Need help, land and house near Tallawong metro

Hi, I m looking to buy our 1st investment property and nothing seems to be under 1m. The cheapest on the metro line is at schofields and land and house package near Tallawong metro. The build will take 10m to complete, is it a good investment decision? Given the area is not yet developed, will it rent out? Any guidance will help? Thanks

 

Nothing seems under $1m? Loads of property is under $1m across the country. It really depends what type and style of property you see as a 1st investment. $1m for a first investment may be costly but it depends. Some people like to play poker with $5 chips and others will drop a $5K chip.

Buying a brand new property under construct could be very concerning for an investment as the tenants will make it look used very quickly and that may just be general wear and tear. And no deductions may be available during the 10mths which could also impact some tax issues. It will also be surrounded by vacant land and other new builds for quite some time with an almost endless supply keeping a cap of values.

You can rent anything out. At what price if there is oversupply ?

 

Thanks Paul. NSW market looks still bumped up. Haven't explored outside NSW yet. Will explore further.

 

I literally just wrote an email to my clients this morning about buying in your local area.

For me, I’d be extremely hesitant to buy a $1M first investment, especially if you’re not 100% convinced it’s a great buy.

Here’s what I sent out this morning.

Did you know that most property investors buy their first investment property in their local area?


It makes sense, right - it feels like a safe option, because you know the area, and can drive past it to check in on your investment.

Sound familiar?

I’m gonna let you in on a secret

Buying in your back yard is one of the best ways to guarantee you’ll buy a property that under-performs...

And there’s NOTHING safe about spending hundreds of $1000’s of dollars on an under-performing property, am I right?

So why does buying in your back yard put you at risk of buying an under-performing property?

There’s a couple of reasons.

The first is - out of ALL the areas in Australia...

YOUR suburb and its immediate surrounds are highly unlikely to be one of the best growth areas.


It’s just statistically really unlikely, and by defaulting to your own neighbourhood you’re taking a very expensive punt on it’s investment potential.


The second reason is that while you ‘know’ your local area...

It’s unlikely that you know it the RIGHT WAY.

Sure, you know it has a nice park around the corner, and that local coffee shop is BOMB...

But - hot tip - hoards of people aren’t moving to your area for the coffee.


There’s much more that goes into pin-pointing a high-performance suburb...

The kind of area that will provide the sustained, long term growth and cash-flow you can bank...

And unless you’ve FULLY researched your own suburb against a thorough checklist of investment metrics...


AND it’s come out on top...

The odds of are you’re going to be choking your investment success from the start.


But the good news is, our clients are having amazing success finding out-of-area suburbs to buy in, using a bundle of tools and training designed specifically to guide you step-by-step through the research process so you can buy your next investment property with confidence, no matter where in Australia it’s located!

If you’d like to check it out - the link is in my signature below.

 

I have an IP at Schofields (near Alex Avenue) since 2014. So I can answer your question.

I assume you want to buy brand new so that you can claim tax on depreciation.

There are tons of houses available for rent over there because of the completion of all the new builds. If you decided to actually buy and rent out, say 4 bedder, then you are looking at rental return between 540-600 per week, and there are tons of competition there. Mine is a 3 Bedder (bought brand new), and is renting out at $530 per week (started at $580 per week mind you!). Rental return for 4 bedder is not much more than 3 bedder.

The metro is already completed and running so you are not going to get any appreciation of values of land as a result of new train line. I bought mine when the development at Schofields was very new and the metro is being built so I have some decent equity there. I personally would not buy Schofields now unless you are living in it.

For 1m you should buy elsewhere instead. Depending on what you are looking for there are plenty of options.

 

All you are paying for is the building. And that depreciates.

 

I’m no expert but if I had 1m to spend I would spread the risk and maybe by 2 or 3 cheaper priced properties in 3 different areas to spread my risk but that is for my own risk profile. Simone else might go the other way a buy a 2 bedroom unit at Elizabeth Bay.

 

Definitely agree with this.
It would be worth considering some different areas in NSW, with better rental yields and more affordable pricing. And for $1 million you could consider buying properties in different locations.

Try to find areas which have already developed in has limited land supply. As an example, My most recent investment was in the central coast area, which offered better (lower) prices for good rental yields with good growth potential.

 

If it was me and I had $1mn I would be spreading that bad boy out.

1. Lake Macquarie, NSW
Find a old fibro home around here for ~$350K

2. Melbourne out Tarneit Way
Find a new-ish build house for ~$350K. Will be a tough find but certainly not impossible. 3 bed, 2 bath 1 garage

3. Woodridge QLD
Take your pick out here. Plenty of properties $300K and under even - if you look hard enough. The COVID era has this place a bit shook. I saw a house in Slacks Creek sell for $260K - which I believe is an amazing buy for 650sqm of land and a renovated 3 bedroom house 22 minutes away from the CBD.

Example : https://www.realestate.com.au/sold/property-house-qld-slacks+creek-133305094

 

Hi Shawn - how about Beenleigh? Or Upper Coomera, or Coomera areas?

Also - any particular reason COVID has people shook with Woodridge specifically?

 

There's a hell of a lot of land out there. And a hell of a lot of rentals.
My mate rented a brand new place out that way at the end of November (just before Coronavirus became a thing).. they were asking $550/wk, he ended up securing it for 6 months at $420.
But he hates it there with all the current development and construction - noise, trucks, people constantly moving in/out, roads being closed for weeks on end. He's had so many different neighbours move in and out in 6 months, he's given up making friends with them.

I'd personally never buy there. Not worth the money, and the returns really aren't good enough if you're getting $420/wk on a $1mil buy thats likely not going to see any increase for many many years.
If you're set on the area, I'd be buying as close to that new hospital as possible (Windsor x Schofields Rds)

 

How many bedroom house is that for? Is that place brand new? $420 is very cheap!

 

That'd be a *bad* idea. First, you'd find an absolute dump for that price. Second, it'll be a crappy part of a crappy suburb. Third, you'd highly likely get crappy tenants. Four, there'd little CG because you'd own minimal land. Don't say you haven't been warned.

 

3 bedrooms, house was 6 months old when they moved in, so will be 12 months old now.
There were plenty of properties to choose from at the time.

They're currently looking to move now their lease is ending, so will see how they go this time around.

 

Wow that is very low rent for a near new 3 bedroom house. The landlord must be very desperate. It would be interesting to see which part of Schofields is that property located.

My area of Schofields is established and no more construction mode so it is much better for living. My tenant is on periodic lease so hopefully they won't be moving out anytime soon.

 

Renovated house?

This is what the agent had to say about the property:

Situated close to schools, parks and public transport this highset home provides the perfect opportunity for the savvy investor, renovator or a first home buyer.

If you look closely at the pics the house is not in the best condition and you can even see some places that need some expensive work. Old photo's on RP Data show the house appears to be a bit of a home handyman style renovation over the years which is usually expensive to put right when something goes wrong!

 

Yep like the above, $1m is way too much for Tallwong. You might as well spend a little more and actually buy something Near the town centre

Your rental yields will keep dropping since there's so much stock on the market around and more coming up once the developers start rolling out their projects like Western Sydney Property Group and Castle Group.