This is my first post but I have been a long time stalker and feel a little overwhelmed with all the detail. I'm ready to purchase my first IP and am struggling with how to start. I have 580K saved (partly due to sale of previous home), earn about 250K, have 3 kids. I have no PPOR currently as I have housing provided with my work and I live remote. I am thinking of buying in Melbourne (I know, I can hear the protests!) purely as I know it reasonably well and feel I need some confidence before embarking interstate to a regions unfamiliar (I can hear the protests again!! Ha! Ideally I think i should get connected with a BA and sort out a proper strategy first before buying, but I have seen an apartment in North Fitzroy that I am tossing up. My VERY basic thoughts on strategy for now is to try and buy a few properties reasonably quickly and hold them, but I have not worked out anything more specific than that (this is open for opinions!) I have read so much about land content being the key to capital growth and that apartments are probably poor choices, especially in the current market. BUT, it is in inner Melbourne excellent public transport, has 3BR of which there is very limited stock as most apartments are 2BR. It is in a low rise development, but has maybe 80-100 apartments. I "think" over a long period 10-15yrs it would be a good asset (purely due to location and 3BR) but am doing my head in wondering if its better considering property with land, perhaps in the western suburbs instead.... my concern with this is that if things are at/close to peak (and may go flat for a while) to hold a house, with a lower yield may make it harder to get more properties. I think I probably just need to cool my jets, not rush, get professional advice and move from there but I would really appreciate your thoughts. TIA
80-100 is a LOW rise? When I think small block I think six-pack. Ease into it. Your at least in your 30s or even 40s. You dont have investments. Ask why. Read books, put together a plan.
Don't think, check what 80-100 unit block apartments have done in the past in that suburb, what growth they had, say 10-30 years, although I doubt they existed. Stay away from such large complexes, what will make your apartment unique to others, just because it is 3 bed, what if the demographic for that suburb is 2 Bed preferred? If I was to buy I wouldn't go past 12 in a block (depends which state too), no lifts, no gyms, no pools, must be in great location, proximity to most work and amenities like beach for lifestyle, limited land supply surrounding or height restrictions to build, less common walls, checkout layout does not look out onto traffic or other buyers objections, what is the area do people earn above average income, can you add value down the track with renovation, does it appeal to owner occupiers (I doubt I would like to live in a complex of 80-100), so many things to consider. I honestly think you should read some books to understand it is not what you think, it is rather what the demographic in that area require, what will make your apartment unique to others, in tough times will there be an exit strategy, imagine 40% apartments being sold at the same time... Educate yourself more and then only buy a property with some of these parameters, with a twist?
Personally I wouldn't touch a 100 unit complex. There are many downsides and risks ( already documented here and in many books), not to mention often exorbitant strata.
Should I have had my time again, I'd have bought two places in a regional (geelong) rather than the one apartment in Sydney Having two cheaper IP's reduces risk of vacancy/no income You also need to consider WHEN you finish working remotely where you might want to live, as you may choose to make the IP your PPOR to take advantage of concessions
Thanks for your input. By low rise, I mean 3-4 stories, all apartments centered round a pool, it actually doesn't look as big as it sounds weirdly. I think i knew this was not a wise choice already, I just kept thinking that location was pretty hard to beat, good yield and price point was more affordable than other 3BR in the area as the building is 20 years old. Stoffo, what do you mean when you say taking advantage of concessions when I leave remote? I'm not sure I understand.
Chez, the light is hitting your eyeballs but youre not really seeing. See 4 stories and think lift. See a pool and think that will need repairs. Doesnt matter how big it 'looks'. 100 units is a hundred votes on the body corp no matter how it looks.
@Terry_w would explain it better Or check out his tax tips My understanding is you have the opportunity to claim the absent rule, by eventually moving into your IP and making it your PPOR there are numerous tax concessions to be had. Then you could use the equity to buy another IP down the track. (Best check though, it's been a while/I could be on the wrong track)
