VIC Here's $550k - how would you invest it?

No it's not free money, you still have to pay interest on it to the back at current market rates

In all seriousness though, if the bank were to lend you this amount to purchase an IP in Victoria right now:

- what would you buy (land, house, unit, apartment, H&L etc)
- where would you buy (suburb)
- what would your strategy be (buy & hold, renovate, develop etc)

With a wide array of members on here with different strategies I'm curious to see what people would do.

Cheers,
Ash

 

For 550k I would be looking at the fundamentals in Melbourne.

Stick to preferably a house, existing, good amenities like hospitals, transport, schools, shops and try not to buy secondary locations such as busy roads, near power lines, easements etc.

Suburbs in that range are Lalor, Epping, Laverton, Deer Park, Werribee, Broadmeadows, Carrum downs, Dandenong, Frankston, Frankston North

Don't know how much longer Melbourne will grow so look for something to add value: renovate or develop if that's what you are after.

 

If you were to offer me 550k at 4.8%, I'd gladly take it and buy three properties in Elizabeth.

 

Brisbane for the win
Outer Melbourne if you are ok to NG
Adelaide for a slower burn
Hobart if you're quick.
Perth if you're a gambler
Sydney if you're a fool.

 

Oh , you said Vic. My bad.

 

I bought a 2 bed villa in Pascoe Vale South Earlier this year for circa that price as . I plan on re-doing the kitchen after 12 months as it was very old. it is currently grossing ~$-50pw.

I am hoping the add value can at the very least bring it to a neutral cash position.

 

I am thinking in that location growth will be as good as (or better than) something further out with more land like 20-25km out west or north with 600sqm which is around the same price. Only downside is no subdivision potential, but for those of us not interested in development who cares.

It actually sounds like an awesome purchase.
Much lower risk with the higher yield also.

I followed a lot of what I heard on PC where people said land land land and went for the 600sq, and I am happy with my purchase, but my next one will have to be a higher yielding one and I really think something like this is ideal with what I think will be great growth to go with the higher yield.

Curious to hear opinions from others who may disagree.

 

Werribee - H&L (as a new investor - you will learn heaps). or just small block

Strategy all depends on what you want to do. There are ppl who has 800K in cash but just want to sit at home and not do too much and get the PM to do the work (no devs) - and bought 2 apartments racking in 100K per year rental. Or some who purchase land 700Sqm and look to get plans and permits to do 10 Townhouses. It all depends on your appetite for risk.

 

What would you suggest for someone wanting to "sit at home and not do too much" given the 550k OP quoted?

 

@Anthony Brew Go for the suburbs that is likely to grow - west is one area. for 550K you could go altona, pt cook or go lower end Werribee.

 

More or less my exact thoughts at this stage. Buy in an area with good fundamentals and something which has the option to develop in the future. Been looking into the North/West in particular and looks like Lalor is now out of the picture at that price. I looked into Laverton also recently and lots of negative things were said on PC about the demographics of the area.
I seem to find myself looking into suburbs with good public transport given there seems to be growth in the 15-25km ring amongst individuals working in the CBD.

 

Interesting. Excuse my ignorance but where is Elizabeth? I'm guessing its rural given that price would buy 3 properties. Also why Elizabeth and what would your strategy be?

 

That does seem to be the market sentiment at the moment so I see where you're coming from. At the same time I do feel like while Melb overall might not see much CG in the next few years (median price for the state overall), there will definitely be suburbs that do continue to experience solid growth. Or at least that's what I'm praying for lol

 

It's about 20-25km north of Adelaide, so not really regional. The great thing about it is that each one of those three properties would give me at least $1,000/year in my back pocket after all costs.
I don't see a high likelihood of significant capital gains anywhere in the short to medium term, so you might as well go for yield. While $3,000/year isn't much, it's better than nothing and will increase with time. If rents go up by 10%, your profit doubles (roughly). So buy 20 of those and wait a decade or two and you'll be able to retire on it.

That's my extremely boring strategy. I've also got capital properties that I want to develop in the future, but right now, cash is king for me, especially if rates continue to rise.

 

Agree with you both. Hadfield was actually one of the areas I looked into however can only afford a unit there. So the internal debate I had was a unit there VS a house with more land say 20-25 km's from the CBD. I think in the current climate the latter option is the one I prefer as it will allow me to manufacture some equity rather than entirely banking on CG of the suburb given we are possibly towards the peak of the market

 

What are your thoughts regarding the supply of land available in the Werribee and the current infrastructure (roads/traffic situation in particular). I was also looking into the area and those are the 2 main factors which seem to deter me.

I think a H&L will definitely be something I look into at some point, been reading lots of posts by yourself and @sash who have done very well.

Agree about your point on strategy. As I'm very early on in my investing career I am in the accumulation phase so trying to maximise my equity as quickly as possible while my risk appetite is higher than it probably will be in a few years time. Hence I'm really looking for a combination of CG along with something that has development potential as I think you have noticed from my posts (still need to reply to your post re. minimum garden requirements)

 

When you say Altona are you referring to a unit/townhouse? I know $550k could probably buy a house in Laverton but noticed surrounding suburbs such as Altona and Altona Meadows are a bit more expensive. What are your thoughts on Hoppers?

 

Id be looking at some holiday/weekender areas that havnt seen any growth in the last few years
These areas tend to grow just as well if not better than your outer suburbs and you would be getting in without having missed any substantial gains
Definately not the only place i would consider but we own on phillip island and the stock on market is coming down quite quickly now after 8 years of treading water
Population up around 20% in last 5 years too...

 

Hi

I love Phillip Island.

Do you mean the amount of stock available for sale at this point in time has reduced or the asking price of properties that are for sale is coming down in price?

Regards,

alicudi

 

Stock has reduced a lot
The house and land packGes are about 75% sold - its been an 8 year process and in my Opinion the last 25% will fly out in the next 6 - 12 months
Cheap estsblished houses have decreased in stock.
You can still.get a 3 bed on 600sqm for 350k but i think the starting prices will be 400k within 6 months.
You could get the 350k houses for 300k, 12 months ago
We are about to put a house on the market at red rocks (renno and subdivide) so have been watching the market very closely.
I think we are selling well before the boom hits but we have another block so its no biggy