Capital thread and/or rental yield for 2nd property

I bought my first property last October, just over 600k, rent is 380/week mortgage is about 1.7k/month. So should be a little negative geared after depreciation/fees are taken into account.

I'm starting to plan a second investment (time in the market etcetc). At the moment I probably won't have enough equity so this will be later this year or early next. Alternatively I can use cash but that will leave nothing in offset. My current borrowing capacity is maxed at around 500k without room for a future third property at my current income which is decent but rising about the rate of inflation

My two options:
1) buy a cheap (350k max) high yield as an income source, capital growth about 1-2% a year. The income might help find a third property???
2) buy in Frranston North or Werribee @low to mid 400's, should still be neutral/positive but will be much better capital growth than (1)

 

600k and 380 a week rent?? Not a great return so what was the reason for the purchase?

 

Capital growth. It's in Melbourne

 

Yeah ok

 

What is that $600K property worth today? I expect if you purchased in Melb you have made a minimum of 15% growth?

 

@MTR still waiting for you to reveal ur newcastle secrets lol...

 

Hell will freeze over before I reveal the location on a public forum as it is not my property, but I already told you that.. you know who you are....

Always happy to share the numbers on my personal deals, and there are plenty I have posted. including mymelb and Perth developments/projects, do a search.

What about you, Do you have any development projects to share???

 

No thats cool though that you look far afield. All the successful developers i know are buying and building in there own backyard no travel time required.

 

Haven't done a valuation. Growth in the suburb atm is 8.6% p.a and I purchased in October so 9 months

 

No i dont have any projects to share as of yet i am new to the game. I am kendrick lamar humble.

 

I chase rising/booming markets, that is one of my strategies

That is why I developed in Melb.

Perth is my backyard but that market tanked in 2014, I sold my developments prior to this. Developments make no sense tiday

USA been in this market since 2011 when it started rising, I started buying in 2011 still playing as prices still rising. We are also developing in this market

 

May be a good idea to access equity but first look at sales evidence over last 3 months

Not sure when Melb will peak, but market been hot for some time now

 

Tell me about it! Frankston North would have been good but getting quite expensive now

 

I know bery little sbout Frankstin, do s search

I would look at low end feeder stuff around 17 km to cbd and preferably a development site, add value in the future

 

Ideally yes! But all the potential development sites are getting snatched by developers at high prices

 

could be builders?? their margins are greater than developers therefore perhaps developing still makes sense.

 

I'd have a chat to a broker to map out the options available for you from a lending perspective. It's good to have a mix of cashflow + and capital growth properties in a portfolio to balance it out. You can have both CG and strong yields available, you just normally need to do some renovations.

 

It still has a way to go. It's a very intense market to buy into. Trying to buy there is like trying to buy in Hobart. Barely anything is on the market after a week and not many auctions.

 

I would go for option 2, there are some great buys not just in Werribee but surrounding suburbs. Get the CG in the mix too. Very important for long term portfolio construction.