The regular readers of this blog would know that I’m a massive fan of building passive income by buying cashflow positive/neutral investment properties as well as high dividend-yielding stocks. I’ve been thinking about making another property investment this year, this time I’m thinking property investment Melbourne.
My retirement options and my plans to retire a millionaire focus strongly on developing passive income and enjoying the compounding effective over the next 20 years. It’s my retirement plans for dummies strategy!
Why do I love property?
- I love that I can control a lot of the investment – I can choose where I buy, how much I spend, which tenants I put in.
- Property can provide a combination of both capital growth as well as income, in the form of rental income.
- Most importantly, if you’re going to introduce gearing into a portfolio, whether it be property or shares, the amount you owe the bank doesn’t really change, but the value of the asset moves every single day. The biggest difference between buying property and buying shares is that property isn’t mark-to-market each day like shares are. That means the likelihood of being “margin called” by the bank is lessened. The American readers out there know that banks revaluing properties isn’t impossible though.
A little about Melbourne
- Melbourne is the second largest city in Australia by population.
- It’s the capital city of Victoria.
- Public transport is pretty good, with a combination of trams, buses and trains.
- Property is more affordable in Melbourne for comparable investment properties, than Sydney.
- Melbourne has a mixture of business and industries, similar to Sydney, including a large CBD.
- Melbourne holds a huge number of international events each year such as the Australian Open tennis grand slam and the Australian F1 Grand Prix.
Why am I thinking about property in Melbourne?
- There’s glut of property in the heart of the CBD, which has created a big disconnect between rental yields and inflation, in other words rent has not kept pace with pricing increases tracked by inflation (2-4% in Australia).
- There’s been a huge amount of property development, so there hasn’t been as strong capital growth as there has been in other cities, such as Sydney (YAY!!).
- Property prices on the doorstep of the city are still pretty affordable.
- I like to often take a contrarian view often when it comes to investing – Sydney property has run hard and Melbourne has lagged behind. Over the long term, I hope that Melbourne will catch up and lagging rents will increase.
What process am I going to take to look at property investment Melbourne?
I need to start doing some research on some areas in Melbourne that I’d like to look at investing in. This research will include speaking to friends that live in Victoria, online research on websites like RP Data and Smart Property Investment , reading some Australian investment property magazines, like the one Mrs Ikonz got me a subscription for Christmas last year.
Mrs Ikonz and I are also looking to head to Melbourne for a few days in Melbourne to look at some areas and speak to real estate agents. I think finding a few good agents to show you some properties and areas is critical.
We’re doing the trip on the cheap by flying Jetstar into Avalon and picking up a rental car that I booked through Avis (Entertainment Book strikes again!). Whilst I’m a firm believer in investing in property you can’t see, you still need to have done the relevant research.
I’ll also be doing some research into loans online and will also start thinking about the strategy I’m going to use to purchase the property, i.e. in my personal name, in my self managed superannuation fund using an LRBA or possibly in my company name.
Watch out for updates
Keep following my million dollar blog over the next few weeks for more updates on my next steps in buying my next investment property.
Images courtesy of Wikipedia
Petrish @ Debt Free Martinion 25/03/2014
This is awesome. Good luck with your investment. I love Australia. Someday I hope to be able to invest like you and your wife.
Petrish @ Debt Free Martini recently posted…Five Awesome Side Effects While Paying Off Debt
Project Ikonzon 25/03/2014
It feels great to be spending money on investments rather than debt!
We could actually buy 2 properties this year, but I think that would put us under a lot of undue pressure, increasing the risk of something going wrong.
Better to play it safe – it’s a marathon, not a sprint!
Ryan @ Impersonal Financeon 26/03/2014
Looks amazing mate! I’m eager to hear how it goes. Property is going to be my next big investment, and I’m trying to learn as much as I can right now and see how other people go about it.
Ryan @ Impersonal Finance recently posted…clothes don’t equal success
Project Ikonzon 26/03/2014
Thanks mate. Melbourne is a bit of a risk because it’s lagged behind other large cities for so long, but like I said, I like contrarian investments.
Comments are closed.