I'm tossing up whether to buy or build in Perth. I just about have enough for my deposit (another couple of months and no i have built a house before so can't get FHOG) and have just moved in with a friend that should allow me to free up at least $2000 a month, maybe more… As i said i am tossing up whether to buy or build, probably something around about the $300-330k mark and then either way i would be thinking of maybe staying with him for 6-12 months and try and get a tenant in to rent the place (or if i bought a place see if the previous owner wanted to continue to rent) and have them make rent payments plus i also put the $2000 a month into either paying down the loan or putting it in an offset account… That way if i went for something like about $330k after a around a year i could get the loan hopefully down to owing about $300k which i would feel more comfortable with on my own.
I'm also thinking of taking out an interest only loan over say 25-30 years so my repayments will only be about $400 a week rather than $500 week but would obviously be paying off way more than that with the combine tenant/mine payments. I would just take out the interest only loan because the bank would only be requiring the smaller payments and if for some reason i couldn't get a tenant or lost a job or something the mandatory payment the bank would be expcting is just $400/week or so (obviously chainging with interest rate variations) and i like this lee way once again as i am doing this on my own, but still on a good slaary…
After that year or so when i moved in, i could see about getting someone to share the place with and so contribute to my fortnightly repayments…. hopefully after a year or two i would then have paid enough off the mortgage to have equity to go and buy an IP…
So all I am really asking is what are the pros and cons of either route in your guys eyes who have a bit more experience… Either way, i don't think i would bother for the year not living there of looking for the tax break between the short fall of the tenants and my loan repayments (on an interst only loan the shortfall might not be that much anyway)… if i then moved in and lived in the place for 10 years and then sold would i only have to pay 1/11th or the CGT would i??? would the tax office even remember the first year that i had renters in??? Anyway, going to talk to a house and land package place soon, so if anyone has any ideas, love to hear them, and if there is a group that meets in Perth to discuss property investing, would like to know about it too.
Sorry for length of post as well.. :o)
Hi, I live in Perth and have two investment properties here. My husband and I built one and we bought the other established. My preference on affordability is to build over buying established. Many developers offer landscaping packages and carpets, blinds, etc. so you could pretty well sign up and get a tenant in when its done without much extra from yourself. The year of building is long but graduated on repayments and tenants love new houses.
I'm not sure what you'll get in Perth for $300-330. The average price here is almost $500,000. I prefer good areas (mine are Atwell and Success) for affordability, quality of homes and location rather than a cheap area, just my personal preference. I know its not always true but I go for good areas with a higher rent banking on good tenants …
Talk to an adviser about the figures. Personally, I would put the minimum into the interest only repayments (with a goal of paying it off when and if you ever sell) and the rest into a deposit on a second property or towards a place of your own down the track.
Perth is going up up up so I think if you're going to get in, do it sooner rather than later.
Happy to help with any thoughts on building, Perth and property investing here.
As far as I have been told by the banks and mortgage brokers it would be extremely difficult to secure an interest only loan for 25-30 years. Usually banks do interest only loans with a term of 5 years, after which you are required to renew your loan. You can renew at interest only, or it might (in 5 year time) be affordable for you to do principle and interest.
Just so you know, house’s aren’t exactly cheap to build. If you have a budget of $330k and you want to buy a block of land and build on it, then you will have to find a pretty cheap block of land. Reading the posts in the forums people are spending over $200k just to build their buildings and if ouchiemama is right and houses are around $500k then you might have your work cut out for you. Not saying it can’t be done…just saying you might need to look hard.
Here is a thread regarding a Perth networking meeting https://www.propertyinvesting.com/forums/community/heads-up/4331209
As for the Capital Gains Tax as far as I am aware the tax office would definately remember you renting the place out for your first year. I think you pay capital gains tax on the amount of time the property was an investment and not your principle place of residence. So if you rented it out for one year and lived in it for 10 then when you sold you would pay 1/11th of the capital gains tax.
Ryan McLean | On Property
http://onproperty.com.au
Email MeGee my 15 yr interest only loans must be an anomaly then!
Perth is going to go back up and sooner rather than later. I would have a look at something more established with some land attached, maybe that you could add value to with a bit of paint and carpet later. I really like WA even though a lot of the property mags and articles are not really giving it the thumbs up. That works though because it means that we can all snap up the bargains before the hordes. I would love to be on the ground there (i'm in Melb atm) there would be some ripper blocks to buy!
Enjoy shopping!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeYes well I would love a $500k place, but on my own its just not feasible at the moment…. I think I am going to have to do it a bit like in the old days where your first house wasn't the one you were going to die in, but after building up up your finances more you move on to the next better house and so on… or in this case the first one i build/buy might be lived in for a bit then rented out and my next property become my PPOR rather than trying to get my dream home first up…
I know in places like Gosnells and maybe Southern River (not the dream suburbs i know) i might be able to build for around the $330-340k mark… but it will be a small block no doubt approx 340 sqm… the alternative is i can go and buy an existing place in places like Maddington or Huntingdale for around the $300-320k mark (3bed/1bath which isn't ideal i know) but could be on a block like 700-800 sqm potentially in Maddington etc… Certainly bigger than these 300sqm blocks with the fence within touching distance of most windows. But I don't think these places will be rezoned any time soon to allow you to split up the big blocks, it would just be in case you wanted to extend later or eventually knock the old place down and build something… But then these days i am tending towards something like a 500sqm block being a decent size without a big lot of yard to maintain…. but i did see on a number of these selling houses shows on foxtel recently about how you can take a tired old place and with a relatively small budget repaint it it, just do the fronts of the kitchen cupboards and resurface benches etc and make them quickly look a lot better… i know on these shows though that all these workmen seem to magically appear so they may only be talking materials when they quote a figure of $6-8000 for a quick renovation…
But yes, i know a built home will come nice and brand spanking new and doesn't have the risks of of buying an older established one or the upkeep on lots of old stuff and is probably rentable at a better rate… and i could probably reduce the costs by opting to do my own painting and landscaping etc… But living with my friend for a year or so if i bought an established property i could have a tenant in there straight away (or reasonably soon hopefully) paying the rent and my supplementing it for the full time which would get more money paid off the loan…. although the idea of maybe taking out the interest only loan and putting my $2000 a month savings straight into a second house is an idea??? that's why i wanted to pop my options out there and see what people thought… i like the ideas others have…..
and damn that ATO and their long memories… that's beauty of having a tenant come and share the place rather than formalise a rental arrangement on a whole house… although the contribution someone would make to sharing your house will be a lot less than renting a whole house obviously… anyway, wanted to get started before the boom really takes off again on getting my first place in the market, and then see what else i can do after that…
And spewing i missed that last perth meeting with the lady who does the renovations!!! Definitely would like to attend the next meeting…
Mark
Hmmm, ok i saw this house and land package place and going down to have a look at a block at Bertram and the package i can get in for about $320,000 on a 340 sqm block… have to decide whether i want a 3 or 4 bed place… anyone have any thoughts on best configurations for maximising value??? and only needing a $12000 deposit and so will owe little ore than $300k by the time i take out the loan….
suburb is a little further away down the freeway south than had ideally been planning for…. but guess i got to get in the market sometime…. will go have a look at it today and think about it over the weeked….
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