Looking for tips on cutting through the IP noise!

Discussion in 'Investment Strategy' started by Rhino, 29th Oct, 2017.

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  1. Rhino

    Rhino New Member

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    I’ve recently received an inheritance which i’m using to buy my first IP. Looking to spend approx 500k.

    I’ve listened to the Property Couch blog, subscribed to their recommended Location Score website, which gives any suburb in Australia a score on Captial Growth potential based on 8 key indicators, I’ve have also visited some property investment firms inc Metropole. Some advisors say buy existing blue chip properties in capital cities whereas other advisors say build a new property in areas like Sunshine Coast or Torquay.

    The issue I’m having is that the experts I’ve spoken to and tools I’ve utilised are all giving me completely different answers on the best strategies/areas to purchase my first IP.

    How do I cut through all of the noise? I am looking for solid CG (like everyone) to be able to eventually buy in Sydney. Looking forward to hearing people’s thoughts!

    Also, does anyone have any pearls of wisdom - things they wished they’d known but didn’t when they purchased their first IP?
     
  2. mickell

    mickell Member

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    Welcome to the arena. Godspeed!
     
  3. Westie

    Westie Well-Known Member

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    Welcome! Trawl through this website for those gems you're after. It'll take time but will be worth the effort. Look at the thread @melbournian posted for the various zones in Melbourne and consider buying into a growth zone if your budget allows it. Please remember property investing is a long term game and we might be close to the end of the current boom cycle. I'd suggest you narrow your search down to a state, then a city and go from there. We're in a big country with markets within markets, so there's plenty of opportunity.
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Hi Rhino

    Finance suggestion might be to borrow to 80 % LVR if the affordability is there and have an IO loan with offset and park the balance of the cash there.

    This is especially relevant if you dont have your current "forever home" paid off already

    ta
    rolf
     
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  5. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    Put on some earmuffs!

    This is an art and not a science - though it does need some science - but you will need a crystal ball for what you want.
     
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  6. MTR

    MTR Material Girl Premium Member

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    Have a read of this
    QBE Australian Housing Outlook 2017-2020 | QBE

    No one can guarantee CG regardless.

    The only way you will achieve this is if you actually buy in the early stages of a rising market, this takes the guess work out of the equation.

    find out what market/s are rising, and how long it has been rising.

    How long do boom cycles last??, generally 2 years perhaps longer, been the case in Syd and Melb.

    Start looking at leads on the forum, however don't rely on these for the answer, you still need to determine what is happening on the ground.

    The best source are those who are selling properties, phone lots of re agents to keep them honest, ask them basic questions -

    What product is selling
    Stock on the market
    How many days is it taking to sell properties
    Are there multiple offers on properties

    Once you sort this out then you need to find out what is driving this market ? is it immigration, infrastructure spending etc etc.

    No rush, take your time, we have had at least 3 property booms in Australia since 2013.

    Most important factor is not to buy at peak, where markets have been going hard too long, this is easiest way to lose money.

    MTR:)
     
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  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Are you based in Sydney which is why you wish to eventually buy there?

    You probably need to take a good look at your strategy, risk profile and long term plans. Once you can bed down those you will be able to target more and find out if an area suits your strategy. There is no rush to spend the money, put it in a term deposit and think things through.

    Questions for yourself to think about:
    1. what does capital growth buy mean to me? How long do I want to wait for CG? 1yr, 3yrs, 5yrs, 10yrs?
    2. if I buy for CG will the yield on the property pay the mortgage or will it be negatively geared? How much am I willing to put in money each month to pay the mortgage?
    3. how much does the inheritance come into play? Is it enough to cover the deposit and buying costs or do I need additional money?
    4. what appeals to my SANF (Sleep At Night Factor)? Do I want a nice new house on a smaller block with less hassles or happy to take a bit of a punt on a larger block that has subdivision potential to increase the return on investment?
    5. What will change in my personal life and how might that affect my future options? Marriage, kids, etc etc. Am I happy to rent considering that?
    6. Is there any pros to using the FHOG and stamp duty concessions on this purchase if you are eligible?


    Personally if it was a 5yr CG play with decent yield I'd be looking at Perth
     
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  8. BarneyRubble

    BarneyRubble Well-Known Member

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    Great advice already in this thread already.

    One thing I thankfully knew when purchasing first IP - get a good broker who understands your plans. There are many on here. Indeed I use one from here. You don't need to be in the same city or state.

    Don't buy off the plan. In fact I would be hesitant to build. Would need to be a really good reason why an established is not better. You need to be able to justify the reason. Tax incentives are not a reason.

    If you are purchasing a townhouse, check the body corporate/ management fees. They can be a deal killer (for your finances) especially those with onsite managers.

    Don't use a conveyancer. Use a solicitor that does conveyancing. Again there are many on here, and again I happily use one of them from here.

    Flame suit on. My advice, be careful of Property Couch, and don't take what they say as gospel. It is after all an infomercial to drive customers to their business, no matter how many times they tell you they are great blokes that just want to help people.

    Actually I have not listened for some time. Not since the masoganistic man v women episode which they subsequently deleted. Talk about out of touch!
     
  9. melbournian

    melbournian Well-Known Member

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    that is very true - you have to purchase more carefully and also think of factors that will enhance from CG. there are a lot of markets within markets. Just from my personal exp - a property i won in auction a couple of week ago, similar 6-7 houses down has gone 100K more in weeks and mine is much more renovated that his. Understand strategy zoning, school zones etc etc to know how to find the right ones
     
  10. saray4

    saray4 Well-Known Member

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    @melbournian - Is this in Reservoir or Preston?
     
  11. Marg4000

    Marg4000 Well-Known Member

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    You say you have "only just" received this inheritance.

    Stick it in a term deposit for a few months and take time to educate yourself on the property market.
    Research where you want to invest.
    Talk finance, do you want to borrow money?

    Take your time. There is no rush.
    Marg
     
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  12. Sackie

    Sackie Well-Known Member Premium Member

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    All great advice already so I'll just say - enjoy the hell-of-a ride! :D
     
  13. dabbler

    dabbler Well-Known Member

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    Why not buy in Sydney if you want to live there ? Sydney is a pretty big place and you can find affordable housing, if your not a toffee nose.

    As far as CG, Sydney is done for some time IMO.

    As for where ? well, you have to go search, on the ground mostly, and get a feel for what is happening, then pull the trigger when your ok, there is no gurantees with anything though unfortunately. Also overall, I feel the market will contract from here until lending is not as tight.
     
  14. Vinson

    Vinson Member

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    Do you think Preston is still a good place to invest?
     
  15. melbournian

    melbournian Well-Known Member

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    depends how good an investor you are when you choose your IPs. Would apartments in Melbourne be a good place to invest if one does not know how to manufacture CG ?

    Look at the Block (Elsternwick) finale yesterday All Sold - talking high 2m to 3mil houses.
     
  16. Vinson

    Vinson Member

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    Lived in Melbourne 10 years ago. Now have an opportunity - blocks with 6 townhouse potential; walking distance to station.

    But not familiar with the Melbourne anymore. Not sure what product can sell now.