Join Australia's most dynamic and respected property investment community

Where to buy 2 properties with good rental return and price around 250K - 300K

Discussion in 'Where to Buy' started by MissBee, 29th Jun, 2016.

  1. MissBee

    MissBee Member

    Joined:
    30th Jul, 2015
    Posts:
    14
    Location:
    NSW
    Hello community,

    I am wanting to purchase 2 properties for the purpose of having an income from the rent, so a good rental return is necessary. Of course, if a suburb has a good rental return and a potential for capital growth that would be even more desirable :)

    I am wanting properties around 250K to 300K. I will be paying cash for both properties and my budget is 550K. I am specifically looking to purchase houses, not units or town houses.

    A question also came to my mind, whether it would be better for me to buy 1 property at 550K for an income, or 2 cheaper properties to achieve 2 smaller incomes (that together would be a reasonable amount for me to live off)? I plan to live overseas in Asia for a few years while I study, so expenses are not high for me.

    I grew up in NSW so I know this state pretty well, and I am also familiar with parts of QLD. Given my small budget I imagine that I would be looking at more rural towns rather than capital cities.

    I am a newbie and have not bought property before, and have had a significant procrastination issue because, to be honest, I am so overwhelmed with this process of researching and then trying to make a decision....this has led me to stay stagnant and make no decisions. I have been overseas for some time and I have decided to come back to Australia to finally go forward with property investment. This is why I am asking the forum for some assistance.

    I would really appreciate any suggestions for areas that would be a good investment for my plans, and any other helpful information that could assist me in making this step forward.

    Thank you in advance.
     
    Last edited: 29th Jun, 2016
  2. +men

    +men Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    82
    Location:
    Sydney
    I would not consider 550k cash as a small budget.
    Have you ever considered getting loan(s) in order to leverage your portfolio?
     
  3. MissBee

    MissBee Member

    Joined:
    30th Jul, 2015
    Posts:
    14
    Location:
    NSW
    Hi +men

    I have considered this as an option. However, I would like to own these properties outright and receive 100% income. Also, I have not been working for some time so I don't have any current employment history so apparently it would be difficult for me to get a loan. If I own these properties, and receive a rental income, I would be able to get a loan after the purchases. I will still have money after these purchases that I can use for a deposit for another investment or 2 in the future.

    Another reason for me to hurry up and stop procrastinating is that right now I can see that the global economy is very unstable, Brexit, EU/Euro risk if other countries exit EU, Japanese economy, Chinese economy, US economy/sovereign debt...all looking very tenuous, and if their is a major economy failure it could become a global economic issue. I don't like the risk of having my money in the bank so I am purchasing tangible assets. Therefore I like the idea of owning properties and land outright (initially), and thus safe-guarding my assets, and then playing with debt/mortgages after that. Do you think this is a reasonable plan? If you (or others) think I could be doing it differently I would appreciate your input.

    Cheers
     
  4. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    736
    Location:
    Homeless
    If your plan suits your goals and risk profile go for it. Everyone is different and their goals may not work for you.

    I haven't looked there much but Adelaide should have something in your budget still which gives you a capital city.
    I personally wouldn't buy in a place with under 100k population, many have done well doing so, just not for me. Not sure where you could look around Queensland or NSW for the second property.
     
  5. ej89

    ej89 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    688
    Location:
    Sydney.
    Ipswich and surrounds. Anything you pay full cash with will be positive haha
     
  6. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    Sydney
    2

    2 x NRAS. You'll receive the NRAS tax credit whether you are a resident in Australia for tax purposes or not.

    That's $11,048 tax free dollars ( this year - it will increase next year, and the year after, and the year after etc- for 10 years) on top of the rent. x 2

    But you'd have to compromise on being able to do it with houses. Not possible at 250-300K

    Alternatively, you could look for a dual income house as an alternative to NRAS.

    The advantage of NRAS is the tax credit is paid separately to negative gearing refunds, so you'll still receive the uplift to your total yield whether you are resident in Australia for tax purposes or not .

