When this one finally gets off the ground it will be a great project, but there have been a few roadbumps along the way.  There are five of us backing this development.  It is in Footscray Melbourne which is regularly featured in property hotspots. 

Profit Margin on this for me should be in the 25% but there is a fair amount of risk.  The good news is that the DA approval has been achieved, so in theory, even if we bailed now the value of the project is still more than current outlay.  The builders are all lined up, so now we are waiting on, guess what, yes the banks….

Meanwhile, a short video below, that runs through some of the choices around the site choice and why Footscray is well regarded as a future hotspot.

My Next Property

I am gearing up to go again with another investment property.  What I find is that as get further into your property portfolio, more balls need to align to get the deal across the line.

So, the bank side looks fine and I should be able to get up to a $600,000 loan.

I am tied a little as to release some funds for the transaction costs,  I need to refinance the Mackay property.  This is tied into a St George Mortgage and I can only refinance if I use the funds into another investment property.  As you know nearly through the strata titling, which should enable me to release $50k or so which will go towards the transaction costs, so in a holding pattern until the strata titline goes through and then the refinace of Mackay and the set up of a new finance pre approval for a new property.

Then the next question is where to go.  I am keen on a NSW property to balance out my portolio; 3 bed townhouse would be ideal, but could be some restrictions on city proximity with my price range, so may have to go for a 2 bed unit.

I have put the feelers out and North West Sydney has come back as an option, Ryde area.

An interesting one came up in one of the top 100 hot spots in Melbourne at $50 under market value but it went before I could even think about it; not really ready to move that quick. Just shows that you want to get all the ducks in a row so you can grab the opportunites as they arise.

I was also approached on a land grab, west of Mackay.  Bit of a riskier option, but the big miners are doing the same and if it goes well, would be a good short term option.

So plenty of options flying around. Just need to get everything so I am ready to go!

These two properties ( a duplex) were bought in 2007. As mentioned in a previous post it was one of my first investments and I went for something relatively well geared.

So far, I have added value by renovating two bathrooms and am now strata titling the two units.  Rent seems to fluctuate with the state of the mining sector. At one stage I was getting $660 per week.  $330 per side up from the original $510 (combined) at purchase.  I am waiting on a revaluation when I complete the strata titling exercise, but expect around the $520k mark off the original $450 purchase price.  Less than I would have hoped, but Mackay has been impacted by the global financial market.

One thing I have found is that there has been a fair amount of maintenance (1981 build) and a lot of rental turnover.  Net result is that it this particular investment takes up more time than I would like and although it is well geared, expenses seem to offest some of these benefits.  I will do a comparison post when I have done my tax returns and give you a live example of a common question of old v new.  My new investment properties by comparison have been minimal effort and I have found a 3 bed townhouse gives some good stability with tenants.

I still remain positive over the medium to long term prospects for this investment, but so far these two properties have caused me a few headaches…

This property settled in late 2008, a little delayed (something I have come to expect with property developments).  Luck for me, I hit a period of good growth in the Melbourne market.  Valuation at settlement came on at $475k an immediate capital gain of $30k.  Combined with the low stamp duty you get in VIC with off the plan (you only pay on the land value) and a max LVR loan with mortgage insurance capitalised, and the net result was the I secured nearly 1/2 million of real estate for less than $10,000.  I was happy with the result.

Rental yield is relatively low with a weekly rent of $400, but with strong depreciation and low interest rates, it is not far off cashflow neutral for me.

One of the reasons I went with this developer is because they have a quality focus and look to add features that give appeal and differentiation to the properties.

Let’s go inside and take a look!

Property Investment Newport Melbourne

This is little bit historical, but I thought I would share with you the videos I made regarding an investment property in Newport, Melbourne.  This video was shot in early 2008 and shows the property in hte build process and also looks at the local area to explain why I chose to invest hear.

It was purchased off the plan for $445k and is a 3 bedroom townhouse.

I will reveal what happened in a second post!

Property Investment in Melbourne