NSW First time investor question

Hello! Long time reader, first time poster.

I'd like to invest in my first property this year and would like to gauge some advice from more seasoned property investors.

My ultimate goal is to retire early (don't really want to be working into my 60s, currently 30) and be financially free, enjoy life and travel.

I think I would like to get a CF positive, or neutrally geared, or slightly negative geared, but gain the NG tax benefits.

Just a bit of background, I currently make a $90k salary, before tax, and I will be buying the property on my own (single female). I have saved up approx a bit less than $70k, but my parents are also willing to help out, so probably $100k in total.

I'm starting to look into areas like Liverpool (Sydney), and Richmond (Melbourne), for 1-2 br units that are more aligned with my price range of $350-400kish.

My dilemma is Liverpool can be a rough area (I live a few suburbs away) and according to some news reports, values are likely to drop this year and also bad tenants could be an issue.

Richmond seems like a great gentrified area in Melb, and I think it will perform better in terms of capital growth over the long term compared to Liverpool. However I wouldn't have the first clue about investing in another state. It's quite daunting and I've heard many horror stories about bad property managers taking advantage of interstate clients.

I'd just like some feedback about whether I am heading in the right direction with the areas I've chosen or whether you'd approach property investing differently in terms of my goals?

 

Hello and welcome.

Great time to get started, slow and steady approach is the way to go IMO. Good job on saving a nice deposit.

Liverpool has a lot of new stock been built at the moment from what I've seen and Sydney just has had a massive upswing which will cool at some time - a lot of people are picking this year or next. The issue here is if you don't see CG for a long time you won't generate any equity to get your next property for quite some time, no one has a crystal ball however.
I can't say much about Richmond specifically, if you know it is gentrifying then that is a good thing for long term CG. Buying well placed properties in gentrifying areas of the major capitals is a strategy that seems to work for lots of people.

The better cash flow you can get the better. With all the lending changes a $90k salary will run out of serviceability very quickly, more so if you buy negatively geared.

Buying interstate is more of a mental barrier than anything else. Things can go wrong in places that are in the suburb you live in. If you do your research and have good people managing it buying interstate is no more or less risky. If you invest long term you are going to face some challenges no matter where you buy, its just a numbers game before you get a bad tenant or some repairs are required. The trick is to be prepared and don't let a minor setback end your investment journey.

Finally I'd advise looking at developing a more detailed plan. What level of income do you require to retire? From this you can work out how many properties you require and how long it will take. Will you need to diversify into other asset classes? Or sell down some stock.
You don't need to finish your plan to get started though! As you learn more it will develop with your knowledge

 

Hey there, welcome.

You're in a great position to start... yes it's hard but well worth the effort... I've got similar circumstances to you (age, salary, single income etc) started my 'journey' a few years ago (shire boy).

Have you considered areas slightly closer to the city such as Bankstown?

Agree with you the market seems a bit wobbly... but in my mind that will give you more room to negotiate a deal. Near impossible to do the past couple of years with everyone paying over the odds.

Best of luck

 

Agree with Hodor about the oversupply in Liverpool. Drove past recently. There are still huge developments going up. A bit of a worry for all the OTP investors seeing as the Sydney market has turned.
Canterbury Bankstown area saw the highest drop in prices (5.3%) throughout Sydney in January. So I'd be careful buying in either of these areas in the current market. Just something to think about.

 

Hang around for a while, you will read good advice and knowledge here. Research about property cycle, try to understand where is your area/suburb atm. Also research what is risk management/cashflow/buffer, to keep you game in the long run.

Welcome to the jungle..

 

Hello,

Thanks for all the great advice, you have really given me some things to think about.

I was actually looking around the Bankstown area as well but found it a bit more difficult to find 2br properties in my price range (less than 400k).

I was just wondering, for interstate buying, would you recommend using a buyer's agent? I'm not sure how it would work otherwise.

Thanks in advance!

 

You could...It can be a good way to learn the ropes.
Alternatively, ask a lot of questions here. Fly up on Saturdays for inspections and build rapport with agents.