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Hi Simon,
I’m from Sydney also, I did a bit of research on this area earlier in the year. I took a trip there in May and ended up buying in Heathridge, 20km north of Perth, where I was going to be pretty much guaranteed rent. Still like the Rockingham, Safety Bay area, only real concern was the amount of development and new estates south of there.
Just a note, Perth Property Management fees are considerably higher than NSW, QLD, everything is added on top, ie. All Property Inspection , annual reports, etc. Rents are quite low also, although with the current upward trend in prices, I suspect that rents will follow in time.If you do head over there, take Kenneth up on his offer, I would have, there is nothing like a bit of local knowledge. If you plan to go and attend open houses and such, take someone else, you get heaps more done in a day, especially if you are trying to read a map and drive to the next house in short period of time. There are just as many open houses on Sunday as ther are on a Saturday, so you can get a lot done in a full weekend.
Dazzling, sorry buy some of us in the Eastern states are already on to you. The wife would love to move there, but I still need the job here (for now).
Mal
Getting out of your comfort zone, can help you become comfortable
Can you say why it would be unwise Dazzling.
I know an area that is Housing Commision, which is cosiderably lower in value than some of its surrounding suburbs. A suburb nearby was changed from it’s restrictions on housing commission a couple of years ago, and it has jumped in value. In approx 18 months, the council is planning change it from housing commission and remove the owner-occupier restriction that applies to much of the area.
I was thinking that this sounds like the type of place to look for future flips.Mal
Getting out of your comfort zone, can help you become comfortable
dkram,
This months API Magazine has an article on the topic of selling or not when you upgrade and move to a new home. It addresses some of the issues that needed to be taken into account.Pete r is right (and thankfully very tactful), ask questions, take in other ideas and opinions, but act on your education (which like IT doesn’t stop once your foot is in the door).
Mal
Getting out of your comfort zone, can help you become comfortable
You’re getting 4.5% + Capital Gains. Sounds a bit better than sitting in a bank for 4-5 years.
If its overpriced, and you’re not in it for the long term, yeah sell. But if you are in for the long term, (and assuming that you do have equity in the places, why not borrow as much as you can on these overpriced properties and buy what it is that you would like to buy in the current market. And with your new CF+ purchases invest the funds back into the CF-‘s to bring them back to CF+ positions.Or if you are really worried about being CF- sell 1 and use the funds to bring the others back to being CF+.
Mal
Getting out of your comfort zone, can help you become comfortable
If you are planning to purchase a new home and you can afford to hold onto the existing house, hold onto it. There is no point paying the selling costs and purchase costs of a new IP.
If you currently live in an area that will rent ok, then hang onto it.
If you are going to go down this path and are currently paying Principal and Interest on your mortgage, I’d consider to going to Interest only. Maybe even upstamp that mortgage to 80% so that you can get access to the extra equity (approx 80k) for future investments.
Basically, stop pumping money into your current mortgage if it is going to become an investment mortgage and start putting the extra aside for the deposit and costs for your new home, or knock off the car loan.After you get settled in the new home, maybe even before, use part of the 80k equity to purchase another IP. With a 130k income don’t be afraid to go for capital gains and negatively gear, as even after next year tax bracket changes you will still be in the top margin.
I’m no adviser, just a guy in IT on a bit less than yourself, a wife on the same, with a house that is half owned by the bank and a couple of IP’s. We just got started on the properties before the kids.
Good Luck
Mal
Getting out of your comfort zone, can help you become comfortable
I’m not going to answer the question, however here is a link to a good booklet which does cover the issue.
Those first homeowner considering renting for the first 12 month and then moving in, there are advantages to using this 6 year exemption on PPR by moving in yourself first, and then renting out later.http://www.bantacs.com.au/booklets/Capital_Gains_Tax_Booklet.pdf
Mal
Getting out of your comfort zone, can help you become comfortable
If there is a time in your life to have a pool of your own, it’s probably now, when the kids are at the age when they will use it. It beat having kids sit in front of the TV.
I had a pool pretty much all my childhood, and if I wasn’t down the bush, I was in the pool. It was my chore to clean the pool, no point giving pocket money for no reason at all.My dads advice: later on, if you only have the pool for the grandkids to come and play in, make the adults bring their own beer. He says he spend more on beer than the pool, and it’s not because he drank it himself. His pool is now a nice BBQ area.
Mal
Getting out of your comfort zone, can help you become comfortable
If you intend to find a place that maybe needs some work and you intend to be involved in that work, then by all means buy somewhere nearby.
If you are only buying locally because you would like to be able to keep an eye on the place and worry about tenants. Don’t buy locally. That’s why you pay a PM to worry about the property and the tenant. And that’s why you take out Landlord Insurance, so you don’t have to worry.
Depening on whether you are after CG or Yield, should help decide where you should buy, and where the different areas are in the current cycle.
You may have $100k in equity, but depending on your current debt, you may not want to purchase something that is going to suck your cashflow that should also be helping you to reduce your non-deductible debt.There was a post elsewhere asking a similar question. A response was: with your equity, it may be possible to offer cash, quick settlement on a property, giving you a potential for a discounted price if this was to help the vendor.
Either way, if at the end of the day after you first venture into purchasing an IP, If you go to sleep with a smile on your face, rather than worrying about the money, then you have done the right thing.
Mal
Getting out of your comfort zone, can help you become comfortable
Aussie have this link that allows you to get medium and quartile prices for postcodes within NSW, VIC & QLD for the past 5 years for free upto 5 times a month (for each email addres you have).
http://www.eaussie.com.au/aussie_valuer.htmMal
Getting out of your comfort zone, can help you become comfortable
Just a note on the cost of eradication of a termite infestation. I noticed with my first venture into WA market that the cost of eradication is the responsibility of the Seller.
Some areas are prone to termites, and it’s simply a cost that you should factor in, to have periodic treatment or inspections.
Where I live in the South of Sydney, there is no avoiding temites, without treatment, but I would not have considered not buying here for that reason alone.Mal
Getting out of your comfort zone, can help you become comfortable
There are a couple of good articles in the August Australian Property Investor magazine that address two issues raised above. The first “The Price of Defaulting”, compares the termination conditions of a Contract of Sale between all states. The other “Land Tax Update”, has all the States latest thresholds and land tax rates.
Mal
Getting out of your comfort zone, can help you become comfortable
