Melbourne Investing

Hi all,

I am 26 years old and having only recently purchased my first property with my partner nine months ago we are now in a situation where we can look at reinvesting some of our capital. We purchased modestly, a one bedroom apartment in Richmond, Melbourne despite the fact that we were offered a loan by many banks for three or four times the purchase price. We felt something more modest and controllable for our level of knowledge and experience was best.

Having read all of Steve's books and many others, a lot equally as good (different approaches but still great concepts) and conscious of not becoming paralyzed with information we have added significant value to our property without spending to much cash. More perceived value than actual cost.

Facts and Figures

Purchase price: $189k

Deposit: 5% (30 day settlement)

Costs: $9.5k (covered by first home buyers grant)

Renovation costs: $11k

Previous rent: $170 p/wk

Current value: $260k

Current rent appraisal: $250-$260 per week

With significant equity and having approached the banks again and having them literally throwing cash at us we are wondering what we should now do?

The kind of person I am at this stage isn't entirely comfortable with investing interstate. Not the most perfect investing mindset but for the moment need for it to be a little more accessible, viewings, renovations etc and a little more in my control. If only for now. Saying this I have extensively review regional markets, especially on the east coast and I do like some of what I have seen.

There is still great money to be made here in Melbourne with a little creative thinking. Purchasing three bedroom property that is structural sound on a decent size block which is close to all amenities and within eight to ten kilometres of the CBD is a great idea. Subdivide the property, develop the subdivided block, another three bedroom property and renovate the original property.

Basic Figures

Purchase price: $500k

Deposit: $50k

Costs: $25k

Renovation costs: $100k

Subdivision & development: $150k-$200k

These figures are based on research of areas that meet the above criteria. All of this 'mathematically' is possible. Current prices of properties renovated, $650k to $700k and the new developed/subdivided property, $350k to 450k.

This is a great idea, on paper but is financially unbelievably unachievable! I have friends similar to myself with whom I've discussed these thoughts with and are excited about gaining financial freedom and by combining our efforts can achieve this with posssibly less risk, in less time and with less stress. I would like your advice however and your thoughts and experiences with investing.

I have very high goals and know that I can achieve them. Being stupidly ambitious but also quite a realist all I need is the knowledge, to date I feel I've done OK with me research and experience, and the desire, which I have an abundant amount.

I look forward to hearing from you all soon.

Thank you very much for your time.

Jacob

An excitable property investor

Sorry for writing so much. My partner tells me I waffle to much. Sorry.