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VIC Looking for my 1st IP

Discussion in 'Where to Buy' started by saray4, 10th Jul, 2016.

  1. saray4

    saray4 Member

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    Melbourne
    Hi All,

    I have been following this forum for a while and this is my 1st post. I am looking for an IP between 450k-550k and at present I am looking in point cook. I am not sure whether why I am looking into right suburb for my 1st IP. I have observed the property growth is around 9% per annum.
    If I am wrong can you please advise few suburbs to look into? It took me many months to decide the Suburb but even now I am not sure if my decision is correct.
    I will be thankful if you can help me out in choosing the right suburbs.

    Thanks,
    saray
     
  2. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Welcome to the forum @saray4. Knowing whether it's right for your first IP will come down to:
    • What your first IP has to do for you
    • Whether your research tells you it will achieve your desired outcome
    Do you want to be able to add value? Do you want a certain amount of growth - in what time frame? Do you want good cashflow? Will this property/area allow you to buy a second and a third and a fourth etc or will it hold you back?

    What draws you to Point Cook of all the suburbs in Australia? :)
     
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  3. saray4

    saray4 Member

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    Hi Steven,
    Thanks for your reply.
    I am looking for annual growth around 8-10% and found that pointcook is one of those suburbs.
    I have friends living in that suburb and I always hear from them prices are going up in west.
    I am going for an IP because my tax agent has advised me that an IP would help in reducing my tax by negative gearing.
    I didn't choose Tarneit or Truganina because of the new dwellings that are coming up in that area and I don't think people will go for an old house when they can get a new one at the same price.
    As I said in my previous post I am open to any Suburb and I have chosen Point cook just because I knew that Suburb. Any help would be highly appreciated.

    Thanks,
    Saray
     
  4. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @saray4, hopefully your tax agent also had in mind creating wealth – not just saving some tax :)

    One of the big rules of investing is to find areas you expect to grow well, then get familiar with them – rather than starting with areas you know well, then expect them to grow :)

    Not saying do or don't buy in Point Cook, just to keep researching (this forum is a great resource so you'll learn heaps reading posts and asking questions here).

    Here's some data on Point Cook FYI:


    point_cook.png
     
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  5. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Welcome @saray4 to a great place to learn.

    I mean no disrespect but with comments like the above, I would be looking for my first investment property book before my first IP. Wanting to invest in property is great but don't go in completely blind. More often than not you wont get very far and even worse, can go backwards.

    Good luck.
     
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  6. albanga

    albanga Well-Known Member

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    I am not a big wrap for Point Cook personally. Sure it has had some growth but I think is lacking a number of fundamentals to see ongoing growth. There is also plenty of land around which is usually not a great thing.

    Agree with @Leo2413 though, if your buying an IP for the reason your accountant has pointed out, i think you have a lot to learn and would be much better positioned to spend some considerable time in here learning from many great minds.
     
  7. melbournian

    melbournian Well-Known Member

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    i know point cook pretty well as have build and rented a few (self manage) myself. Don't think it is 9% per annum though. It is an OK suburb but i entered within the mid to high 300Kish. At 450-550K it is a big high if you ask me. there is a growing asian population comprising of chinese and indians as many of the H&L packages was sold overseas in seminars etc. shops wise not many nearest mall is highpoint. also traffic is super bad in the daytime going off the westgate to the CBD. that being said at the time i purchased it was cost wise the cheapest area (for new builds) within the distance to CBD. There are many markets within markets in this suburb. There are many estates but the better ones are featherbrook or alamanda. Some have like estate fees some don't. You may achieve some gains say 30-50K by organizing a lot of the stuff yourself and depending on the builder selection etc but it is not for those without construction and some legal knowledge on contracts etc otherwise you could get burned with delays etc. Tenant wise there are many young professionals which is better and you get the occassional unemployed moms or had a kid which are lower income regimes, had to get one out through VCAT. if it was around high 300Kish or maybe low 400kish would be a good entry level but if it is 450-550K i would go west or north in melbourne.
     
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  8. saray4

    saray4 Member

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    Thank you all for your comments.
    @melbournian - I am seeing expensive houses in Alamanda estate. The ones I liked are over 600k and some are over 700k as well.
    The ones that are in-range of 450k-500k are very small in land size(around 350sq) . I have checked the price history in Alamanda and they were 150k in 2009.
    I am not saying that I am correct as I don't have any experience in this space.
    I will surely spend more time in this forum..:)
    Can you all please advise few suburbs so start my research?
    Thank you once again..
     
  9. saray4

    saray4 Member

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    Thanks Steven for the stats. Can you please throw few more recommendations?

    Thanks,
    Saray
     
  10. JacM

    JacM VIC Buyer's Agent Business Member

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    Hmmm. You're still making a loss though. The tax office does not reimburse you for your entire loss. It is important to keep this in mind.

    Ideally a property would do a pretty good job of standing on its own two feet... or close to it... without relying on the taxman's friendliness.
     
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  11. melbournian

    melbournian Well-Known Member

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    My Ips are in featherbrook. there are many other estates like upper point cook, 3030, paragon etc. Personally i wouldn't buy in alamanda first coz there is an estate fees to manage the parklands and surroundings etc where as featherbrook doesn't have one. Also if you are targeting 600-700K in pt cook, it is really above the median of the suburb. i would rather buy in say preston or someone closer to CBD for those prices. Also all the other estates are relatively the same except for those as there are the lakes parklands etc. There is also limited or no value in getting such a large plot of land 300-350 sqm is more than sufficient for an IP for rental. If you get large plots, you can't really sub divide as there are covenants in place for like 20+ years so unless you want to have 3 large dogs running ard as a home, 300-350sqm is the best value ratio for H&L build. i am sure the legendary H&L investor @sash would agree

    i would suggest going north or west but it all depends on your budget.
     