    With other options, you'd be wanting to use depreciation to provide an uplift to your yields - even as a cash buyer - but you wont be generating a taxable income in Australia so that wont work for you
     
    Last edited: 30th Jun, 2016
  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
    Rural won't be necessary.

    A number of my clients are picking up houses in the Logan area around the $270-$330k mark and seeing 6% rent returns, or higher. And I'm aware of plenty of stuff in Adelaide with similar rent returns, and even lower purchase prices.

    You could also buy a couple of cheap renovators and renovate to improve cashflow if you're game. Or even buy a house and build a granny flat out back.

    Euro's suggestion may make a lot of sense for you too, if income is the main focus.

    Given capital growth is also a consideration, another option is buy a house closer to a CBD either with the lot, or spend a bit less and keep aside some cash to reno (add value and improve cashflow).
     
  8. Balman

    Balman Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    118
    Location:
    Perth
    Consider parts of Adelaide for relatively good returns with lower capital investment.
     
    DaveM and D.T. like this.
  9. Mabelle20

    Mabelle20 Active Member

    Joined:
    23rd Aug, 2015
    Posts:
    35
    Location:
    Melbourne
    HI there,
    Can you please explain further what this is all about? I've not heard of this before- I'm in Melbourne so maybe this is just a qld incentive?? thanks
     
  10. jins13

    jins13 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    932
    Location:
    Sydney
    Talk to @D.T. if you are interested about Adelaide.
     
    D.T. likes this.
  11. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,569
    Location:
    Adelaide, SA
    I agree :)
     
    jins13 likes this.
  12. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    Sydney
    Hi. Lots of posts RE NRAS.... rather than writing again, just have a read of those...
     
    Mabelle20 likes this.
  13. Chabs

    Chabs Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    149
    Location:
    Sydney
    I would consider shopping around for a good commercial property.

    One with the right tenant at the right interest rate even with a 50/50 LVR will be reasonably safe or at worst 60/40 where you carry the 60%. Just have to shop around for a deal that suits.

    A lot of banks will lend to you at really good rates if it is safe enough. I got a 4.39% on a suncorp one (4.19% now) with 70% leveraged! In commercial yields are typically higher than residential too.
     
    D.T. likes this.
  14. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,544
    Location:
    Sydney or NSW or Australia
    If you're not chasing capital growth - Launceston or Hobart
     
  15. MissBee

    MissBee Member

    Joined:
    30th Jul, 2015
    Posts:
    14
    Location:
    NSW
    Thank you everyone for your input so far...I am still keen to hear other suggestions.

    Thank you. I would also like capital growth. Does it not exist properties where one can acieve yield and capital growth?
     
  16. hash_investor

    hash_investor Well-Known Member

    Joined:
    11th Oct, 2015
    Posts:
    912
    Location:
    Sydney / Canberra
    Where in Adelaide are ppl looking to buy for 7% yields? Something with not much maintenance required?
     
  17. Chrispy

    Chrispy Well-Known Member Premium Member

    Joined:
    21st Jun, 2015
    Posts:
    300
    Location:
    Melbourne
    Cairns ... if our dollar goes back down then you can expect more tourists. Although at the moment they are probably all heading to London!! Tourists mean more employment, meaning more employees, hence the southerners go back up to Cairns for work and rentals become in demand. Although it looks like houses in the good suburbs have increased in the last year.
     
  18. Mick Butterfield

    Mick Butterfield Well-Known Member

    Joined:
    15th Jan, 2016
    Posts:
    408
    Location:
    Bermagui NSW
    Lots of good options at that point have both one in Ipswich and am considering going for a second soon or looking at;
    - Salisbury LGA (SA)
    - Christies Beach and surrounds (SA)
    - Launceston (TAS)
    - Hobart (TAS)
    All have options in your budget with attractive yields and fundamentals for CG.

    Mick
     
  19. JDP1

    JDP1 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    2,838
    Location:
    Brisbane
    of course they exist. ..but they will be rarer, and likely have high competition.
     
  20. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,569
    Location:
    Adelaide, SA
    5108, 5114