Suburbs for Investment ($350-450k)?

Discussion in 'Where to Buy' started by KTJH, 23rd Feb, 2021.

Join Australia's most dynamic and respected property investment community
  1. KTJH

    KTJH Well-Known Member

    Joined:
    14th Dec, 2020
    Posts:
    49
    Location:
    Sydney
    I've got my pre-approval ready, along with $150k deposit available.
    Since it will be my first investment property, I am looking at the cheaper houses outside of NSW. I am more inclined to purchase something that's brand new and am considering all states across Australia as well that can provide good cashflow and capital growth.
    I'm steering away from apartments/units/complexes.
    I'm hoping to spend as little of my deposit as possible so that I can consider a second investment property in the near future.

    Could anyone advise a starting point on where to look?
    With that kind of budget, I've ruled out anything that is under 20km from major cities. So far, I've been looking at South Australia - Andrews Farm, Playford area.

    My broker has also advised that if I went with a dual key, my borrowing capacity would increase significantly.
    Although I am not sure how capable I would be with managing the logistics of having 2 tenants at the same time. I've been researching lots of Pros and Cons about dual-keys but I still don't know if it's a good move for me.

    Look forward to hearing from the experts here. Thank you in advance!
     
  2. Westie

    Westie Well-Known Member

    Joined:
    19th Jun, 2017
    Posts:
    1,136
    Location:
    Melbourne
    You should read everything in the Ballarat, Bendigo and Traralgon threads on here.
     
  3. KTJH

    KTJH Well-Known Member

    Joined:
    14th Dec, 2020
    Posts:
    49
    Location:
    Sydney
    Reading about it now.

    What about somewhere like Deebing Heights? There's supposedly a proposed train line too.
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Dual Key or Dual Occ? Dual Key won't be touched by a lot of lenders so choose carefully, dual occ more chance.

    Deebing Heights is in an area that has a lot of new developments going on, expect capital growth to be minimal and more houses coming on the market means less chance of solid rental returns, my opinion only, not advice.
     
  5. Bwinny

    Bwinny Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    136
    Location:
    Sydney
    dual key + new estate + "recommendation from broker" = it might sound a little suspect? (it might not be but definitely be sure to do some serious due diligence
     
  6. NickWCBA

    NickWCBA Well-Known Member

    Joined:
    29th May, 2019
    Posts:
    339
    Location:
    Australia
    I wouldn’t be touching anything Andrews farm at that price point. You’d find plenty in NE Adelaide around 15km from the city at the 400-450k mark. Good yields and healthy growth. Think ingle farm, valley view.
    here’s a good example...
    84 Brougham Drive, Valley View, SA 5093
    https://www.realestate.com.au/property-house-sa-valley+view-135506762
     
    M_Chad88, SAlad and Bwinny like this.
  7. KTJH

    KTJH Well-Known Member

    Joined:
    14th Dec, 2020
    Posts:
    49
    Location:
    Sydney
  8. KTJH

    KTJH Well-Known Member

    Joined:
    14th Dec, 2020
    Posts:
    49
    Location:
    Sydney
    What is the difference between the two if I may ask?
    I always assumed that a dual key would be for the sake of dual occupancy, and to provide double rental income?
    I'm not quite comfortable with the idea of managing 2 tenants in 1 property to be honest.
     
  9. NickWCBA

    NickWCBA Well-Known Member

    Joined:
    29th May, 2019
    Posts:
    339
    Location:
    Australia
  10. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Suggest you do more research, lots to learn regarding property investing, luckily there's plenty of info on this forum if you search for it.
    What is your goal? Capital Growth to use equity to further invest or cash flow?
    Dual occ usually have seperate entrance, dual key have a shared entry, different floor plans.
    Both provide two rental income streams
    Each are treated differently from a lender perspective.
    A property manager would be looking after the management of the tenants not you...
    I would not buy dual key personally
     
    Last edited: 25th Feb, 2021
  11. gach2

    gach2 Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,895
    Location:
    sydney
    I wouldn't invest in new properties in what looks like the middle of nowhere. I know people have made money out off it (usually purchased where land supply is limited) but lot have lost. If its PPOR thats fine.

    Near that suburb is red bank plains and surrounding suburbs. Ignore Springfield etc and you can see lot of places sold 10 yrs ago for 400k (200k land + 200k build) and now selling for 300k (land still worth 200k and house now only 100k).
     
