What and where to buy for under $500k?

Hi everyone

If you were in my shoes and planning to buy your first investment property in Australia for under $500k, what and where would you buy? Something that is slightly cashflow negative is acceptable but it should have capital growth in the near future. I would like to grow a profitable portfolio as soon as I can

Thanks

 

In your shoes? Would go and actually do some research myself.

even if people suggested areas you are just going to start with the “but how about”s. And then you get overwhelmed by a hundred areas.

not seeing enough commitment here for people to help you. Have you read anything in the last month since posting? The world is a little different compared to 6 weeks ago. How has that changed your thinking?

 

Good question.

I would find a beach town in South Australia some where and get a house near the water.

 

I'm in a similar position, 500k to spend on 1st investment property, based in Sydney; one of my strategies is looking at units that hug the proposed stage 1 Parramatta Light Rail. Other options include Townhouses that are in the vicinity (Merrylands, Auburn etc). Although these areas could be seen as more risky and will take longer to gentrify. The focus needs to be finding areas that will outperform the market. This will be based on proposed infrastructure, speed to get into the city and other amenities that will make it a place people want to live in the future.

 

How can anyone tell you what area is going to have capital growth in the near future? No one can predict that, especially at the moment. You do realise that the economic side effects of covid will be at play for a while?

My suggestion is not to buy for 'growth in the near future.'. Take responsibility yourself for any value growth in your portfolio by buying property that you can add value to. Growth is a bonus.

 

That's certainly a fair enough point!

 

Thank you for the helpful idea and information. I will look into this Good luck with your first investment

 

That's a good plan and it's definitely a good way to invest by following the infrustructure.

Parramatta is still growing and has alot more to grow with all there developments like Paaramatta square.

I think North Parramatta can be considered cause it can still be walking distance to centre.

 

Maybe you can tell us a little about what areas or States that maybe of interest to you ?

It's a very board question you've asked.

 

I am obviously biased by my localized knowledge, but $500k can get you a reasonable property on Brisbane outskirts if you want something that will combine low risk, reasonble yield and reasonable cashflow prospects (i.e. the safe bet). I don't believe that budget will get you anywhere near the capital in Sydney or Melbourne (happy to be disagreed with?), though Adelaide probably has some good prospects?

 

An investment property or farm in a rural area not too far from major metropolitan areas might be a good deal in the near future. With post COVID-19 and remote working begins to be the new normal, I think commute distance might be less important compared to now. Properties on the fringe of major cities might be hot again. Just a few thoughts

 

Honestly safest bet is to just buy something in Brisbane that allows you to build a granny flat or 2nd dwelling out the back

 

In Brisbane you can't rent out the granny flat to anybody, the occupants must be related to someone in the main house.
Experts warn Brisbane homeowners about renting out granny flats

 

You can in some parts of the Greater Brisbane region

 

It depends upon your goal. Do you have a mortgage already or are you just wanting to buy property? Do you know what yield or ROI you are expecting? Are there other assets out there that could provide greater ROI? There are a lot of questions to ask before just buying property.

 

Sharkling,

I am in Brisbane and would have to agree with some of the others, there are still some really good buys up here around that. If I were starting again, I am not sure I would do much different - buy good low maintenance properties in areas with good growth potential (yeah none of us know for sure), things like big infrastructure spending, job creation, new schools etc. Don't sacrifice your cashflow though, if you have to fork over money every week or month, if things get tough you might have to sell before you get to see any good gains.

Have you seen this article? I am biased being in the building industry but it is all pretty exciting stuff.

Brisbane's Top 15 Major Projects 2020

 

Infrastructure spending is great, but it won't necessarily give you the short term capital gains that you are after. There's a number of short term suburb growth factors which put pressure on property prices, and future infrastructure is not generally regarded as one of them. On the other hand, if you are seeking opportunities with long term gains, then you don't need to be as methodical and data driven to uncover the right areas. You'll just wait for the next big property cycle in Brisbane to help lift the price of your property; in which case, a house with a large land component will mean you do quite well. The only issue with that approach is Brisbane has been waiting for quite some time and experts are still not convinced the time is now.

 

Fair points there. How I look at it is the infrastructure spending is a result of population growth, how often do you see governments spending $1b on areas that are not exploding with population growth? The population growth puts pressure on property prices as long as the supply cannot meet the demand. But the biggest thing for mine is the jobs it creates. If there is work, people will stay and if there is not, they won't. Look at any mining town as an example of what happens where there is plenty of working and spending versus when they stop.

 

Well, let's look at Sydney as an example. They are going to spend *$55.6 BILLION* just on transport alone over the next 4 years.

https://www.budget.nsw.gov.au/sites/default/files/budget-2019-06/Budget_Paper_2-Infrastructure Statement-Budget_201920.pdf

Summary below;

• $32.2 billion for public transport projects
• $23.4 billion for road projects
• $300 million to improve accessibility for rail customers, part of an $885 million spend on the Transport Access Program over four years
• $812 million towards new trains
• $6.4 billion over four years for Metro West
• $480 million to upgrade sections of Mamre and Mulgoa roads
• $561 million for Parramatta Light Rail project
• $450 million to ease congestion key traffic bottlenecks

Based on the infrastructural logic, then Sydney-siders could make an argument that they will experience an imminent boom. Also, with the proposed infra work in Brissy, did you check how many jobs it's going to create and what time it's saving for commuters?

One more note; Many experts concur that population growth (as strange as it sounds) is also not a key driver for SHORT term capital growth.

 

You make a good argument for Sydney. Perhaps an option for Sharkling to consider. What can he get within 30KM of Sydney CBD for his $500K?