High Rental Yield Property #3, Debt Consolidation / Cashflow

Evening All,

Need advice on a 3rd IP that can reduce debt and bring some extra coins into the household each week. Budget is around 600-700k. Open to all suggestions, have been considering Darwin / Palmerston Greater Regions, Perth, Tas, Adelaide. Darwin would be a bonus as it will be in my parnters name, and could take advantage of the FHOG, as we live in this region and could potentially turn it inot a IP later on.

To sum up would like some upside in terms of capital growth for the medium - long term, but the priamary focus would be the rental yield to round out my small portfolio as i move into debt consolidation.

IP 1 - QLD, Gold Coast, Robina, 1B unit ->
Valued @ 460,000, rents @ 500 p/w
Loan amount @ 363,806
LVR @ 79.7

IP 2 - VIC, Geelong, Charlemont / Armstrong Creek, 4,2,2 / 313m2 -> (Deposit down, Land titled Q3 2022, Finished around mid 2023.
Valued @ 560,000, rents @ 480 p/w
Loan amount: 412,194
LVR @ 72.8

IP 3 - Suggestions?

Wouldnt be aposed to some kind of dual occupancy stratergy aswell, if that could work in this kind of budget.

Cheers Guys.

 

Bringing any meaningful income into your portfolio will not be achieved by investing in any of the places you listed above

I have always been big on cash flow.but realistically right now its all about making capital gains with the money splashing around

Just buy a house in Perth , not in a new estate, on a 600sqm block or similar
No risk, potentially great reward
Everything else you are into is medium risk , low reward-average reward

 

What is debt consolidation here and why?

 

My thoughts as well.

How is a third IP going to reduce debt?

Sheesh, if you don't have a PPOR, then why not buy local. From what I've heard there's a shortage of rentals in Darwin, so makes perfect sense to buy something to live in.

 

With the changes the way APRA are stepping in with the loans are approved with debt-to-income ratios to above 6, aswell as the fact i've proably hit the servacilbilty wall for the forseeable future with myself and partners income (around 120-130k) High cash flow property would give me the ability to make extra repayments to pull out later, or stockpile more cash to pay for the next property.

 

Sheesh, if you don't have a PPOR, then why not buy local. From what I've heard there's a shortage of rentals in Darwin, so makes perfect sense to buy something to live in.[/QUOTE]

I'm with the defence force, so it defeintely makes more sense for me to rentvest. As the subisidied housing benefits im currently getting, far outweigh benfits of having a PPOR. Defenitely not opposed to the idea of living here in Darwin, but hasnt exactly performed set the world on fire the past 15 - 20 yrs.

 

Alot of people mentioning Perth, which areas would you consider? Haven't done any research in WA suburbs yet

 

I've also mentioned Perth, but have done zero diligence on the area as I'm not currently buying.

Just do what a lot of us oldies would do if we were actually going to buy something. RE.com will give you the basics, like finding suburbs that may be in the right price bracket, and also rental yields. Then move on from there with other things that are important to you.

 

bump

 

Darwin can totally work but you have to be so, so careful when buying. It's my hood and I'm doing OK. The yield is mind-blowing, so yay - but historically the capital growth has been hit or miss. It's either boom or bust.

I reckon the best way to buy in Darwin is to buy a cheap PPOR, do it up and rent it out when you're ready. Buying here is often cheaper than renting and if the bottom falls out of the market...you still have somewhere to live!

However, If you're in defence - the rental incentives probably make that strategy the wrong one for you.

I'd keep reading the forum religiously for a few months. There's lots of great ideas on here and lots of smart people (way, waaay smarter than me).

Good luck!

 

Depends on the budget but you really want to get into Tier 2 suburbs with School Catchment such as Willetton, Dalkeith OR anywhere along the beach if you have a higher budget.
My suggestion is to look into those owner-occupiers suburbs as they tend to have higher and stable demand.
Just my opinion, hope this help

 

You might consider purchasing your 3rd investment with more upside potential other than rental income since your borrowing capacity would be capped and it's going to be hard to purchase more in the future unless your income is going to increase and the current rentals kept staying positive.
Just y opinion, hope this helps

 

We were considering Darwin but the margin of safety has been reduced in the past 12 months. Good luck. We settled for Townsville for a PPOR.

 

Yeh im looking @ Muirhead, Lyons. Up in there air about towards Palmerston way, higher crime rate? Zuccoli, Bellamack, Johnston. Willl do some research on these ones. See how it goes

 

Cheers Mate, got a place to start. I've read some suburbs in Perth has a high investor to owner-occupier ratio. 30% According to 2016 census, likely to have increased more since then.

 

Ok so an issue i think you have is that you are targeting only new builds?
Yes a lot have made a bucket on new builds but these people are more like traders than investors. They also have very good timing and an ability to read when a market is moving.

Number 1 principle in real estate is land appreciates, get your head around that and reasses your options

Based on your portfolio and the likelihood of being maxed out after your next purchase i would be looking at buying a very big parcel of labd with a rentable house.
In 5-10 years you will be laughing and it will probably pay for your future PPOR
Think of it like this, a huge block of land will give you some short term pain but one day you may be able to develop it and achieve 2-4 property sales from it.
On a personal note we purchased in redlands (brisbane) about 8 years ago for 370k, 1400sqm block. Over the next year and a half we will probably realise about 1.6m after investing another 350k
Had we bought a townhouse for say 300k we might be lucky to fetch 450-470now

 

Personally i dont buy into the only invest in blue chip areas rubbish. I like to look for cheaper lifestyle areas, whether it be near the sea , hills, wherever,
When a city booms everything gos nuts even commission areas
Just look for areas in your budget with a rental yield you can accept and narrow down from there by looking at what properties may be in more desirable locations, such as close to shops, schools, beach, parks etc

 

Buying new builds in Darwin is super risky hey. You get smaller land blocks and the houses really aren't suitable for the tropics. Might take a long while to get your money back.

Old is gold up here.

 

Definitely agree with this, land appreciates and buildings deppreciate. Starting to learn and get my head around this.

From the research I've done, Sourcing House and Land packages, either combined, or indivually is the way to go. Yeh got a nice bit of build up equity after settlement and construction is done, with the lesser stamp duty costs. Combining that with the deprication benefits, particulay in the first 5 years makes seems pretty good for me.

Granted i still want to buy these H & L's that are in good lifestyle locations, with the economic fundamentals to go with it, that will hopefully drive captial growth, with good rental yields. Staying away from the endless supply of land locations / estates.

Good thing about the established market is the blocks are usually way bigger. Can defeintely look into this and see if the pro's of having a big block, which potentially be sub-divided later, are better than benefits of H & L packages all inclusive.

Back to my computer screen.

 

Yea i can never see myself buying in places like Sydney, Melbourne for these reasons. In terms of diserable locations i wonder how North QLD would go. Places liike Cairns, Townsville, Palm Cove are still affordable and offer plenty of lifestyle through beaches, schools & ammenities close-by. I'm really keen on these areas but i've read the insurance premiums are through the roof and kill a bit of the rental yields that you make