I have recently just started looking into purchasing my first property as an investment. Having a read on here for a couple of hours has definitely stopped me in my tracks and made me question my plans. Originally, I wanted to buy in Sydney (looking at Oran Park and surrounding areas.) I was hoping to bring the mortgage down enough within 5 years, that I can remortgage to buy a place to actually live in whilst keeping the investment on the side. My servicing capacity would be around the 650-700k mark assuming approximately $500 weekly rent. I also have my parents willing to guarantee to avoid LMI and have close to 50k saved. After reading about possible falls in the market (especially in over populated areas with super high supply like Oran Park) it's got me worried. I thought it may still be good for me to jump into the market asap with all the future plans for Badgery's Creek and all the new infrastructure going up in the area... Could it be I am better off waiting a couple of years whilst the market is flat to get a bigger deposit together? Am I better off looking into other states? (Something I am quite worried about and have 0 knowledge of) The fact I have no knowledge regarding property and investment makes it all the more scary for me to look interstate because of the huge lack of confidence in my knowledge and understanding the figures and market. Any advice would be much appreciated, cheers.
I would be extremely cautious about Sydney at the moment... But if the numbers make sense to you for an investment property (yield, cashflow etc) and you are comfortable with holding for the long term while factoring in no Capital Gain for next few years - go for it! Local knowledge is generally best. Good luck.
Well the problem is I'm not sure if the numbers make sense =S I would have to throw on around $320 to pay principal and interest which would be no problem at all, I should be able to throw on $600 a week. I've calculated the property would need to go auto at least 2% a year for me to not be losing money.. I'm guessing that doesn't sound too promising...?
Before you buy make sure to speak to a lisenced professional in regards to ownership and loan structure, money and time spent now to save money time and heartache later, very important. In terms of your assumptions on rent and serviceability, I would always go on the conservative side of things, just to assist with unexpected costs and future rate rises, also you'll find (as I did) when you plan for the worst I.e lower rents and/or higher holding costs and live like that you build up cash buffers and offsets quicker meaning you save on interest and in effect either pay down debt or build equity/deposits quicker so you can buy another IP, shares or even some of life's wants and not needs! Truth is no one really knows if it's a good time to buy now or not, but sentiment is clearly changing which could indicate favourable buying conditions ahead! Also ensure your parents and yourself are completely aware of their liability as loan guarantors. Most of all enjoy the process and good on you for taking initiative towards your future and financial independence!
I have been conservative in my estimates for serviceability, I know that is important to make sure you can survive with unexpected interest rate rises and/or decreases in rent also. I've got an appointment with a broker who a friend used and was very happy with this weekend, to hopefully discuss suitable loan structures and and crunch some numbers to get a more accurate indication of where I'm at and what I can afford at this point. I guess I'm more worried about loosing out over the next 5 or so years then what I can afford... Thank you for the advice @Silverson ,much appreciated.
My pleasure mate! My other piece of advice is don't get sucked into fear of missing out! Admitably I battle with this too All the best mate
I maybe biased as I don’t own in Sydney, however I don’t feel it is offering the best returns in the short term. To me a property should yield at least 10% return p.a (income and growth) if you are getting 2% yield you would be wanting 8% growth to make it worth wild and I would struggle to think Sydney has this in it for the next 2-5 years. Not thinking Sydney isn’t a great place to invest but my gut isn’t screaming to me that Sydney is great to invest right now - however only time will tell. If you feel Sydney will give you 8%+ growth than it would make sense to invest there but I would be calculating Sydney probably 5% for next 2-5 years at best for an average. That being said if I owned in Sydney I wouldn’t be looking at selling it(in my stage of life 31) as the buy/sell costs are so high with property and in 20 years Sydney would still do well.
Making money in property market is all about cycles.... the winners and the losers. That is the way I see it, no one shoot me. Market sentiment in Syd has changed, you only have to read the number of negative posts on PC regarding Syd to understand things are turning, or perhaps look at recent auction clearance rates. Next question to ask yourself is do you want to be holding an investment property at peak, where you unlikely to see significant growth over the next xx years? .... but the real clincher is you still have to pay the loan/interest. Add to the dilemma is the fact that interest rates are now on the rise, do the numbers on an additional 2% interest rate? to cover your a$se Next question.... is this attractive investment on numbers alone when you consider Syd rental yields today are around 3%??? without even considering an interest rate rise. MTR
I'm in Sydney. I'd also be cautious about buying now without a great reason to do so. QBE reckons Sydney will be flat for the next 3 years. Make of that what you will QBE Australian Housing Outlook 2017-2020 | QBE You don't have to buy in Sydney just because you live in Sydney. I would read the latest Herron Todd White report Property Report - Herron Todd White and take note of the property clock. Firstly, educate yourself and don't rush into anything. Your post mentions some "worries" and "fear" that you have, take the time to do your due diligence.
The really negative vibe re Sydney is coming from 4 members ,so taking with a grain of salt. Of those members some are attending auctions so have interest some have sold in Sydney so want to make sure its right decision and so on. So now is really important to make your own mind up. Although I agree you have to be very smart in Sydney. Its not the tide that will lift you like in years gone by. I think their is some places in Sydney where you will make money 100% but you have to buy strategic and negotiate well. I think Oran market development is nice. But is it scarce I don't think so. Also new so maybe little margin as developers have taken it.
I would buy in Sydney again but not now, not in the immediate future. Buying interstate is an option but you have to be really proactive and do greater due diligence due to familiarity. My aim is to earn as much as I can and keep it handy.
Thanks for you're response. It really sounds like Sydney is not a good idea. As I mentioned previously, it's worrying for me to look interstate due to my lack knowledge and understanding in relation to the property market. Research will only do so much when I don't have the thorough understanding to do something with it... I guess I've got a lot more reading to do for now... haha.
Thanks for your response. The more I read, the more unsure I become and the more I feel as though Sydney is a no go. =S
Um have you been living under a rock. I would suggest perusing mainstream media at some stage. Did you mean there are 4 members left with a positive vibe about Sydney...? I think there might be 4 who have recently purchased in Sydney, of which you are 1. good luck
