Hi All,
Having a bit of a dilemma, currently living in Sydney and we plan to buy a house to live in for the future for family.
Problem is the price of a house and land in Sydney. How is anyone supposed to afford a house worth 700k? Even with 2 people on decent wage its a stretch.
Would it be advisable to purchase cheaper investment propertys like 200k mark, maybe get 2 or 3 of these if possible, and look to make profits in capital gains from the sale of these propertys 3 to 5 years? Then assuming i make some money, use that money to help bridge the gap to that dream home.
Or, should I loan that 700k and buy the house now, and put renters in. Repayments will still be pretty big, but I would have secured the family home.
My main concern with the 1st option, is that in 3-5 years time, that house I didnt buy has now increased in price aswell, perhaps to 1mil but this time, and is still far from my reach as before. And the second option will put a big hole in my pocket, and I'll have a massive case of debt stress.
Does anyone have any stategy in this case?
Chris.
Hi,
I would go with the "cheepies". The problem with getting the big house with the big mortgage first off is that you can't get anything else. That's fine for most people. They want the barbie dream house with a nice kitchen etc and never want to be rich or have any other properties. (Sorry to all my friends)
Where I live the median house price is about 1Mil. We have opted to rent a nice house and use the money that we would have spent on the dream house on buying and building more properties.
It just depends on you. Can you live without the nicest car and the best house temporarily while your other assets grow? My friends don't get why I am renting. My mum is constantly at me to buy a house to live in because she thinks that will make me happy. I am happy watching my assets grow knowing my family will have security later (and also its really fun counting money
)We are now at a stage where we could access equity and use that as a large deposit on the mansion but I think we can wait a little longer and use that money a little better.
The prices in our area have risen about 200k over the last 2 years. So if the smaller properties are going to give you a good capital gain go with those. If the 1 large property wont hamper your ability to keep purchasing by crippling you with repayments then go for that. Have a think about where you really want to be in 3-5 years time as well as how much debt you can handle and still sleep at night. I hope this hasn't sounded too preachy!
I would really love to hear what the pro's think and if they think getting the 700k house is the way to go.
Good Luck
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeI'm with the previous guy, dont go the big house to start out, especially with interest rates coming back up. It would be potentially some time before you can qualify for an IP. Better to go for cheaper IP now and keep doing that, build a portfolio then go the house you really want.
Its amazing how things change, my parents were always told buy a home and pay off the mortgage, dont pay rent. But my thinking is its much faster to rent for a while and accrue IP's then get a home of your own. You can still rent the lifestyle you want now. No shame in that!!
Disagree …
Find a $600k house in an old suburb and renovate it for sale do this 10 times … that's how we started and it is tax free …
Stay away from new suburbs … it is the great Australian dream !!!
You can do it the others are wrong trust me … or don't and look back 20 years.
He wasn't talking about an old property he was talking about house and land for 700K brand new in Sydney.
Sure you can do the renovate route but what if he's not up to that personally, not everyone is good with a hammer! Buying and holding cheaper IP's is far less risky and if holding and using equity no agents fees.
Horses for courses.
No I didnt mean buying a new house, I meant buying a house in a decent suburb not too far out.
Doesnt have to be new.
Not sure about renovation, my concern is also buying a 600 or 700k place the repayments wil be large if I plan to move in, and renovate. Putting renters in would obviously ease the pain.
Appreciate the comments, I think purchasing investment properties would be the best option for us right now. Then hope for growth and use that capital made to help secure house and land later on.
Yeah I don't mean waiting 20 years to buy the dream house either.
I like the idea of buying a mid price house in a older area for reno but for a first time might be worth getting something cheaper with good chance of growth and/or C+. If they are not confidant with reno-ing budget might get out of hand etc, and yes house and land packs in new estates are not generally the way to make big bucks! (Unless you are the developer)
Out of curiosity Wealth where did you start reno-ing? Do you still do 10 a year or do you focus now on less jobs but bigger?
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeDon't set your sights on a $700k house in the first instance. As above, consider some cheapiers further out – if you pick the right suburbs, growth may well be better anyway. Then use your equity to fund your own.
Buy the cheaper one and work like buggery to pay it off then you can rent it out and you have extra cashflow
Extra cashflow – more borrowing powerbuy another cheap one -and work like buggery to pay it off then you can rent it out and you have extra cashflow
Problem with $700,000 is all your money goes to interest and you can never pay it off.
A cheaper property can be paid off quicker or paid down to build up equity.Problem with waiting for capital gain in cheaper property is
that the $700,000 house also achieves capital gain
and then you may have to pay cgt on cheaper property if IP.Not sure if you're currently renting or owning a unit, but you could consider buying a 2 or 3 bedder unit first, rent out one of the rooms. After a few years, you could consider turning it into an IP & get your house. I know of some ppl who started with units & slowly upgrading.
Minimise your non tax deductible expenses as much as possible if you are going to build growth. This means minimise your owner occupied home mortgage interest whilst using maximum leverage on your tax deductable expenses such as investment home mortgage interest…
Just my two cents worth.
Rod
I would also go with buying an older house at up to $700k. (not too old though, just not new)
You may have to compromise with suburbs depending on where you want to live and also the style of property, house or unit however, the Sydney market is really moving in this price range at present (houses nearly 10% this calender year and units nearly 8%).
I think the market will keep pushing forward for a good few years, albeit maybe not at the same frantic pace. The tax free gains are a great incentive and also the peace of mind of having your own base/home if you are that way inclined.
Why not buy the home, up to $700k or even a lot less, see how you go for a year or two and then start an investment property portfolio with the equity gained.
There are many options however, the straightforward ones are often the best when starting out. (if you are just starting out)
Chris White | Pillar Property
http://www.pillarproperty.com.au/
Email Me | Phone MeThe Property Investment Specialists
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