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VIC Is positive cash flow possible in wider Melbourne or only regional Victoria?

Discussion in 'Where to Buy' started by Pins, 17th Aug, 2015.

  1. Pins

    Pins Well-Known Member

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    Hi all,

    Starting to consider the state and location for my next purchase (Eastern Seaboard). Having just purchased a property that's negatively geared, I would like to purchase a neutral or slightly cash flow +ve property. And of course I want CG as well :)

    Seems pretty tough to find anywhere in greater Melbourne above 4-4.5% yield. Obviously different in VIC regional areas such as Ballarat etc but at this stage I would prefer to buy in one of the cap cities.

    Should I discount Melbourne?
     
  2. Bayview

    Bayview Well-Known Member

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    CFP in metro/wider Melb has hardly ever been possible unless you chuck a massive whack of cash in when purchasing.

    That cuts our most would-be property tycoons starting out.

    Unless of course you earn a couple a hunge per year at work...but then you don't need IP's then.

    The only way to get near it for most folks (on average wage and limited wealth) is to maximise all the factors;

    1. Buy low (only works in a dead market, or start of a boom)
    2. Great location (hard to do point 1 because everyone wants these properties)
    3. Maximise depreciation (newer builds with less land and more building)
    4. Reno to increase rents (very hard to do unless the property is terrible to begin with. In reality; the increase will probaly not cover the reno costs). Do basic and cheap reno - this will get a tenant, but not necessarily a significant increase.
    5. Rapid debt reduction to increase yield (and equity)
     
    Last edited: 18th Aug, 2015
  3. juzzy

    juzzy Well-Known Member

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    You may find something in Melton.

    Not sure what CG prospects are though.
     
  4. Pins

    Pins Well-Known Member

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    Not sure why you wouldn't need IPs with an income of 200k per year?
     
  5. Bayview

    Bayview Well-Known Member

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    It was a glib statement. But you know what I mean;

    Only if you had no/little financial intelligence and/or money management skills would you need IP's/shares etc to supplement your opportunity to build enough wealth from your wage.

    It also depends on how rich you want to be and/or income stream you wish to have, I guess.

    It would take a very long time to replace a $200k wage with pure IP income after acquisition phase, wait for CG, sell off some of the portfolio to eliminate debt and live off the remaining IP rent.

    If you could earn $200k per year, but only lived the lifestyle of the folks on average wage, (or even a little bit more) and were able to keep that job until retirement, you would be wealthy enough to retire without being a pensioner just on that.

    The trick of course is to not start living the $200k lifestyle, and keep that job until retirement.

    The IP's would be the cream on top.

    Folks on an average wage need the IP's to have any hope at all of keeping up with the $200k folks.
     
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  6. Jamie_Monkey

    Jamie_Monkey Member

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  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    If you build your own you probably improve your chances.
     
  8. 2FAST4U

    2FAST4U Well-Known Member

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    If you bought something under market value in Broadmeadows /Campbellfield you would be close to neutral and only a couple of years away from being positive (if rates stay low).
     
  9. adrian_christian

    adrian_christian Well-Known Member

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  10. Pins

    Pins Well-Known Member

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    in Sydney I have an inner east apartment that's furnished and positive by about 5k a year. Unfortunately don't feel quite so enthusiastic about doing the same thing in melbourne!
     
  11. Soul

    Soul Well-Known Member

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    Have you considered Adelaide.
     
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  12. Pins

    Pins Well-Known Member

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    Nope. Would look at QLD ahead of SA with state of economy but keen to explore Melb as an option.
     
    MTR likes this.
  13. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    This would be fairly close to cash flow positive (depends on rates and body corp):

    http://www.realestate.com.au/property-apartment-vic-mitcham-119884553

    I should point out that these apartments have barely moved in value since they were built a few years ago. The rest of the area has seen tremendous growth. The problem is apartments in Mitcham are very far removed from what the rest of the area is. If you want to live in a small apartment, you'd probably choose somewhere closer to the CBD.

    Personally I wouldn't be buying this.
     
    Last edited: 19th Aug, 2015
    Chrispy likes this.
  14. Soul

    Soul Well-Known Member

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    I cannot talk about QLD, But I have been to Brisbane twice in last two months and property market is moving fast in sub 500K category. I am not looking to invest in Logan or Ipswich. Melbourne has better long term potential, but parts of Adelaide are very affordable and people are moving due to lifestyle choices. Per HTW report Adelaide is at bottom of the market. I feel Govt is spending on infrastructure and looking to support with job opportunities. May be, Adelaidians can comment on that.

    Job growth appears slim in Geelong region, but V line takes an hour to Melbourne. Many opportunities within 400K.

    Have look at http://www.residex.com.au/residex-report..state of market report.
     
  15. Be Developer

    Be Developer Property Developer Business Member

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    @Pins

    PM sent... should be able to find what you looking for!
     
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  16. cherubym

    cherubym Well-Known Member

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    Toon likes this.
  17. MTR

    MTR Well-Known Member Premium Member

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    cashflow in Melb is very much possible, it will be new product with depreciation around $2000 pa cashflow, 17 km from CBD

    MTR
     
  18. MTR

    MTR Well-Known Member Premium Member

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    I would not recommend Adelaide at this point in time
     
  19. B-Mac

    B-Mac Well-Known Member

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    Hey MTR,

    Why would you not recommend Adelaide?
     
  20. miked

    miked Well-Known Member

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