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My situation - advice and suggestions please :)

Discussion in 'General Property Chat' started by InvestmentNoob, 20th May, 2016.

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  1. InvestmentNoob

    InvestmentNoob Member

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    Hi All,

    I thought I'd just share my situation and welcome any advice/suggestions.

    At the moment my wife and I have one PPOR in Western Sydney, it's valued at around $650K+ We owe around $240K so have $400K or so in equity.

    Spoke to the broker, we've been pre-approved for $1 million for an investment property and he can get me a rate of 3.99%

    Now I am quite open to investing in the best place to make money and I'm open to various options, capital growth, positive cashflow, or even negative gearing.

    My wife, however, wants to invest in Sydney, and she wants a house, not a unit. We might be able to work out a compromise by getting one property in Sydney and one (or more) elsewhere.

    So, if you were in my (financial) situation where would you invest and why?

    And, if you were going to invest in Sydney, is there any particular area you would be looking at?
     
  2. MsAli

    MsAli Well-Known Member Premium Member

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    Hi @InvestmentNoob - Firstly rate is only part of the equation. Make sure you are maximising opportunities for yourself with the right lenders etc.

    In your view, if property cycle was a clock, where do you think Sydney is?

    Various other markets in Australia apart from Sydney that are rising and can be considered. I personally wouldn't buy in Sydney right now.
     
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  3. Mick Butterfield

    Mick Butterfield Well-Known Member

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    I can't say that investing in Sydney is a bad idea, only that I would not be putting my money there at this point. Have a look around some of the Where to Buy threads to help you narrow it down. A good start may be Brisbane and surrounds, Adelaide and even Hobart/Launceston. All of these areas have good fundamentals for growth and for me are much more attractive than Sydney. We are looking at all the areas I listed for another purchase later in the year. At this stage I am leaning towards doubling down in Ipswich but we will see.

    What I will say though is make sure that you and your wife are on the same page. If you are doing it as a team make sure both parties are happy/comfortable with the decisions made.
     
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  4. HUGH72

    HUGH72 Well-Known Member

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    I would consider buying 1 in Greater Brisbane and 2 in Adelaide or vice versa.
    Reasons:

    Better yields.
    More room for growth.
    Low vacancy rates, especially Adelaide.
    Markets which haven't out performed so are currently better value.
    Better time cycle wise.
    It would give you diversification across 3 states.
    No land tax.
     
  5. Mumbai

    Mumbai Well-Known Member

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    yes, you don't need to buy NOW to keep her happy. As @MsAli mentioned, if you believe that the property clock is not in Sydney's favor, why would you block your money there? Having said, there are always opportunities. You will need to look harder.
     
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  6. Wandercro

    Wandercro Active Member

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    Mate I'm a fellow Westie and would have to agree with above re Sydney at the moment. We purchased in Brisbane last year and are looking at another one later this year. Need to do some homework as some suburbs have moved and you have probably missed the boat, but there are other areas that haven't, yet.
     
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  7. Wukong

    Wukong Well-Known Member

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    400K equity would allow you to buy up to 1.6million worth of properties based on 80% LVR + 5% closing costs.

    Go for it!
     
  8. bob shovel

    bob shovel Well-Known Member

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    West is best! But unfortunately things went crazy in Sydney so prices aren't best.

    Have a look at the growth of your ppor and check out the median in 2012 and now. That's when time to buy was
     
  9. Mumbai

    Mumbai Well-Known Member

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    Since, you asked that question, I would look at areas that have NOT boomed all of a sudden in the past couple of years. Check the fundamentals for a suburb. Are the close to supermarkets, shops, major roads, schools? Are they favoured by a ethnic group? Are they getting gentrified? Also, look for a 'bad' house on a 'good' street.
     
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  10. bob shovel

    bob shovel Well-Known Member

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    And distressed seller
     
  11. Leo2413

    Leo2413 Well-Known Member Premium Member

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    InvestmentNoob, post: 218615, member: 5589"]Hi All,


    My wife, however, wants to invest in Sydney, and she wants a house, not a unit. We might be able to work out a compromise by getting one property in Sydney and one (or more) elsewhere.

