Hi all! Great site you have here. Your advice please:
My wife and I are looking at purchasing our first property very soon. We have been 'looking' for around 3 years now, on/off, and are currently living with her parents. As we have just got married, we feel it’s time to move out and purchase our first place/IP. In just 2-3 years we have seen the goal posts shift; initially we could have got decent house for 250k, now it’s closer to 400k.
We feel we can stretch to that price if we really had had to, and it is quite tempting to have the extra land and rooms. Recently, however, we have been thinking of spending as little as possible and buying a 2 bed unit to get us by for the next 2-3 years, while I finish off my apprenticeship. We have 50k in combined savings and both take home around $650 a week.
We both love the beach/hills and feel we would like to live around one or the other, preferably not in-between, however travel is a concern as I work cbd and wife works in glen Waverly. Would like to be close to train and Monash freeway.
Our options we have thought about include:
1. Hills house @ around 400k. (Belgrave, Upper Ferntree Gully, Tecoma) More of a long term. If we have extra $$ down the track, then purchase an IP.
2. House in the South East (Dandenong, Noble Park) @ around 360k .More of a long term. If we have extra $$ down the track, then purchase an IP.
3. House for Sub Division in an area like Scorseby, Boronia. Buy around $400k, subdivide and sell rear block ASAP. Live or Rent front house, move on after few years.
4. 2 Bedroom Unit in Beachside area like Chelsea, Bonbeach etc. @ around low-mid 300k. Live in for 2-3 years, then rent out and use equity to purchase something bigger.
5. 2 Bedroom Unit in within 35km of CBD, @ 250k .Live in for 2-3 years, then rent out and use equity to purchase something bigger. Have seen a couple around Belgrave, Upper Ferntree Gully, Tecoma and Dandenong/Noble Park.
These are just some of the options going around in our heads.
We just feel the market is crazy right now and we are not really impressed with what our budget will get us. At the same time, we don't want to be sitting here in another 3 years talking about how much houses have jumped in price….Quite confused really…
your help is appreciated…
Personally, I would steer clear of the unit idea. They don't tend to appreciate as quickly as houses, and as such a unit might not provide you the option to upgrade to a larger dwelling later on quite as you hope.
I'd lean towards the house on a decent block idea. Subdivide if desired.
May I suggest an additional option? Buy something, but rent it out. Don't live in it. That way, your bank interest and purchase costs will be a tax deduction (read up on negative gearing). Your accountant would also be able to snatch more of your tax back for you by means of "depreciating" the dwelling. So you'll get some of your tax back to help you with the shock of buying property. Of course, if you choose this option, you cannot use the first home owner grant, and will waive your right to ever receive it. You've just got to do the numbers and work out which is more beneficial.
As for you and your wife, you could carry on renting elsewhere. Perhaps in a little flat by the beach or something.
Move into the big dwelling after a few years when the tenants have gotten the mortgage to a manageable level for you.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Jazz
Firstly welcome to the forum and I hope you enjoy your time with us.
Jac has made a couple of good points however just in case the following point is misunderstood thought i would put my spin on it.
Move into the big dwelling after a few years when the tenants have gotten the mortgage to a manageable level for you.
This comment implies that the loan should be reducing and therefore would indicate a Principal & interest loan.
This is the last thing i would look to do and would strongly suggest you took out an interest only loan with 100% fully trasactional offset account linked to it.Then if and when you decide to upgrade to a bigger home a few years time the interest on the entire original debt will become Tax deductible and the savings in the offset account can be used as deposit on the new PPOR.
Careful planning now will mean moving forward in the future will be easier.
Your Mortgage Broker should be able to assist you in this respect.
Richard Taylor | Australia's leading private lender
Hi – my vote is for option 4.
Close to transport and beach and in a bayside suburb that I believe will only continue to go up in value and have strong demand for rental.
You shold be able to pick up a 2 bedroom standalone type unit with an attached car space to do up for around the $330-$320k mark.
We just bought in Seaford so I am a little biased – but have been following this market very closely for 2 years
Cheers for clarifying and improving on my suggestion Richard
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:Of course, if you choose this option, you cannot use the first home owner grant, and will waive your right to ever receive it.What if we lived in the house for the first 6 months and then rented it out after that? We would qualify for the FHOG i assume?
Just to clarify if you purchase an investment property and do not reside in the property you are STILL entitled to receive the First Home Owners Grant assuming all other qualifying criteria has been met.
Buying or having owned an IP does not disqualify your FHOG elligibility.
Also you would need to satisfy the terms of the FHOG so normally continual occupation of the property for a 6 month period within the first12 months.
Only other issue would be the concessional Stamp Duty in your State which may require 12 months occupation of the property.
Check the OSR website in your State.Richard Taylor | Australia's leading private lender
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