First IP Strategy Melbourne

Discussion in 'Investment Strategy' started by Triton, 17th Sep, 2017.

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  1. Triton

    Triton Well-Known Member

    Joined:
    8th Sep, 2017
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    Location:
    Vic
    Hi,

    Seeking some advise regarding my strategy:

    Current position:
    Have a townhouse (PPOR) in Melbourne bought 3 years ago for 520, valued by bank at 620, and mortgage remaining of 380K. I am looking to use the equity as a deposit for my next purchase (IP)
    Savings of 180K, and saving about 5K a month on average
    Combined annual pre-tax income of 180
    Both aged low 30s, bank is likely to lend close to 1 mill, but I am not comfortable with high level of debt.
    Have been thinking of the following strategies for my first IP:
    1. Buy a 3,1,1 or 3,2,1 villa unit (single level), within 40 min to city, for 500-600K.
    I can see a very high demand for these types of properties in good locations from downsizers. Also the rental yield will be about 3.5-4%. Some suburbs I am considering are Thomastown, Sunshine, Albion, Glenroy, maybe montmorency (probably over budget).
    2. Buy a older house with land in a less desirable suburb (Albion, St Albans, Epping, Lalor), would need at least 650K budget. If the market is flat in the medium-longer term, would be able to sub-divide.
    3. Wait another 6-12 months, see if the market declines a bit or stays flat. Will have more savings and would feel more comfortable borrowing more.

    Any purchase would be long terms options over 10 years. Would appreciate any feedback on the above?
     
  2. GetRIDof5CENTpiece

    GetRIDof5CENTpiece Well-Known Member

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    Hi and welcome. I would be leaning between 2 and 3. By that I mean a detached home but being patient to acquire.

    You need to narrow down your suburbs and monitor the market results... you may get a property passed in at auction for slightly less as the inner to middle ring has softened.

    As it is a long term investment and likely your last for a while you need to make it count.

    Are kids on the horizon... if so you need to plan for that period also and not be stuck as your next purchase at that $600-650k mark is going to be negative cash flow.

    Btw - congrats you're in a good position :)
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Your personal debt levels may benefit from and active debt recycling strategy rather than just looking at buy and hold resi

    Ta

    Rolf
     
  4. Triton

    Triton Well-Known Member

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    Thanks, yes, kids are on the horizon. Based on my calcs, negative cash flow should be manageable. The hard part is trying to predict which way the market will head in the next 6-12 months.
    The median prices in the suburbs I mentioned have shot up 20-30% in the last 12 months.
     
  5. Triton

    Triton Well-Known Member

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    Not familiar with this concept, how would it help?
     
  6. Gypsyblood

    Gypsyblood Well-Known Member

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    Melbourne
    I have personally done option 2. But it comes with maintenance costs.
     
  7. MTR

    MTR Well-Known Member

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    I would be watching the market closely and look at any opportunities that arise where you can add value, with a view of developing. I don't see the need to rush in.
    As has been mentioned we are already seeing some markets soften, booms don't last forever.

    MTR:)
     
    JL1 likes this.
  8. Triton

    Triton Well-Known Member

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    Thanks, looks like Brisbane presents better value. Another option to consider
     

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