    Most of Sydney has bolted, and if you buy in Syd now, especially if your plans are quite aggressive and want to build a portfolio asap, it's probably not the best move. You gotta try to nudge the wife to keep emotion out of investment as much as possible, especially when choosing an optimal location.

    So, if you were in my (financial) situation where would you invest and why?

    Depends on your goals and attitude to risk. But if I was approaching from the pov of wanting to grow fast and aggressively and it was within my risk tolerance, then finance and serviceability permitting I would be looking for some good deals in middle ring Brisbane and Adelaide. Buy in areas that are slightly under the radar, BMV as much as possible with good overall fundamentals for capital growth. I would buy probably 3-4 props as high LVR as I could. Also I would try to buy all 3 props with some slight 'add value' twist. Whether its a cosmetic reno or adding a bedroom or something else. It does take more effort but it should reduce your overall risk and possibly manufacture some equity on the way into the deal. Try for longer settlements with access to give you time to 'value add' without the holding costs.


    And, if you were going to invest in Sydney, is there any particular area you would be looking at?

    Somewhere I could buy BMV and 'add value', with good CG potential short to medium term.
     
    Last edited: 20th May, 2016
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  12. Tonibell

    Tonibell Well-Known Member

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    @Leo2413 has pretty well nailed the response.

    Best to purchase where the "market" will add the most value to your investment.
    This is much easier than manufacturing the value yourself - but optimally you want both to be adding value.

    Too late for Sydney, possibly just in time from Brisbane - don't know about the rest.
     
  13. InvestmentNoob

    InvestmentNoob Member

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    Thanks for all the advice guys, much appreciated. I don't have time to reply to it all now, but will try to do so later.

    Just on distressed homes, I was thinking about this as an option for Sydney to try and by BMV as I have seen it done before.

    The only technique I have so far on finding these is going through realestate.com searching by the map view and typing 'auction' into the keywords. I then look for houses that are empty in the pictures, which gives me an indication that they might be foreclosed homes.

    Is there an easier way to do this?
     
  14. Nick Valsamis

    Nick Valsamis Well-Known Member

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    Yields are pretty low across Sydney so even if you buy under market value which is good, you would still need a gross yield of approx 5% to break even on holding costs.

    There may even be some opportunity where there is a price differential of approx 10-15% with units in areas like Liverpool and Lakemba compared to their neighbouring suburbs.
     
    Last edited: 20th May, 2016
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  15. Gockie

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

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    Completely doubt you'll be able to target foreclosed home sales since rates are at all time lows...
    You'll find elderly owners or deceased estates needing to sell, sales due to divorce, and people upgrading or moving elsewhere. I really don't think mortgage stress is a major factor in the reason why people sell atm.
     
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  16. big max

    big max Well-Known Member

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    Exactly right - Sydney in my view is around the 12 O'clock mark - either a little before or possibly a little past. I would stay away...

    Simply because you can get access to fund this does not mean its a good time to invest. One of the most valuable lessons an investor can learn...
     
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  17. big max

    big max Well-Known Member

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    Agree- you are going to get both a better yield and a better capital return in Brisbane vs Sydney at current prices.
     
  18. big max

    big max Well-Known Member

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    Which would also maximize their losses if the market turns sour. Again, just because you can borrow the max amount, does not mean you should be. Trust me on this, from someone who has seen many people hurt by doing this. Especially common on the Gold Coast high-end market by the way during previous cycles...
     
  19. P Roperty

    P Roperty Member

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    If you have a million to invest why don't you buy 3 at 300K or even 4 at 250K in different states/markets? You can have more exposure to growth and also diversify. I'd rather do that than have one property in Sydney where the market has already boomed and you could be waiting years for the next growth cycle.
     
  20. big max

    big max Well-Known Member

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    Absolutely. And yield likely better too. And also gives you ability to ease in (or out) of the market in bits and pieces rather than all or nothing ...