First Investment property, Melbourne or Brisbane

Hi All,

First time poster here, Im a 22 year old from Melbourne looking to purchase my first investment property early to mid this year. My goal in real estate is to scale and own 6-7 properties by the time im 30 and try to replace a chunk of my income in a grander goal of Financial independence (Don't know whether this is a tad optimistic but im going to give it a go). I've saved up 100k to use to get the ball rolling, i'm just a little uncertain the route i should take and would appreciate some opinions. I also earn around 70k per year (Full time work)

Being from Melbourne, i initially started looking local and was set on Melbourne's western suburbs, the likes of sunshine west, Ardeer and St albans, Close to train stations and infrastructure and on at 600m2+ blocks to allow for future developments. From my research id be looking at around 600-650k to meet this criteria, which would obviously not cash flow and require money from my income and hurt serviceability.

After doing some more research i discovered Brisbane as an interesting alternative. What makes Brisbane sound lucrative to me is that i could potentially snag a property 10-12 kms from the CBD for under 400-500k, I have been looking at Chermside and Zilmere Specifically. The lower entry point and the fact that the property would most likely at least cover its on expenses and maybe even cash flow a little has swayed my interest up north. The hype around Brisbane being poised as the next state to boom has me interested as well.

So im ultimately looking for a good area to purchase my first IP that is set for some growth in order to allow me to be able to buy again rather soon and not hinder my serviceability. Any other suggestions/strategies would be greatly appreciated as well.

Thanks

 

Have you actually sat down with a mortgage broker to map out how much you can borrow depending on the yield?

 

Hey, I have not met with a mortgage broker as yet, ive only used online calculators to work out my borrowing capacity based on a few scenarios and worked off that. Sorry if i sound naive but should meeting with a mortage broker be done first?

 

Would definitely suggest meeting with a good mortgage broker and go through your plan before buying. Actually, before looking.

 

If this is your goal then you should definitely take @Trainee's advice because going down the wrong path with your financing early on will impact you ability to grow a large portfolio. There are a number of mortgage brokers on here who specialise in helping investors and whose expertise would be very valuable to you.

Be sure to read through these threads too
Loans & Mortgage Brokers

 

Those online calculators you've been using are NOT an indicator of how much you can borrow and are basically useless apart from telling you how much your monthly repayments will be.Suggest you speak to a mortgage broker ASAP - it's important to map out your borrowing structure and lender selection order if you're looking to build a portfolio of properties.

 

Congrats on getting started and saving up such a sizable deposit. Talk to a broker. But continue to educate yourself. There's no rush.

 

Any lending is going to hinder future serviceability no matter which way you cut it, even if you're lucky enough to get a property that "cash flows" ie. where the rental income covers ALL expenses and loan repayments etc. the fact that you have a debt against the property means your serviceability is going to be worse than it was prior to the purchase.

Have a bit of a read through the forums, lots of good information on here

 

Ideally you want both CF and CG, Brisbane sounds like a better option of the two you have mentioned.