Newbie seeking experienced IP advice on what & where Byron Shire to Brisbane

Hi All!
I'm new here. We're an early 40's couple with 2 kids under 7 who own our own $750- 800k home in South Golden Beach, near Byron Bay.

We have low incomes (which will go up) but 100% equity & thus we're pre-approved for a couple of loan options to buy a 2nd house, either in our local area or elsewhere.

South golden beach has had 12%CG 3.8% rental yeilds & good rental demand. With option A we would move into the new place (happy for a change) for a year or two so the higher rent on our house will cover the mortgage on the new place making it cash flow positive.

Once our incomes go up & we pay off some principle, maybe build a granny flat for extra income, our idea is to move back to our 1st home because we love our street, & the houses we can afford up to 670k will be smaller & not quite as nice as ours or have smaller gardens. We're looking in Ocean Shores & Mullum (both steady growth & destined to continue to grow)....BUT ALL OPINIONS WELCOME ON THIS!

Theres 2 houses we like:

1. 4 year old hardiplank & rendered brick 2 story free standing duplex on 390sqm backing reserve, east facing, end of quiet culdesac, 3brm 2bth up, double garage/work space + fully self contained apartment down. Hard wood floors, neat, good build, large timber deck facing reserve. Rental possibility for future up 550. Down 350. 2 mins walk to shop. 10min hill walk to beach. Ocean shores near shopping centre. Made offer at 650, refused, said wanyed 680k. May take 670k as it originate sale but about to go with RE as no buyers biting.

2. Medium sized House 3brm w single garage (can easily convert to studio) 1bthrm & carport, nice gardens in coveted street a 10 min flat walk to south golden beach. 688msq block, room to build freestanding granny flat. 698k Might take 670k

3. Idea to buy 400k block in ocean shores or Tallowood ridge estate mullumbimby, put on a 2brm steel frame kit 60k, move into it then refinance to get another 250k to build 3brm. Buy 801msq + block so we can build a 2nd 3brm as the 3rd IP.

We love house 1, but are unsure of long term potential due to small block/strata title.
House 2 is solid, neat, fine, nothing special except better location.
Land & build option will involve a lot of work as my hubby would help build & I'd perfect manage.

My partner feels a bit wary of option A, as it's a big loan, in case interest rates go back up to 7% like they were 9 years ago when we first bought our home.

Even if they do we can just afford it, but will have no spare money. We don't earn enough to gain from tax savings of having an IP really.

The other option we're toying with, which
is more conservative (the loan amount anyway) is to buy a pure IP that is in a cheaper area up to 450k as long as it's cash flow positive or neutral. This could be Iluka, Banora Point or somewhere like Loganholme Qld or even Brisbane.

Q TO ALL EXPERIENCED INVESTORS: As it's our first I.P, is it better to go for a lower priced property 450k or higher 650k? Or doesn't it matter as long as figures & statistics on the property add up!?? Out of A house/land options, what cpuld be best for long term nest egg?

We know about the keypoints to look for that make a good investment decision (good infrastructure or new infrastructure planned, good employment or close to it, easy access to good jobs, schools, shopping centers, aspects of beauty, not too far from big city, coastal, good Capital Growth & Rental Yields), but really don't know which idea is better!

Our area isn't the top option for investing (as research shows) due to not a lot of employment but it's an easy 30mins motorway drive to the Gold Coast & many people commute & is a hub for lifestyle entrepreneurs. Byron Shire is an international hotspot of stunning beauty & has a unique alernative/ natural lifestyle people crave so there's always high demand for houses & nice rentals up to 600pw from people doing a lifestyle change from Sydney & Melbourne.

Which idea is better? Or can they both be good just depending on houses we find, stats & CG + RY figures??

Option A or B: B being we could buy in the best investment area within 1.5hrs drive (this takes us up to Logan area or 3brm Brisbane). We don't know exactly which area is best, so any experienced advice welcome. I would just do "best investments in southern Qld searches".

Sorry for the huge post! I'm really seeking some good advice.

Many thanks in advance!

Em

 

Hi Em, No one has had a crack at an answer but i will give you some thoughts after just seeing this thread.

Some key points:
Good Equity + Low Income means you need to be careful on ability to cover cashflow.
I would be seriously considering what you can afford to service without a tenant in place - (it happens) and cash flow is king as they say.
Start small, go for a high yielding area so you are not having to top up from your "low income".
Factor in that it will be vacant for periods of time and the bank still wants their payments, so stay within what you can sustain without rental income in terms of payments.
If you want to be fairly conservative factor in a couple of % more on interest rates and that should give you a starting budget.
Buy your first IP based on this then, go again if it it goes well and you have some cash reserves to deal with it(either saving or a line of credit will do). Given the low income i would be chasing yield 6%+ to add to income as (a) you dont have much to play with to cover anything negative and (b) there is unlikely to much tax benefit in doing so.
You mentioned Logan - probably a good place to start looking, also Ipswitch area i would consider.
Consider a buyers agent also, there are a few on this forum who work those areas.
The other thing to remember is if you arent going to live in it, you dont have to love it, someone else just has to want to live in it and maybe buy it from you later.

Hopefully that will give you some food for thought.

Cheers,
SMTY