Buying first IP, Need your expert advise.

Hi All,



I have been thinking on a couple of options to buy my first IP but unable to make up my mind and decide. Need help to finalising which particular investment option will reap more capital gains in future (approx. 15 years).



Option 1. Buy an old house with big land component (600 sqm +) and built a granny flat within 850K. Could you please share some suburbs name where I can look at, which may hold much better value in future (Anywhere around 1 hour away from Sydney CBD).


Option 2. Wait for another 8-10 months and save more, buy a land (500 sqm + ) and built two townhouses. Could you please share some suburbs name where I can look at, which may hold much better value in future (Anywhere around 1 hour away from Sydney CBD).



Option 3. Buy 1 house in Melbourne and 1 in Queensland (Within an hour from CBDs).

Which option among these three would be better in terms of capital gains ?

 

No-one here has a crystal ball - sorry it doesn't work like that. What does your research tell you? You don't seem to have specific suburbs in mind - 1 hour from Sydney - by rail or car? At what time of the day - peak or off-peak?
What makes you think anyone on an internet forum can predict the future 10-15 years out?

You're asking the wrong question/s.

How much money have you saved and what did the mortgage broker tell you that you could borrow from the bank? and what rental yield do you need to get a loan approved?

 

Take a step back and work out what the end goal/long term strategy is?

Once that has been nailed down with your team of Broker/Accountant/BA e.t.c, that will help find answer to your question!. Lot of questions to be asked to get to right answers tbh..

Cheers,

 

What Jazz said. A similar question has been asked elsewhere and it always comes back to making sure you are educated, have a strategy and have the right team to execute that strategy.

Let's assume for a moment you have done that and those are the 3 options you came up with. Building anything is very stressful and time consuming so for a first time investor, I would probably steer away from this.

How about a combination of 1 and 2? Wait until the end of the year and then have a look at option 1. You will probably have better leverage as the market falls a little bit further. Just be aware that resale value on blocks with granny flats can be affected. They're not for everyone.

- Andrew

 

Thanks much for yo response ! I'll look into this.

 

Thanks for your response, i'll research further on this.

 

All good..

 

Hi Sumit

As Propertunity and Jazz have pointed out, you need more stats and knowledge than asking questions at a broder level.

I will just go a step further to answer some of the questions so that it helps you do some sort of analysis. I dont recommend any of the options though.

Option 1 is blacktown-all cheaper suburbs in blacktown council, schofields (if you get lucky). However, you have to do a lot of due diligence to understand what sort of land you requjre to take granny approval.

Option 2: I am assuming same budget. But you have to double your budget to build two townhouses. Are you prepared to do that. You can target anywhere from westmead/ merrylands to schofields/ leppintgton.

Due diligence and numbers are key which even a pro cannot come up with. This is a risky option as well.

Option 3: I am biased on vic as I have my investments there but vic is also going through a correction phase. And to some extent i am aware of the numbers and markets so i am more comfortable.
Cannot comment on briss as it is not my preferred market.

Cannot comment on capital gains. Can speculate that deals at a certain price point and some areas in vic are still worth looking.
NSW should also start giving competitive deals in 6 months or so.

Regards

 

welcome to the forum @Sumit Sharma

you probably think you didn't get the answer you are after so far, that is normal. don't be disappointed.

your questions are like walking into a Supercheap Auto shop and ask the sales guy

"what should I buy?"

without knowing what car you drive, which model, which part, what you want to do with the car .....

the sales guy won't be able to answer your questions.

Think about what you want to achieve in what time frame, what resource you have, then formulate some specific target, then reach out to ppl for advice.

 

All the responses here are spot on. You really need to spend 6-12 months in this forum and reading books before you do anything.

The good news is that actually all your strategies are fairly sound. I am an advocate for land, I am an advocate for 2townhouse developments. That is a much more realistic goal then when people come on here with zero experience asking where they should build 4.
I also really like Melbourne and Brisbane to employ these strategies.

Again this is all just very general advice but if I were in your position.
Spend6-12 learning A LOT more! Your in the right place. Whilst your learning you will actually be making money because the Melbourne market is still cooling down. By the time your ready it will have hit the bottom.
Then look to purchase something on a good block of land to employ strategy 1 or 2.

For me personally it would be number 2 and on your budget provided by then I imagine some of the North West will be open. Areas such as Broadmeadows I believe to have huge long term upside.

I have no doubt that Melbourne will be the strongest performing market over the next 10 years.

 

If you decide on Option 1 then you can look at Quakers hill which suits your budget and requirements. 50 mins train ride to CBD and is very established suburb. Buy a old house with land component for 700-720k with granny flat potential. Build granny flat with 110-130k. You will get 400+ for a 2 bed granny flat in this area

 

Well done all.

I suppose I would ask, why are these your only options?

If I were you, I would research whether it makes sense to build granny flats (develop) or instead use the capital to just buy additional properties.

I think you will find it makes sense to accumulate as many good assets as you can first, do smaller superficial renovations, and then leave the granny flat building to later on.

Best to use your time buying more properties than enhancing the smaller number of properties that you have.

Sounds like you have some funds and need a strategy.

Thanks,
John