idea. (as per @Jess Peletier comment)
3. Why do you even want to? What's your plan/goals?
4. Do you own your own home? Are you intending on Reinvesting? Will the IP ever be a PPOR?
5. Are you a high income earner? i.e. is negative gearing something you're seeking or do you want +ve cashflow?
6. How old are you? This may shape your strategy towards either CG or Cashflow or Super or....
7. In what entity do you intend to purchase? Own name, trust, joint etc....
8. Do you have a location preference at all? A preferred state at least?
9. Do you understand land tax issues & how that may affect a portfolio over the longer term?
10. What's the rush? If you can't answer such questions, why rush to get in?

$1M is a lot of money... especially if you invest it poorly....

Enjoy the journey

Indi

 

Think about the CGT if a $1mill IP doubles in price and he decides he wants to sell it. Could be hard to minimize tax.

 

@Pash81.. If u haven't made the necessary progress in 12 months, hire a BA and they can assist you in the above questions and more yo have a more focussed and strategic approach.
If your budget is a mil, iy would be worth spending a small amount of money on a BA.

 

What do you want this property to do for you?

Any limiting beliefs preventing you from taking action?

 

Thanks a lot for all the replies. To answer some of the questions above:

I do have a PPOR and two IPs . First IP was a townhouse in which I lived and second is also a free standing unit which I bought solely because it was cashflow positive. All 3 properties are on the Northside of Brisbane.

Now the town house and unit were only bought as I wasn't putting any money into them from my pocket but they haven't gone up in value much in last 3-4 years.

So I want to buy two houses with a block of land now.properties will be in joint name with my wife. We both are in mid 30s..

I do understand the concepts of cgt, land tax etc and gross family income is bit more than $200k a year, not sure weather this is high income earning or not. Also I can get mortgage with only 10% deposit without paying LMI.

I would like to buy the properties and hold them for long term without doing much to them. So I guess passive investments. Have around $150k saved to put as deposits towards buying properties.

Now the question of "rush". I'm not in any real rush but after reading all these forums I feel bit disappointed that I haven't bought anything in last 2 years although Iam able to buy 2-3 properties. So I feel kinda left behind...whereas people are buying lots of properties and the properties are appreciating quite nicely.

Now as I have said earlier the main issue and confusion I'm facing is that how to decide which area to buy in and how to decide weather the asking price is correct or not? Also now a days a lot of agents say "for sale" or "sale by negotiation" etc and it's even harder to decide what's the right price.

 

What do you want to achieve? Property is only a vehicle to get to your goals. We invested simply because we wanted a 'home' as the 40k wouldn't get us a home at 24 years of age when we started. So what is it you want property to do for you?

Clichéd question: What strategy - buy and hold? Development?

Figure out on paper your purchase critiera
- your negotiables and non negotiables in terms of...
1) buying price,
2) rental return,
3) house or unit,
4) block / complex size,
5) property condition (do you want set and forget)
6) the location you want or are you okay with buying something in the suburbia?

What's happening in the area? (fundamentals)
Where in the property clock is the area? (Look at rent returns and price gains over the last 5 to 10 years)

These are only some things to consider but you get the idea. This should help you determine where you could consider where to buy. People on this forum are buying all across Australia so there is no one way to skin the cat. Simply, it's how you want to approach your buying and your goal...which could to be maximise opportunity given it's becoming more difficult to access finance.

 

If you're not in a rush, don't pay too much attention to what other people are doing, run your own race.
Also don't feel like you are being left behind, as long as you are learning something everyday and have some sort of plans in place, you are progressing in one way or another.

 

Two comments:

1. Wealth creation is NOT a race. So, you can't be "left behind". Wealth creation is a journey where you set your own pace.

2. Read everything on PC (and the internet, for that matter) but believe NOTHING. There appears to be a lot of "knowledge, experience and advice" on here, but no-one has validated it as appropriate for you. Prior to reading posts on PC, put on your "glasses of skepticism".

 

Buy and hold long term