Hello,
It's a goal of mine to own a property next year and I would really appreciate some advice.
I'm a few years away from 30, live in Melbourne (work in Collingwood) and currently rent in Parkville.
Currently I have 80K in savings and have been given a pre-approved loan of 315K.
Therefore my budget would be somewhere between 350K – 400K.
I am relatively new to the country and new to property, so I'm trying my best to do research into Melbourne suburbs to find out what options I have. Id like to keep central(ish) to the CBD and handy to public transport as I don't have a car, but ultimately I want to make a smart investment.
It would be great to hear your thoughts on what you would do in my situation.
Thanks
Thomas
Hi Thomas
With a budget of 350k-400k, you would be talking apartment if in the CBD or really close to it, or a unit if on the fringe. In order to get a townhouse you would need to be a few train stops fro the CBD, or further for a house.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If you were to generalize with Melbourne then the Eastern and South Eastern suburbs are more expensive than the North and West where you could get more bang for your buck. Whether that translates into better capital gain down the track is another thing.
As Jac mentions, within the CBD or surrounding suburbs for your kind of budget an apartment will be the best you could do. In Richmond you might get a 1 bedroom for that price, on the other side of town in Kensington/Ascot Vale you might get a 2 bedroom.
You have made a decent start with the savings, just need to make sure that you structure the loan properly when you buy to take into account your future goals.
Cheers
Tom
If you intend to buy more property and retain your first one as an IP then get your loan structure right from the outset.
Go interest only with a linked offset and use the offset as a savings vehicle for your next purchase.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
Thanks for the advice so far. It's most likely going to be an apartment that I buy and will be my primary residence. I'd like to retain it as an IP and aim to secure a bigger property in the future. What do you think about the idea of getting a cheaper unit than what I can afford and having more equity in it with less mortgage?
I've seen some well located (albeit small) units priced around the mid 200K mark. What do you think of starting with something like this?
In that case you need to do as Colin suggested and IO with linked offset.
There are two ways to make money with investment properties. First is with the rental income which should increase every year leading to a higher yield. Secondly is with capital gain. It's all good and well buying a mid $200K property because it's cheap, but if you're not to going to receive a decent foreseeable income and have decent gain over the long term, then all that will happen is that you will be holding the property at a loss so you might as well not have had it in the first place.
Cheers,
Tom
Ardmore wrote:Thanks for the advice so far. It's most likely going to be an apartment that I buy and will be my primary residence. I'd like to retain it as an IP and aim to secure a bigger property in the future. What do you think about the idea of getting a cheaper unit than what I can afford and having more equity in it with less mortgage?I've seen some well located (albeit small) units priced around the mid 200K mark. What do you think of starting with something like this?
Interest only with an offset all the way.
This article might be helpful – it explains the concept in more detail.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
That's a great article. Thanks for sharing that. Interest only and Offset makes a lot of sense.
Ardmore if you structure the first loan correctly you should be able to buy again fairly quickly even with limited savings.
Some lenders will allow you to borrow 95% + LMI plus offer a further secured line of credit to cover renovation costs or funds for future deposit etc etc.
The cheapest interest rate is not necessarily the best move in the long run for ongoing acquisitions.
Flexibility is always key for investing.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Perhaps check out meetup.com for some property type meet ups. There you may be able to network with lots of potential investors. Thomas, I would also be suggesting that you try to take some of the well established Investors here out for lunch. Find some people with the experience and success in what your trying to achieve.
Adrian Cahill | AdrianCahill.com Personal Development Expert
http://adriancahill.com/from-investor-to-coach/
Email Me | Phone MeHere since 2002, however things have evolved over the years.
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