Starting my Investment Portfolio

Hi Guys,

I'm looking to start my investment portfolio but need guidance and have a limited budget.

Options are;
Budget - 350-450K
Off the Plan properties
Residential
Commercial

Out of the three which is the safest option?

Would appreciate any feedbacks. xx

 

Existing residential 1000%!

 

Definitely not OTP and I won't advice on commercial as it is a different ball game... But if you are willing to back yourself, if you are patient/brave/can treat this as a business/are relentless/love real estate/and if you are willing to spend a lifetime learning, I think residential will do just fine for you in the long run!

 

existing residential sounds much better than the others.

 

If it is Sydney....sit on your hands for about 18-24 months....no hurry....you budget is tight now...but will be good enough in about 2 years.

 

OTP vs Resi vs Commercial - this is a very broad range.

In that budget you should be able to get good quality asset interstate where returns are better than Sydney, close to infrastructure.

Steer clear of OTP.

As others have suggested, established is the way to go - something with land component .

 

Can you perhaps recommend other areas/states I can look to invest in with my current budget?

 

I'd say safest in terms of capital gains in the long run.

 

I would of thought, with my budget that OTP would be the best. no?
Can you consider OTP as high risk high reward?

 

Why does everyone advise against OTP?

 

In terms of return, wouldn't Commercial be the best?

 

Would it be the most ideal for my budget?

 

commercial is a different beast, from lending to management. do you have experience with commercial previously?

 

Have a look at Brisbane....stick to quality houses under 25 klms if you can.

Avoid lower socio Logan...Ipswich...Caboolture.

 

How did you come up with this budget?
Are you buying with cash? If so why?
If you're borrowing the money, from who? I would be extremely surprised if you're pre-approved for all 3!

 

Hi @KuroZin

Existing residential 1000% as has already been mentioned.

There are many reasons OTP is not favourable. One reason is that with a "new" product, you'll have no opportunity "add value" and make it worth more (eg via small aesthetic renovation).

 

In my experience, OTP is high risk and low reward

Most on PC won't touch OTP.

What makes you think you could only purchase OTP in your price bracket?

Buildings depreciate in value, and being brand new OTP will depreciate in value. Land appreciates.

 

Hey,

I’m no expert by any means.
But from a lot of property podcasts I’ve been reading lately, one of the biggest issues they mention in regards to OTP is the Builders Margin (ie the percent on top of the actual value of the property)

This can lead to;
1. The banks not agreeing to finance you as the bank valuation of the property comes in as lower than your contract price.


Apparently people can then have trouble once it is complete& you have to hand over the cash= suddenly a shortfall between what banks will give you and what you owe.


2. The property actually declining in value for initial period due the fact that the market doesn’t care that you paid the builder his cut.

There is a good podcast by The Property Couch where they chat to a professional valuer- Grenville Grabst.

He talked about a survey recently of 1800 properties that his business valued (in Docklands, SouthBank etc) where around 50% of the OTP properties declined between 10-20% of the actual contract price paid.

This podcast estimated 6-7years it could take (depending) to break even when you take into account depreciation against growth.

As someone else said, the land is what goes up in value the most.

In many of those estates there is often so many similar houses and often new blocks being released continuously.
So lots of the same stock around.

Just what I’ve been learning from various podcasts , as I said I’m not expert just beginning.

 

Very Insightful, thanks.
Will look into that podcast.