Hi
I have a property PPOR with approx 50% equity ( bank valued 500,000, mortgage 230,000). Borrowing capacity 310,000 on interest only secured againts PPOR. Income 90,000 2 dependents and no other investments or liabilities.5 years ago I bought a large block with a very liveable 4 x 2 house with the intention of developing the block at some point. It is 985sqm and likelyy can be zoned to a duplex. 15 of 16 in the cul de sac are single dwellings and another block in the same street is duplex. It is an easy 20 minute drive on freeway to the CBD. I do not want to move home for at least 2 years.
Goal is to aquire investment property through using current asset or greatly reduce mortgage and use surplus income to invest.
Looking around at properties in Perth under 310k I don't see great potential for a positively geared purchase. However, I do have a good sized block, albeit with an awkwardly placed house.
Thought #1. I have land so buying more land on which to build may not be smartest move. Maybe subdivide and sell off part of block.
Thought #2. Land is in short supply and there is not much scope to develop new estates. Therefore get a new block in best proximity to CBD and build IP while prices are flat. 310k will not buy much but it is do-able.
Thought #3. Build a rental property (strata?) on the existing block and use extra income to borrow more in future, meanwhile value of PPOR rises due to extra income stream or possibility to house elderly relative etc.
Thought #4 Do nothing and develop block into 3 or 4 town houses further down the track, use funds to buy a smaller property and invest the rest.
LOts to think about!
Your thoughts are most welcome. Can anyone recommend a building consultant in Perth that could help me weigh all this up?
The more property you own, the more you can take advantage of growth. Owning one block is good, but land almost ALWAYS goes up in value, so if you can leverage one property to buy another property then it could be a good move (if you can afford it).
I agree with you that it would be hard to find somewhere in Perth that is positive cash flow, but you could always aim to buy something that is only slightly negative.
The main reason I would buy again (if it was me in your shoes) is because rents go up in value over time, which you mean you could move from negative to positive in a couple of years if you buy properly, and land goes up every year. By buying another property that you can rent out now, in the future you will have more income and more equity to do you duplex/town house development.
Just some ideas for you to think about. Might be a good option. Maybe you could even buy a place that is ugly but structurally sound and do it up to increase rents thus making it positive cash flow.
Ryan McLean | On Property
http://onproperty.com.au
Email MeThe only straight up +ve geared properties I have been able to find in Perth are the inner city apartments. Lenders have real problems using these as securieties and so maybe isn't the palce to go just yet.
Land and construct is starting to become more popular at the moment as the builders prices are pretty good at the moment (well for Perth anyway). The problem with building in Perth is the time it takes to construct.
Glen
The problem with anywhere is that it takes time to construct. Not just Perth
Ryan McLean | On Property
http://onproperty.com.au
Email Me
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