VIC Please help the rookie ...

Argh, where do I begin. So we had an investment property a few years back, in Hoppers Crossing, Victoria. But after some bad tenants and lots of repairs we sold that place and moved on. Sort of regret that decision now, but hind sight is a bit like that I guess.

So looking to get back in, but am now faced with crazy melbourne house prices and lots of ideas of where I would like to invest, but not really sure.

So far have been looking at Werribee and Hoppers Crossing again. But prices are going up here too and trying to find a house in the $500K bracket in a good area, with good rental return is hard. Have also considered more rural areas like Ballarat. One friend has even suggested Canberra, but I seem nervous to buy in another state. Any advise here would be great...

As I said earlier, I would like to keep the budget around the $500K mark and focus on a stand alone house, rather than townhouse or apartment. My wife and I can't seem to agree on the best way forward. She is against a negative geared, interest only property as she says we would pay way more over the long run. She would prefer something positive geared, and a principal + interest type repayment and think that would be cheaper in the long run. Like I said, heated discussions. What are peoples views on this?

Thanks for any advice.

Mark

 

great mindset!!! no point dwelling on what ifs

 

You probably need to provide a bit more information, as any value property could be positively geared.
If you're wanting to buy a 500K house and you have 200K deposit, it will be positively geared. But if you're looking at 10% deposit, then you might need something that has 7% gross rental yield

 

Yeah thats true. No, we just have the 10% deposit.

 

Do positive geared properties even exist in Melbourne unless you're paying a huge deposit? If you're aim is to grow your portfolio then you need good capital growth to start off with. So don't limit yourself to just positive geared properties, which will be hard to find. Instead look at cashflow positive properties, which will most likely be negatively geared but cashflow positive after tax.

I just posted some links here about northern suburbs like Mickleham and Donnybrook, which are growing very fast.

Mickleham and Donnybrook

 

Hello

There are ample suburbs in regional post codes of victoria around geelong which will give you a high rental, immediate capital growth; 8-15%, and ample future growth opportunities.

But these are getting extinct day by day. With each month, i see prices rising by .8 to 2%. You can still catch the boat if you try to work out the numbers and act fast.

Regards
Ashish

 

I like Melton and Bacchus Marsh for good entry prices (you can still get value under $400k, have invested myself in Bacchus) and you're getting closer to having rent cover your repayments, with room for capital growth. There are also a few threads on Geelong and the surrounding areas for capital growth potential, reasonable entry point. My goal though is to have the house pay itself off over 30 years - how long are you looking to hold onto the investment?

 

be weary that you might be too late to the party now. Melborne has had a few years of good run and has been slow quite a bit now. In fact is in the negative territory recently. Sydney, Melbourne property price falls ease in February I would wait and see or look elsewhere for better growth protential and rental return.

 

There's always markets within markets. You cannot buy Melbourne. I suspect the drop is happening in the top end of the market. There is still growth happening in the outer ring suburbs (+20km from cbd)

 

@Jedi77 the Geelong area is worth a look with that budget.

 

Sure certain areas that are slightly out of step with average but they are not far off. Is it worth the risk to chase that final bit of CG after the average market has cooled? It might well grow for another 10-20% if you are lucky but it will likely stall for a long time like previous peaks.

 

Well said
A lot of posters on this forum just spruik where they have purchased (myself included) which is ok.
However if youve already received a 50% gain in a year or two then would you really pull the trigger again in the same area again at current prices? Probably not yet most encourage others (lemmings) to do so?
Also low yields mean that even if you get that last 100k in growth on a 500k property you will be 10k (after tax) out of pocket for the next 5 years with potentially a slight drop from peak price of 5-10% (could be 30-50k) and then add on purchase costs of 25k.
So even if you pick up 20% quickly you will still lose money overall until the market decides its time to boom again

 

Ive been banging on about phillip island a bit.
Its had very good growth in the last year. I would say houses around 25% and land a crazy 50%.
Still a few opportunities popping up but not heaps.
Blocks in established areas were between 160- 220k a year ago. Currently cheapest established block in cowes is 299k. After this year i think vacant blocks will be a rarity and will start commanding the same prices as the low end beach shacks. So 350-400k

Still beach shacks to be bought for around the 380k mark but unfortunately its just overpriced land (on current prices) with a small holding income.
Any decent house (old or new) is now around 500k .
Dont know if buying down there now is still feaaible as an investment but just pointing out that an investment doesnt have to be in melbourne itself.
Money travels

 

So if I understand what you're saying, I should wait and not get another IP now?

 

What areas of Geelong should I look at?

 

Would be looking at holding onto the property for at least 10-15 years.... maybe more.

 

Depends how much growth is left in the market short/ medium term?
Are the 500k properties going to go to 700k??

What price were they a couple of years ago?
I seem to remember that hoppers was around the 250-300k mark?
So to get over 700k before we stagnate then your looking at price rises of around 250% over a few years?

 

Increase your scope to look nationally as there are lots of better opportunities. I wish I did that when I first started out. Different regions are in different part of the property cycle. The first question you should ask yourself is which part of the cycle you want to get in?