    NickWCBA likes this.
  12. KTJH

    KTJH Well-Known Member

    Joined:
    14th Dec, 2020
    Posts:
    49
    Location:
    Sydney
    The long-term goal is for me to build a small portfolio of investment properties. Definitely looking at using the equity from the first property to purchase a second.
    I've got a comfortable salary at the moment but I am currently renting so I would prefer to invest in a positively geared property to not cripple myself in the long-run.

    Correct me if my assumptions are wrong about this - Rental properties closer to main cities are currently providing lower percentage yields at the moment? I live reasonably close to Sydney CBD and the rent I am currently paying is $100 a week less than what the previous tenant was paying pre-Covid.

    How far from major cities would you consider as middle of nowhere? What does PPOR mean?
     
  13. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    I wouldn't be building a new property then, just my opinion based on the lack of capital growth I've seen from new builds in SE QLD
     
  14. nth brisbanite

    nth brisbanite Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    385
    Location:
    North Brisbane
    PPOR means principal place of residence. Middle of nowhere to me means 30 to 40 kms from the edge of suburbia.

    Agree that yields for property in suburbs may be poor and could even be cash flow negative. If you want to be cash flow positive you may have to invest in new estates but the downside is that the capital growth over a long period may be abysmal. What happens if you have to sell your new property in a hurry? You may end up losing money. Take the advice of some seasoned investors who have recommended that you don’t invest in new estates which are in the middle of nowhere.

    in my case, I did buy new property but it was always in either built up suburbs or very close to these suburbs. I have had them for a while and am very pleased with their performance.
     
  15. Nemo30

    Nemo30 Well-Known Member

    Joined:
    31st Dec, 2015
    Posts:
    596
    Location:
    Somewhere
    I think its a great time to buy. Your 350-400k budget gets you an ok property in Adelaide - you dont have to go to whoop whoop. I wouldnt buy in playford council area. Its very low socio economic. You can do much better for your budget.

    North I'd be looking at Ingle farm and surrounds.

    South Id be looking at Happy Valley, Reynella (not west of expressway), Morphett Vale, Christies Beach, Moana (far out but close to beach and becoming popular)

    If you want to draw equity, perhaps look at something older that you can do a cheap cosmetic freshen up. The market is rising anyway so i cant see you losing.

    Also dont necessarily put all your deposit into 1 house. Put the minimum cash in, which will enable you to buy again sooner.
     
    Last edited: 26th Feb, 2021
    D.T. and NickWCBA like this.
  16. Nemo30

    Nemo30 Well-Known Member

    Joined:
    31st Dec, 2015
    Posts:
    596
    Location:
    Somewhere
    Also be aware that adjacent suburbs might not be equal.

    For instance, south I would buy in Morphett Vale any day of the week, but I wouldnt cross the road and buy in Hackham West, Huntfield Heights etc If I did i would want a serious price difference. There is a stigma associated with some suburbs.

    Christies Beach is adjacent to Port Noarlunga - the latter is very popular (my fave southern suburb) and unlikely in your budget, while Christies Beach is within your budget.

    Properties are selling at first opens. You either need to be on the ground, buy sight unseen or get someone to look for you. If you want someone to look DT offers that service for interstate buyers.
     
  17. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    Your budget goes into a lot of suburbs in Adelaide, a few of them have been mentioned in this thread already.

    It’s quite difficult to buy here at the moment , all areas have low stock levels and lots of competition. Things are selling at first open so you really need to get in and offer before that occurs. We can help interstate people with viewing property or with renovations.
     
    trinity168 likes this.
  18. Nemo30

    Nemo30 Well-Known Member

    Joined:
    31st Dec, 2015
    Posts:
    596
    Location:
    Somewhere
    Id buy something like this.

    https://www.realestate.com.au/property-house-sa-morphett+vale-135534394

    Its at the cheaper end for the suburb - expect it to go at the higher end of the advertised range

    It can be updated cheaply and easily - rip up the carpets, paint the brown skirting/timber inside and maybe new kitchen - total spend around $10k.

    It would potentially rent for around $340
     
  19. NickWCBA

    NickWCBA Well-Known Member

    Joined:
    29th May, 2019
    Posts:
    339
    Location:
    Australia
    IMO push for a bigger block size.
     
    Nemo30 likes this.
  20. Nemo30

    Nemo30 Well-Known Member

    Joined:
    31st Dec, 2015
    Posts:
    596
    Location:
    Somewhere
    NickWCBA likes this.