Hello there! I’m about to invest in my RE market and I am looking for help or connections to jump start my journey as RE investor. im about to purchase my first property in the eastern suburbs of Melbourne. my plan is to go first time buyer 600-700k. 2-3 bedrooms. with Reno potential. Live in there for one year ( save on stamp duty) and than renovate and convert into investment and rent it out. im counting on the usual avarage of 6-7% yearly growth. within 2-3 years ( once capital surlus allows ) refinance. Create an offset account to use for the next purchase+absorb costs. than repeat until banks will allow. my worry is the current market conditions and I was hoping to connect with someone around here a let to share some insight re my plan +current market cycle. Would you happen to be able to help with this ? thank you ahead if time for you help! kindest regards Matteo
Welcome to the forums Matteo! Re market cycles, truth is literally no-one knows what's going to happen, and if they tell you they do, they're lying. At best, it's our best guess. My clients often ask whether it's a good time to buy, and I always bring it down to 2 questions - What happens if you DON'T buy, and the market goes up? AND What happens if you DO buy, and the market goes down? Which is more palatable to you? Do you have risk management in place so you'd be fine if the market went down? At the end of the day, property investing is all about - "Do the numbers work?" And, "Can you manage the risk?" If the answer to either is no, best to sit out. If it's yes, then it's time to get in.
Thank you for the propl Thank you go the answer Jess, Essentially my worry in case the market would go down is that I'm about to purchase my first property: I have no real buffer to sustain a 'bad' investing decision. if it was my 2-3 I'd have an offset account (master facility) to buffer out market swings. I guess that there is no right or wrong. I'm not reaching out to try my luck in prying some sort of prophetical forecast. I'm new at this, but I'm aware that timing the market is hard, and these post COVID conditions make it even harder. On the contrary, I'm seeking advice on my investment plan, trying to get some feedback: is it sound? what first property (and where) would you experts suggest? Sorry for the long post, but here follows my plan: 1 first property (timeframe: 1 year - to 3 years): - now (or next few months) - first time buyer (will live in there for a year at least) - 2 years fixed (managed to get a 1.97%) - 600-700K bufget (prefer less as I'd save more in taxes) - 2-3 bedrooms (heavy land to dwelling ratio) - around Croydon area (did some research, and I believe in good capital gains in that area) - looking for Renovation potential (nothing major) 2 second property (timeframe: second to the third year) - refinance converting into investment (rent out), and using the acquired capital on the property (pus reno). - loan becomes interest only, a portion of which will be variable: offset account. This will be calculated based on the next purchase. - repeat... on the market again. maybe rural this time off the plan, let's see. Any thoughts?
No worries really, I just have one shot to get this right as it is my first property! I don't want to be a victim of analysis-paralysis, but I also need to get as much knowledge and info as I possibly can before the purchase. Re-market conditions: I see a heavily unstable market caused by the euphoria post-COVID and low rates. Seller market, with few options available. This is just not the ideal situation! I'm looking for a bargain, and for the time being everyone just jumps on the property with no regards to the cost. I had to pass an auction in South Croydon last week because the price went 20% above advertised! It really looks like a frenzied rally, and I've seen this happening before on the stock market... no good comes from it if you enter now. a dime for a thought. regards
What were you thinking in 2018, then 2019, then 2020? just because a market is a bargain in hindsight doesnt mean you would have bought.
True, history proved to support well Real Estate, which is why I'm fairly confident in this investment vehicle here in Australia. I'm just playing the devil's advocate, hoping to spark a healthy discussion.
Incorrect assumption IMHO. As long as you don't buy off the plan / brand new, there's little chance of you making a fatal mistake (there may be losses but not killer) The Y-man
You are right. However people who had invested in these towns were dictated by greed, greed of getting very good rental income without considering risks or comparing dynamics of these isolated markets (as in comparison with the larger Australian market) with similar markets at other places. I know about this because I have seen many such cases first hand. Several of these buyers had multiple properties, which when things went south, all of a sudden became maladministration lending disputes. Having said that some investors were also misled by unscrupulous property sprinklers and for some, investing in these cities turned out to very costly mistake. In any event, to me, its seems these mining town investments in the middle of no where did not represent fundamentals that apply on bigger Australian cities.
If your talking about Croydon as in next to mooroolbark croydon, Then i would do more research. Definitely one of those most inflated suburbs in the area and not something i would get as a first. Get much more value and growth with adjoining suburbs looking towards yarra valley FYI i live in chirnside park.
