2019 Money Magnet Symposium - Discover how to make, and keep, more money and achieve a financially empowered future
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  • Profile photo of ProptyPropty
    Member
    @propty
    Join Date: 2013
    Post Count: 3

    Hellp Everyone,

    Need sm advice. We've already done a mistake in buying an investing in property ( a land in drouin two years ago, with the intention to sell by the settlement time and gain profit but ended up exiting the contract cos land prices went even down) and now got my eyes and ears open widely…!

    We live in Melbourne and planning to buy an investment property with a budget of $370k.

    We were considering our options…… and something we heard was to buy interstate in Perth.

    Other options we are considering are in victoria

    – Mernda a brand new house and land package : maximizing tax return

    – Wantirna south : land size of 700m2 with an old house : with the intention of subdividing in 10years

    – Noble Park : Unit with demand for rental.

    Is it a good idea to invest in Perth, Will it have a significant gain than Melbourne and is the market in Perth is secure?

    Would really appreciate your opinion,

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Propty,

    Drouin was always going to end badly – especially when you were trying to flip the property. Small market, finite and unforgiving timeline, and risky strategy. For these reasons I, for one, certainly wouldn't be making all future investment decisions based on your Drouin experience.

    Perth is a major capital city and many of t he key fundamentals look rosy for Perth – the current market is moving well (even though the stats don't show the whole picture) and looks OK moving forward. Stock levels are extremely low and rental vacancy rate remains below 3% – albeit it is showing a slight rising trend in more recent months. Fundamentally I would argue that Perth offers better options than Melb (but I am biased)

    Re-reading your post it would appear as if you need to clarify what you are trying to achieve. The three options you have provided all have different reasons underpinning them – a lack of clarity means you may have difficulty clearly identifying which property and area is most suited to your goals.

    If Perth is your preferred option you will need to give due consideration to how you will go about your research and purchase. Get these two ducks lined up and you'll enjoy success.

    Stats and suburb profiles for Perth suburbs can be found on http://www.reiwa.com.au website

    Profile photo of ProptyPropty
    Member
    @propty
    Join Date: 2013
    Post Count: 3

    Hi Derek

     

    Thanks for your comment.

     

    You are right. We are not clear as to what's the best investing strategy for us as first time investors with a budget of 370k.

     

    What we are considering is to:

     1.) Claim some tax – which we end up paying combined 20k annually.

     2.) Have a good capital growth ,eventually when we sell in 10 years time, that will help us to pay off our mortgage quickly

     3.) Also something that would give a good equity next 2-3 years to lead us to build our property portfolio.

     4.) And the safest investment option – losing little or no money!

     

    I know we cannot achieve all in one. But cant weigh up which of above considerations is the most important and move on.

     

    We heard Perth will have a capital growth of 22% in future vs Melbourne 3%. Which sounds appealing.

     But for our budget of 370k the option we have to buy an apartment in Perth – 7km with CBD.

     And Apartments sounds risky again..!

     

    Would you personally invest in a Apartment in Perth CBD or would consider other options in Melbourne?u personally invest in a Apartment in Perth CBD or would consider other options in Melbourne?

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,681

    Perth is high risk. While the Perth market may appear buoyant at the moment WA economic fundamentals are deteriorating rapidly. Many areas of WA are in decline and at the moment I see a retreat to Perth as the main driver of current activity. I don't expect that to continue for much longer. At some point the largely uninformed market will realise that growth/price drivers are weakening or simply disappearing. When that moment comes I expect to see the Perth market at best drift sideways and at worst decline quite rapidly. 

    This isn't to say there aren't opportunities in WA but that they are high risk and require the knowledge and experience of a veteran investor. Preferably one resident or familiar with the idiosyncrasies of the region.

    Property markets are going to be tough going for some time. I expect to see quite a high casualty rate for the over leveraged and less sophisticated investor for the foreseeable future. The winners will be few and far between.

    Profile photo of ProptyPropty
    Member
    @propty
    Join Date: 2013
    Post Count: 3

    HI Freckle,

    Thank you so much for your post.

    That make sense. And we are even more confused..! Meaning we need to do further research -Trying to find an low risk investment property.

    Propty

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,681

    Sydney is probably the lowest risk market historically and NSW as a whole is the only state with reasonable economic conditions. That said you can still easily get your fingers burnt there as well.

    If you're confused then you're not ready yet. It takes time before you can confidently get your head around the necessary skills required to invest confidently. Absolutely no harm sitting on your hands and spend a year or two learning the ropes. One screw up now and like so many you waste years and loose your grubstake. It's not a booming market. There's no rush. In this type of market patience is an absolute must.

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