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  12. saray4

    saray4 Member

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    Thank you once again @melbournian ..
    My budget is strict between 450-550k. Can you please suggest few suburbs in North?
    Do you think going with H&L package is better for IP than buying an established property?
     
  13. melbournian

    melbournian Well-Known Member

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    You can try glenroy, i saw prices around 400kish mark for 380sqm of land. Thomastown and Heidelberg West you still can get properties within that range (landed) H&L is not a straightforward like buying an existing property. you going to have to buy the land then source the builder and then finish off anything else. There is margins to be made by buying the land and then getting an individual builder. It may also be good entry for the inital investor due to the price point. If done properly you can be 30-50K just on it alone till the build finishes but it does require dedicated time.
     
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  14. saray4

    saray4 Member

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    Is it ok to buy a unit as IP? From the stats posted in this forum and from other websites, I have observed that units in Ringwood appreciated around 15% in the past 12 months.
    I would appreciate your advises.

    Thanks,
    Saray
     
  15. Kristine..

    Kristine.. Member

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    WARNING: Long Post!!!

    Hey Saray

    Welcome to the Forum! Welcome to the Wonderful World of Property Investing.

    I visited a Housing Investment seminar person the other day, just a but of B2B networking, and after exchanging the usual swag of business cards and talking about property for a couple of hours, I went away remembering all the things I had forgotten:

    1: The only property of any benefit to you, is the one with your name on it
    2: Make sure that what you buy has a few good reasons for buying it
    3: Buy it.

    That’s about it, really.

    I just sold a two bedroom garden unit in Kilsyth. You know the sort I mean, concrete blocks, flat metal roofs, they somewhat resemble public latrines but hey! Good, solid, honest housing.

    Anyway, I bought this little treasure, in Original Condition, waaaay back in 2006. Best intentions of getting in there, renovating, and getting out again in all of about two months, flat!

    But, you know, life sort of got in the way and then there was the GFC and I had a couple of half hearted attempts at renovating but was too busy / no time / no money / no enthusiasm, so it sat empty for nine years then finally it got renovated and now, ten years later, I have sold it.

    So did this transaction meet my criteria?

    1: It had my name on it
    2: It had the opportunity for Value Add and if I had ever finished the renovations, would have rented for more than the mortgage payments, so that was a compelling argument even though it never came to pass
    3: I bought it and eventually I sold it. For more than I bought it for.

    Let us examine this deal in a little more detail.

    Actually, all we need to know is:

    Without rent, I paid for it all myself, all the time. No rent income means no capacity to gear it financially but hey! I have kept every bank statement and every invoice and receipt, and it all gets capitalised to the cost base when preparing the tax statements

    The property went from Purchase Price 100% November 2006 to Sale Price 221.24% April, 2016. Hey, not bad for a public latrine, wouldn’t you say?

    As I have never claimed any expense, the margin in this deal for Capital Gains is about 15-20%, half of that to be taxed at Marginal Rate, I think I can cope.

    And, you know, I have been a property investor since 1994, I think taken over all the properties I must have clocked up more than 100 Landlord Years, and this property had the easiest tenants because it had none!

    Saray, if you buy just one investment book, buy Jan Somers’ Building Wealth Story by Story Books

    This remarkable anthology of 101 stories from individual property investors will show you that there is no right or wrong with property investing. Everyone will do it their way and each story has it’s own inspiration.

    If you want to buy in Point Cook, hey, buy in Point Cook! Make a decision about your budget, get your finance on the slate, go and drive around and go through as many Opens as you can find the strength for! Ignore the pretty bits and look for the best value for money you can find.

    While you are in that neck of the woods, just for the heck of it, go to the other side of the School Zone as well. Ignore the Mission Brown and the wall heaters and the laminate benches, there will be plenty of large rooms and yellow bottle glass and separate rumpus rooms and built in linen cupboards. Boring but Value for the Accommodation Dollar!

    I have a theory, and just for the fun of it I will share my theory with you: When families buy land and build a house, and leaving aside the families whose Dear Old Mum and Dad have enough room and are capable of squishing everyone back into the Family Home for a year or so, will try and enrol the children in the school they will be going to once the new house is built.

    This means renting probably an older house on the other side of the School Zone. Move house but don’t move school or at least, not more often than is absolutely necessary.

    Tenants in Victoria stay an average of 22 months, and that would be about right for buying land, waiting for titles, building the new house, moving in.

    You get to keep your rent up to date, refresh the property on a regular basis, write off the cleaning and maintenance as you go along, and know that you are providing quality housing for families which appreciate it.

    Are there better suburbs than Point Cook? Sure! If you want yield, the Regional Cities will provide yield but not necessarily a lot of growth

    If you want growth, you won’t always get the yield. Melbourne averages 4.5% annual yield across a range of postcodes.

    Did I think Kilsyth would double and a bit in less than ten years? Ha! Will Point Cook? Only hindsight will tell you that!

    Many investors wish that they had made a plan, so here is a simple plan you might like to consider:

    Buy property, make money.

    It works for me!

    Hope this helps for you

    Kristine ..
     
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  16. saray4

    saray4 Member

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    Hi @Kristine.. Thank you so much for your time and this post. I am a rookie in this space hence I am confused and worried :(
    I don't want to take a wrong step so only I am asking so many questions.
    I started with Nunawading and Mitcham to buy a 2 bedroom unit and couldn't compete in Auctions.
    So I decided to check in west(Point cook, seabrook etc) as the prices are affordable but I am not sure if it is a right decision to buy an IP in west as there is still a lot of land available.
    Once again thank you.

    Thanks,
    Saray