Where to buy IP for 350-400K in this environment

PC gurus,

Thinking of investing to buy an IP for 350K-400K in this current environment.

A new build will suit due to reduced stamp duty.

M open to all States....as i am looking for a property that will almost pay for itself with growth potential as well.

Thank You!

 

Have you narrowed down on anything?


Regards

 

I was thinking around Geelong and Ballarat H&L simply because i live in Melbourne. However, I am up for suggestions for a much better option esp in this downturn period

 

Hmmm
I'd say keep your eyes open for deals in North and west as well.

I can see deals in vic markets. Keep prices point low. But these days 480k is the norm somehow.

Regards

 

What you suggest isn't impossible but it doesn't sound so likely to pan out well I guess.

I suggest to review your goals and define them a bit more clearly, then perhaps you will see a way forward.

Many investors on this forum would suggest that your starting criteria are somewhat flawed. The vast majority of what I consider to be acceptable investment quality prices in that low budget range would be older homes not new builds. This is for several reasons.

1 - New properties most often are purchased in new estates. New estates are inherently imbalanced supply/demand equation locations with more land being released. This effectively ruins capital growth until the supply runs out after which point the market can become more balanced. Many 2nd hand homes in new estates actually fall in value for the first few yrs then stabilise and grow later

2 Constrained supply is what drives growth so established built out areas are more likely to offer "growth potential" as long as they have growing populations or incomes or both

3 To get a brand new home for $350k at current project home build costs you need some very cheap land. That is only going to exist where there is no constrained supply (see points 1& 2).

4 To acheive what you say you want "almost pays for itself and growth potential as well" in relation to points 1-3 is a challenge. I would question whether you will get the growth in a new estate. You could try infill development in a good established growing area but can it be achieved for your budget? You would need to be a savvy negotiator (with builder not on the property) and manage them tightly.

Hence for folks looking to spend $350-400k at present I am mostly suggesting older properties, either units in very central but non city coastal areas or homes on own block in select coastal and regional areas with the most important things being new infrastructure spending and population growth trends established to help boost medium term growth. I prefer houses with yards to units as they also offer long term potential for dual income via secondary dwellings etc.

Just my 2c.

 

Agree with all of the above.

 

+1

 

Thank you for the responses!
Saving $$ on Stamp Duty and maintenance costs is a big attraction to me....

Having said that, would you recommend i look at other States other than the declining Melb market?

Maybe Adelaide/Brisbane? Which area is likely to give better returns in the next 5yrs?

Any thoughts?

 

I would definitely recommend looking in other states besides Melbourne. As far as Adelaide goes, who knows as it’s never been a boom or bust city...it just kind of ticks along.

There are opportunities in Brisbane at the prices you’re looking at but no one has a crystal ball as to how it will pan out, particularly in cheaper markets. There are many variables to come this year.

- Andrew

 

I think with that kinda budget you might be better off in Adelaide. In Sydney/Melb it doesn't really get you anything, in Brisbane it gets you into the lower end type suburbs. In Adelaide it gets you into a half decent type suburb.

Lower end suburbs have certainly boomed in various cities at various points over the past decade, so they look exciting when you see a sudden increase. But i think getting into a nicer suburb gives you better long term odds, better quality tenant, less headaches. Adelaide has been very steady, the suburb i live in got 12% over past 12 months

 

Qld and Adelaide will offer some good opportunities in that price mark with growth prospects/dev potential...

But will come down to overall cashflow/strategy you plan to adopt...

Cheers,

 

Hi Kushanda

Some really good advice already in this thread. I'd avoid new builds - generally these are on smaller blocks of land, with a large supply of 'cookie cutter' houses - with a large supply, impacting future growth, as well as rental returns as more of the same stock comes on the market.

 

If you can up it to $450k you could go for a decent sized house in Mayfield in Newcastle. Long-term I think pockets in this suburb will gentrify and imo (as a Sydneysider) Newcastle is still a somewhat underrated secret considering how beautiful it is.

 

If you have more $ of course will do better but if budget constrained below $400k the options 2hrs north and 2hrs south of Sydney are really quite good if you know what your are looking at/for.

 

Mornington has some good options and likely strong growth opportunity. But you may need to increase your budget to around the $450,000 mark.

8 Illowa Street, Mornington, Vic 3931
59 Robertson Drive, Mornington, Vic 3931
1/100 Tanti Avenue, Mornington, Vic 3931
5/56 Wilsons Road, Mornington, Vic 3931
7/1-3 Wendy Street, Mount Eliza, Vic 3930

 

450k wont get you much in Mayfield. After years of sustained growth I'd hardly call Newcastle an underrated secret anymore.

 

Redcliffe peninsula has everything going for it at the moment in regards to that price bracket. Plenty of 3 bedders in close proximity to the foreshore @400k .

 

Agree Redcliffe peninsula I think presents the best value. Can get a nice house on 600sqm block in kippa ring for about 380-410k. Place would rent at about a 5% yield. Possible good capital growth too in next 5 years

 

Hey DT,

We are also in a similar position and looking at purchasing two IPs in the next 6-12 months. Currently looking in Brisbane and also interested in Adelaide. Are there any particular suburbs you'd recommend looking closer at around Adelaide for around $350k - $400k.

Open to houses or townhouses provided they have a decent growth potential and aren't going to cost me an arm and a leg to hold as this our first 2 IPs and don't want to restrict servicing ability too much moving forward to hopefully keep building the portfolio.

Thanks!

Dave

 

I still really like the Redcliffe Peninsula and we have bought quite a few there for clients. Yield is good, infrastructure in the area is great, income growth higher than state average and a natural land-lock on the peninsula itself.

I would say that area or some suggested Adelaide suburbs would be a good place to start looking but as has been suggested, another $50k in your budget would really help your options. It would only be another $10-11k of cash up front including a bit of extra stamp and cash flow would probably be equal with a slight increase in yield.

- Andrew