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If you had 900K to purchase ....WHERE?

Discussion in 'Where to Buy' started by Pipeclay, 11th Oct, 2016.

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  1. Pipeclay

    Pipeclay Active Member

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    I have been given the go ahead to be able to purchase another IP with the max value of 900K from my mortgage broker

    Servicing shouldn't be a major problem due to a relatively high income so the property would be for the following reasons.

    1. Looking at maximum capital growth over 15-20 year period. Short fall on short to medium term cashflow can be covered by salary.

    2. Prefer not in QLD due to land tax issues with my other IPs there but if it would outshine the other states OK.

    3. Needs to be NOT OTP/H&L/High Rise etc etc. So existing stock. Needs to be inner ring (not CBD) of capital city.

    4. I am based in Tasmania so likely to be looking "internationally". ;)

    My leaning is towards inner west Melbourne cottage due to the predicted large population growth. Any other ideas/strong opinions.

    Cheers
     
    Colin Rice likes this.
  2. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    I would be looking for something that you can "add value" to now or down the track via subdivision so you can create equity and not reliant on the current market conditions. If the markets already in a growth phase then thats the double wammy.

    Close to transport links, popular school district, medical, shopping and lifestyle precincts and you should be right long term.

    I have heard Melbourne may be peaking so might want to consider another "international" destination :)
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Do you own anything in Hobart? Because Hobart is one of the strongest performing cities atm.
     
  5. Pipeclay

    Pipeclay Active Member

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    Yet to buy in Hobart. Yep very tight here on the ground. I am looking at the 15 year growth + outlook and there may be small pockets of Hobart that may compete but would consider the bigger cities to provide better long term opportunities. ? Thoughts
     
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  6. Tonibell

    Tonibell Well-Known Member

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    For me, a little block of units in Hobart that are in need of an upgrade.

    Should get good cash flow, capital gain and value add. Even better if you can strata later.

    There a couple like this on the market now.
     
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  7. Pipeclay

    Pipeclay Active Member

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    What suburb?
     
  8. Tonibell

    Tonibell Well-Known Member

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    I lived in Hobart for a couple of years so have my own preferred suburbs there - but don't own anything there.

    This one at West Moonah is an example of the type of thing I was referring to.
    Buy at the right price and you will do well.

    2 Tenth Avenue West Moonah Tas 7009 - Unitblock for Sale #122821150 - realestate.com.au

    We have something similar to this in Brisbane and all our investments are multi occupancy - so good cash flow.
     
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  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    Probably scraping the bottom of the barrel with tenant quality in something like that, not the kinda income I'd like to base my retirement on. If it were me with that budget, I'd be looking into houses in inner city ring in mainland capitals.
     
  10. Pipeclay

    Pipeclay Active Member

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    Yes
    Really looking at capital growth - and that in my limited experience needs a capital city. I don't have any insight or understanding of the Adelaide market but happy to start looking/learning.
     
  11. Tonibell

    Tonibell Well-Known Member

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    Definitely not bottom of the barrel - probably just average. The suggestion was more because the OP is based in Hobart and that the cycle is OK for that area.

    If I was looking in Hobart then that is the type of property I'd be after - but I haven't had a look there.
     
  12. Big Will

    Big Will Well-Known Member

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    Hi @Pipeclay,

    I understand your predicament of the QLD properties shame about how they have worked out for you so far.

    My mentor and I would only consider Sydney, Melbourne, Brisbane. As you have a land tax issue it could rule out Brisbane although much easier to service loans from there as you will typically get 4-4.5% yield in Brisbane compared to 3-3.5% in Melbourne and around 3% for Sydney. This make a big difference when looking at 900k purchase and 80 LVR, which could be a 10k difference a year.

    If looking in Melbourne we have just had very strong growth recently, if you are looking at buying and holding for long term 15-20 years you will still make money but no one knows where the top is and when it will go back so you need to make the call if you think it has topped or not. If you were to purchase in Melbourne I would consider something like @Colin Rice wrote. That being future potential, room to add value and close to infrastructure, might cost you more now but it will be cheaper today than in 10 years time. I've seen 600m2 blocks in Preston sell for 1.25M with an original 3/1 house and saw in Reservoir sell for 1.7M or 1.8M for 3/1/1 on 600m2. Given they were well positioned it was their land and potential that made them so valuable.

    Sydney I don't know this market to well, I cant afford to buy there but if Sydney is still going up then it would have to be reaching its peak soon which means another 6 months of good times perhaps in Melbourne.

    I am more across Melbourne (live here) and Brisbane (grew up) but little knowledge of Sydney so I can give you a full picture.

    Best of luck!
     
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  13. Pipeclay

    Pipeclay Active Member

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    Thanks everyone,

    Looking looking. I'll probably pull the trigger in the next 3 months or so and will let people know.
     
  14. Big Will

    Big Will Well-Known Member

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    If considering next year I would be more looking at Brisbane than Melbourne personally but you do your own DD and pick which is right.
     
  15. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    +1. (inner Adelaide suburbs in general)

    I would be trying to avoid the areas already up 20% over the last year or so, I'd likely look inner west or north, else the inner adjacent suburbs of East/South to get the secondary flow on.

    Would likely be looking at 600-700k for CBD adjacent character properties.
     
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  16. JDP1

    JDP1 Well-Known Member

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    Either Mel (likely inner west?) as you say or blue chip in Brisbane would be my picks with 900k. If you can get better than West Mel for that money, I'd consider that as well.
     
  17. Nlang

    Nlang Active Member

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    I'm another one for Adelaide
     
  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Not at all - that's a lovely block of flats for Tassie. Maybe a bit expensive, but very nice on the whole.
    Most of the dodgy ones would have Besser brick internal walls.
     
  19. Tonibell

    Tonibell Well-Known Member

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    Convinced myself that this was worth a second look.

    Unfortunately it got snapped up at $740K which was just a tad more than I wanted to pay.

    Good buying I think - I wondered if I'd shot myself in the foot and someone from PC got in first.
     
  20. Brady

    Brady Well-Known Member

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    +2 (inner Adelaide suburbs in general)

    Rostrevor/Tranmere - might even be able to pick up 2. Pending what rent and equity/cash the broker based the approval on.

    Or even just buy one now and hold off for a period of time until you're ready to buy again

    If $900k is your MAX I wouldn't want to be buying at that unless you don't want to buy again or know of something in your financial position that is going to allow to you to purchase again.