My partner and I have worked out that for us to buy a house in Melbourne, its going to take us at least 3 years to save enough for a deposit, and with the price of houses at the moment, we are going to be living on the very outskirts on Melbourne, which is continuing to grow further out! We are currently renting a house from my father as he lives with his partner. Its pretty cheap and flexible.
(We are not eligible for first home buyer grant and the price range we are looking at in Melbourne would be about $300,000 – $340,000)After holidaying down the coast, and checking out the prices on land and holiday houses, I thought It might be a good idea to buy a block of land to sit on for a few years. Where I was looking has the beach and lake, and is a growing town. I know the prices have increased over the last 6 years, a lot. (a block about 6 years ago was around $8000, now selling for $40k – $50k).
I thought if we sit on that land for a few years then sell, the money we make could go towards a deposit for a house in Melbourne. Its alot easier to get a deposit for $50k, that $350k
Our other thought was to buy a house down the beach for around $120k -$130k. It would be hard to rent and pay that mortgage, and it would probably be about what we would pay on a mortgage if we were to buy a house now in Melbourne. But it would be easier to get a deposit for a holiday house at that price. There is also the rental income we could get too. From my understanding, if you advertise your house as a rental for the whole year, whether it is rented or not, you still can claim for the tax refund on it. Im not sure if this only works if it is your 2nd house or if it would work in our case, but it is something we need to look more in to.
What are your thoughts and advice on these ideas?
Are we completely crazy and should just focus on buying a house in Melbourne and not even think about buying down the beach?Thanks
bamjitsu wrote:My partner and I have worked out that for us to buy a house in Melbourne, its going to take us at least 3 years to save enough for a deposit, and with the price of houses at the moment, we are going to be living on the very outskirts on Melbourne, which is continuing to grow further out! We are currently renting a house from my father as he lives with his partner. Its pretty cheap and flexible. (We are not eligible for first home buyer grant and the price range we are looking at in Melbourne would be about $300,000 – $340,000)Hi Bamjitsu
Welcome to the forum.
It might be possible to purchase a property within that range with a deposit of $30k.
If you took out a 95% loan with mortgage insurance added to the loan – you'd only need a $15k deposit plus completion costs (stamp duty, etc) which you could factor in another $15k. All up $30k. Is this a more manageable deposit to save?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie,
$15k would be more of a manageable deposit, $30k would be a couple years at least. Thats why i was thinking if we bought a block on the beach for $40k – $50k sat on it for a couple years, the money we would make would be a good deposit as well as the additional money we can save during that time. Its only about $80 a week for repayments.
Just a few words about beachside property…personally I think any property within short walking distance to the waterfront (let's say 100-300m) is a good thing. If you're anything like me and obsessed about living by the sea, then there is almost no substitute for proximity to the water's edge. However, it would be too simplistic to just stop there.
For sure, the water draws hundreds of sea-changers in every year. But amenities are still important, particularly so to older retirees. This is in contrast to a 30-year-old who still doesn't mind driving for miles for shopping and wants to live near the sea just for the fishing. I read this recently in the papers: sea-changing retirees are being forced to move closer to Melbourne and give up their dream because there is a lack of amenities in their area. For example, if the nearest convenience store or hospital is too far away, then it'd be grossly inconvenient to get their grocery shopping done, or being able to get to the hospital in time in case of an emergency.
If we look at Melbourne's most prime bayside suburbs, it's not just the beaches that feature prominently. It's also the amenities such as proximity to shopping, transport, parks and even schools. It's these things that turn a regular seaside property into a 'hip' seaside property. Hence, if you wish to buy something near the sea, bear in mind the presence (or absence) of amenities.
If you do buy a beachside property, then it should ideally also be easy to rent out. If it's difficult to rent, it will attract much less interest from investors and that can put a ceiling of the future price potential of that property. Stuff that is easy to rent out is of course desirable amongst tenants. And if this is the case then usually the location is an excellent package of lifestyle and amenity. This is the kind of property that you would want to buy.
Also, if you buy land, do consider that at that price, it'd probably be very far away from where you currently live. The grass will need to be mowed from time to time and you'll need to somehow keep an eye on your vacant lot to ensure someone isn't using it as a dumping ground (which will naturally attract nasty fines from the council). Take care also that your neighbours aren't quietly moving their fencelines when you're not looking. I'm not sure how adverse possession works. But if they sit their fences on your land long enough, that land may become theirs. Their lot becomes greater, yours becomes smaller.
Just a few thoughts. I'm not experienced with property, but this is what I can see as being some of the possible issues. However if you've done your due diligence and truly believe the place is undiscovered and about to boom, then by all means park your money there and reap the rewards!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
