What will you buy for $200k (borrowing)

A friend of mine recently learned that they are going to have a baby (not planned) but they are ecstatic nevertheless. His wife is gonna stop working for a couple of years when the baby comes and they only have a borrowing capacity of about $200k (which will drop significantly when the baby comes and his wife stops working). They have 1 IP that is cash flow neutral, rent where they currently live. I suggested he should look into buying 1 more IP before the baby comes.

So what would you buy if you only had circa $200k in borrowing and enough deposit to spare for a 88% lend? He is after CG with a 5 to 10 year outlook.
I suggested
1) studio unit in Perth middle ring(Belmont etc) in one of those old complexes
2) Elizabeth and surroundings in Adelaide
3) Stay away from regional cities -- too much uncertainty.

 

I doubt they'd get a studio apartment at 88% lend so that really does leave Radelaide. Calling @DaveM and @D.T.

 

Purchase price of 220k.. maybe the Salisbury or Hackham areas. I wouldnt spend 200 in Elizabeth

 

2 bed Unit/Villa in Sunshine (vic) or Logan (qld) will be cashflow +ve, which will help in their case

 

Keep some cash on hand, he's gonna need it !

 

Yeah absolutely.im noy sure id do that ie purchase with 200k borrowings..options will be limited as will cg for that price eg studio. Might be better off keeping the deposit for the baby expenses and think about other investments (that are also more liquid than property ) that could deliver better cg than what 200k in property can get you. eg shares, etf, etc.might not be able to get that loan for non property investments though..

 

Nothing... save some cash, do more research while sitting on the sidelines.
Serviceability sounds tight already, see how the budget works on one income first and if everything is okay look to invest again in a couple of years.
Edit: not that there aren't possibilities in this price range.

 

Plenty of sub 200k deals to be had in Adelaide 7-9% returns as well

 

Stay away from regionals but buy in Elizabeth...well, ok.

I would have said go live in a regional !

 

I guess neither Perth or Eliabeth region are going to be booming anytime soon, so why bother adding upfront costs at this time? Rent return per week would be low at that price range even without a mortgage. A couple of vacancies or bigger maintenance issues could cause serious strain.

 

little 2 bed unit or basic cottage in Eurobodalla south coast nsw might be worth a look poised for ripple out of Sydney, stock falling.

 

Elizabeth and surrounds have had a signficant price rise past 12 months. But I guess if buying at 140k renting at $240pw isnt enough yield then a regional likely wont stack up either?

 

Doesn't sound like a prudent time to be buying.

 

this is valid too though

 

Congrats on the bub @JohnPropChat!

 

Thanks for the all the posts. I'll pass on the information.

He is a buy and hold mindset guy. Nothing wrong with that. With that strategy buy what you can, when you can as long as you don't buy in a boom and pay fair market value he should be alright in the long term. Perth and Adelaide are are not exactly in a boom mode so worth looking into especially now that he knows his borrowing is gonna be **** for the next couple of years. For IPs in that price range - it's also not hard to get CF neutral stock - works well for him in the medium term as well.

He tells me that he has good cash buffers for the baby. He doesn't do any investing outside of property - he should be he doesn't.

Thanks for all the wisdom. Cheers.

 

Thanks @bob shovel I didn't know that I was going to be a Dad
My friend and his wife are pregnant. Not me.

 

What are the fundamentals for CG in those areas and their guesstimate timeframes..?

 

We're all friends here your secret is safe with us

 

You may be giving good advice as a property investor but a lot of the posters who have suggested holding off are Dads as well as investors and you should make sure you pass on that wisdom, too.