First time investor seeking help in Brisbane

We are looking for buying our first investment property in Brisbane. I have found that it’s a huge research. I have couple of questions/doubts and just wondering what you guys think. I guess, my aim is to build some wealth and buy couple of investment properties in future. I am not quite sure what’s the right balance of positive gearing and capital gain should be.

1. For me, it looks like little old Brisbane CBD units are somewhat undervalued at the moment. While brand new units are expensive, there are some <10 year old units for fair prices. I have around $50K for the investment property, so the LMI would be less. Most of such small units 2BD/1BD are positive geared. But banks think they are in high risk as their time in the market is comparatively high. But apparently vacancy rate is not too bad in the CBD. When you go around 15KM away from Brisbane CBD still there are good old properties with good size of lands for around $450K. They are not quite positive geared, but good potential of capital gain (may be with some renovations). What you guys recommend in that regard?

2. I have noticed that there is 2.5% tax depreciation available for up to 40 year for properties built in after 1985. So, will I get that benefit for 30 years, if I purchase a 10 year old unit? Is there any difference between buying a new property or 10 years old property in that regard?

3. When getting a loan for the investment property what are the advantages of having both owner occupied home loan and IP loan in the same bank (other than offset benefits)?

 

I guess, my aim is to build some wealth and buy couple of investment properties in future. I am not quite sure what’s the right balance of positive gearing and capital gain should be.

In the mean time, I would be hungry to learn as much as I could from books, forum, networking. All essential for long term continued success imo.


1. For me, it looks like little old Brisbane CBD units are somewhat undervalued at the moment. While brand new units are expensive, there are some <10 year old units for fair prices. I have around $50K for the investment property, so the LMI would be less. Most of such small units 2BD/1BD are positive geared. But banks think they are in high risk as their time in the market is comparatively high. But apparently vacancy rate is not too bad in the CBD. When you go around 15KM away from Brisbane CBD still there are good old properties with good size of lands for around $450K. They are not quite positive geared, but good potential of capital gain (may be with some renovations). What you guys recommend in that regard?

I would be looking for a house, middle ring with scope to add value. I think that will have more chance for CG in the medium term than a unit near the CBD. Has to meet your own financial situation and goals of course. Just my opinion.


2. I have noticed that there is 2.5% tax depreciation available for up to 40 year for properties built in after 1985. So, will I get that benefit for 30 years, if I purchase a 10 year old unit? Is there any difference between buying a new property or 10 years old property in that regard?
Personally I wouldn't care about any of that. What I would want to guide my buying decision is what type of property, in what location, meeting my finance ability will give me the best chance of CG as well as the ability to hold it with a cashflow position that is acceptable to me.


3. When getting a loan for the investment property what are the advantages of having both owner occupied home loan and IP loan in the same bank (other than offset benefits)
A good broker will look at your situation, goals etc and find the best bank, rates, deal that meets your goals for this purchase and sets you up in a good position for future purchases.

just my 2 cents.

 

Hi,

My two cents:

1. Units/ apartments to be avoided at the moment because they are over values and even if you see potential, you might not see capital gains.
2. New property offers greater depriciation value and less maintenance.
Provided you build it or you have to pay premium for the newer build.
Older one's you pick lower than than the market price to get immediate gains.
Sometging with land content is always good.

3. You can negotiate roi.

Regards

 

Hi @Samj

Tread very carefully with Brisbane units - there are concerns regarding oversupply.

 

I wouldn't touch inner CBD units with a barge pole. But thats just me. Let the dust settle and then see what pickings are left.

 

A new appartment will give you greater deprecitation than a 10 year old one. The 2.5% pa is depreciation on the building itself, but there's a lot that it doesn't include such as fixtures and fittings (like carpet, blinds, stoves, etc). This is depreciated in a much shorter timeframe, all less than 10 years.

I think this is all irrelevant however. There's been quite of information suggesting that the Brisbane CBD (and other CBDs) are over supplied. I don't believe these locations would make a good investment in the foreseable future and the tax benefits won't make a difference to my opinion.

 

Thank you very much everyone!