First investement property advice needed

[jus085]

Hey Guys,

I'm currently looking at getting my first investement property somewhere in the melb area. The idea is to negative gear it an draw from the equity after a few years...

At this stage I'm not looking for something that needs work. Just want something to buy and get tennents into asap. As I dont live near the city and don't want the hastle of having to find time to get up there everyweekend.

I'm only young and I have not yet owned any props. I have been to a few semminars to explore options and from what I can gather 400k is a good starting point with a 80%lvr.. I'm edging closer and closer to the deposite so I just want to try cover all grounds before I jump in and miss something... Can anyone give me some good advice on what to look out for, where to look. If this is a good stratagy etc etc.. Even a source of good un bias info would be fantastic!

Thanks,

jus085

[kincella]

am a bit too busy today, but I will get back to you, also have a mate more involved with Melb markets...will see if I can get hime to come to this forum to give some advice....I know a couple of the inner suburbs only...

[jus085]

That'd be awesome, thanks!

[robots]

hello,

try and get a low rise 1970-1980's era building somewhere in prahran, sth yarra, malvern, hawksburn, st kilda hill

1 or 2 bed, carspace, top floor if poss, if you can paint and do a bit of tidying up (blinds/cutains) then you may get one of those a bit easier as many buyers are looking for a "finished" product

all the best brother

thankyou
professor robots

[kincella]

thanks Robots, St Kilda would have to be included....but you know the area better than I.....
oh and on another forum today, article about Sunshine, Footscray and the western suburbs, being the NEW St Kilda...I doubt that will ever be the case, they were talking about 2060 though.....
anyway I prefer the eastern or northern suburbs to the west.... near fast trains or freeway and tollways.
cheers

[jus085]

2060, Investement for my kids if I eventually have any lol...

So older props are the go you say.. Everything I have heard has leaned toward newer stuff with more land component for intrinsic value. But I don't know, hence the Q!... Is Rp data the best place to find facts? And If I were to base my first purchase on around the 400k mark in a good area, what is a realistic ball park figure of my weekly expenses after rental income? or is this a how long is a peice of string Q?

[kincella]

I suggest you ask an agent for the rent figures,,,,,,the other costs are easily determined.....interest, rates, insurance , body corporate fees, (for units) and water rates...... you might come up with a positive amount , or a small loss, which is then tax deductible, from your other income.....there will be depreciation claims, and building allowance claims to add, for tax purposes.....
I might add my experience with units....check out the body corporate minutes of previous meetings, look at the building as a whole, will it need refurbishment, maintenance....has it been well looked after etc....

I bought a unit for daughter couple of years ago...then found out although there was money in the kitty, or building fund, the body corporate would not spend the money on the painting and other maintenance,,,,,a bad body corporate....they complained it was too expensive...the longer they left it the more expensive it was getting.....arghh...I got out after a year....
another case....5 owners out of 15 were on the board of a body corporate.....for 15 years they absolutely refused to spend any money on maintenance....finally another owner returned, and one sold and left (the worst offender) its taken this owner 5 years to have the existing board removed, and a new board of owners, who are now spending the money for maintenance.......

I am not talking about huge sums, but I would be allowing about $1000 minimum per annum to set aside for maintenance....thats cheap to look after a 400k asset.....you may not get those bills each year, but set it aside and you have it ready.....
another case...friend bought a unit for 150k in 1990, never asked to pay much for the building fund, property not looked after, last year finally asked to pay $5000 for painting etc....property worth about 350-400k now......it would have increased more in value if body corporate had looked after it sooner, like major paint n maintenance at least every 10 years.... friend happy....its been 99% tenanted the whole time....
others with ongoing maintenance and looked after....are seeing gains way in excess of the above...
their properties are worth over 1 million...
I will leave it to others to bring their experiences to the thread

[francinemelbour]

I would suggest to consult to professional Realtor first just to make sure your in the right track.:)

[alyna]

If you are buying an investment property you may find that there are many decisions so you should get advice wherever possible. Be sure that you get an accountant to look over your financial.

This will not only ensure that you pay all the tax you need to but it will also ensure that you will use all the deductions that you have available to you.

[adrianm]

Hi jus085.

I see you first posted back in mid 2009.

How's the investing going?
Have you bought something?
Did you go for older or newer in the end? and where?

Happy to help out if you're still in need of pointers or have some more questions.

Happy investing!
Adrian

[Bronwyn]

Hi Jus085

I too would be interested to find out how you went. If you purchased in any of the areas you talked about back then, you should have seen substantial growth and possibly ready to draw out the equity and buy again!

I agree with Kincella's comments about the body corporate. I purchased a unit where the body corporate had a low sinking fund, so when they had to fix concrete cancer in the common areas and each of the owners was stuck with a huge and unexpected bill. :eek:

If you are looking to buy a unit that needs work in the common areas but does not have much of a sinking fund, then you risk a big hike in sinking fund levies. If the sinking fund is low and the complex needs urgent works (ie. if there are safety issues) then you could be expected to foot a share of a big bill.

If you find an apartment that is looking a bit run down but the body corp has a large sinking fund then it may be possible to get on the board and push to spend some of this money on an outside refurb to push up the value of the units. This reno could give you extra equity without actually spending any of your own money.:thumbs:

Let us know how you went.

Cheers