Property Investment - First Timer

[Edgar]

Anyone has experience in property investment field? Mind to give some advice?

My sister is planning for her first porperty investment in SA. She had always wanted to invest in city apartments due to their ease of leasing, but my other family members finally convinced her that landed properties are the way to go, for her budget, and for long term perspective.

So she has set a budget of around $250k-$320k for a house. Which surburbs should we be looking at? I am more favouring into the Northern and Western surburbs as they are cheaper and more affordable.

What do you guys think? I am living city of Charles Sturt (Pennington) at the moment and I find that these areas ain't that bad either. I know it's very close to Howie's place but I find that it is rather in the middle of all directions.

The Port is just 10 minutes drive, Semaphore is just 10 minutes drive, West Lakes, Henley Beach and Grange Beach are just 10 minutes drive, Glenelg 15 mins, Marion 20 minutes, City roughly 20 minutes depending on traffic.

Can I can see that there are massive developments up the North with affordable housing such as Mawson Lakes, but out of the many people I asked, they never liked Mawson Lakes, and I even once heard rumours that the land used to be a dump site? Is that true? I know there are a lot of mossies up there, a couple of my friends live there and there have no interent access in certain areas.

If you own a car, then these areas are alright, because you simply cannot rely on the public transports.

Is there any other recommendations for that sort of budget? Any advice would be appreciated.


Ed

[Will]

The better investments are those which are close to the city or to the beach. Being close to public transport, schools and other facillities is also beneficial. Furthermore the places to invest at the moment would be around Port Adelaide and up in the city of Playford and Salisbury. With the industrial growth expected in the next few years, these are the places that will be hot for rental investment properties.

[Al]

Get something low maintenance. If you don't plan to live in it, small gardens or no gardens are best. Sure you can claim them on tax but it's better not to worry about them at all. If you are planning on using an agent to find people, I'd say try going solo at the start because I reckon agents suck. They take a percentage for no visible work apart from maybe finding a tenant and that's it. Don't go with Bernard Booth as agents if you do decide to go that way.

If you can, go for something that's not built yet because you'll save heaps on stamp duty. If you buy a property that's built, you'll have to pay for the stamp duty on both the building and land. Plus buying off plan gives you the best chance of capital gain.

I agree that apartments are not really the best things to put money into because of the extra body corporate fees involved. You don't want to pay a fee for gym and pool facilities when you're not the one to use it. The exception would perhaps be apartments with fixed lease agreements where you know how much return you'll get upfront. I think the CBD are places to look for these. Another thing about apartments is that some banks will only lend 60% of the value so you'll need to come up with the rest.

Remember, it's a financial decision not emotional decision. SO DON'T GO FOR SOMETHING YOU'LL LIKE, JUST SOMETHING YOU RECKON A TENANT MIGHT RENT.

My 2c.

[Brando]

I have two properties, a unit i live in which i bought nearly 5 years ago ago an Apartment in Oaks Horizon approx 3 years ago. By far the best return has been in my unit i bought, in 5 years the "bank" value alone has gone up around $75k. The apartment has stayed fairly flat line over the few years, although the car park at cosmapolitan has increased approx 70% in value.

The problem i had with the apt was Urban Construct!!! They sold off to Remada and then off to Oaks. Contracts changed and returns came down.
That's another story...

With investment property make sure your sister has a good accountant that actually deals on a regular basis with negative gearing etc and depreciation as this can cost you thousands of lost income if not done correctly. Beware that every year they do tend to crack down on what is deemed tax deductable and what is deemed as property improvements.

As for location, well thats all about research and timing. Knowledge of what is going on around the place, adjoining suburbs, read different council messenger papers etc.

I second what Al said, if she is serious about investing, buy with the head not the heart. At auctions, don't attend yourself and bid, leave it to someone you trust and tell them your cut off point.

Good luck.