澳洲Australia property Magic Number | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi guys,

My girlfriend and I are currently in the process of saving for our first property. We are both very young but would like to get into real estate ASAP provided we are in a financial position to do so. We intend to live in the property for 6 months to get the FHO boosts and then rent the property out as an investment. We are working on a $500k budget. We hope/intend to purchase a 2 bedroom, 1 bathroom, 1 car spot apartment in the Inner West/Lower North Shore of Sydney with value adding potential if possible. We are hoping to renovate both the bathroom and kitchen. On the proviso finance can be arranged for this amount, we intend to save the following amounts:

Deposit: $25,000 (5% of purchase price)
Renovation: $20,000 (bathroom and kitchen) - do be done during first 6 months whilst we are occupying the property
First Six Months Living Expenses: $30,000 (working on approx. $3000 / month mortgage repayments = $18,000 + additional expenses of 500/wk (set I believe conservatively high?) = $12,000
Additional Costs: approx $10,000-$12,500 = includes Buyers Agent ($7700),
Solicitors, Strata Search, Body Corporate Fees for 1 year

Total = $85,000 - $87,500

Please note, these savings DO NOT include FHO grants (currently $7000). I do not believe we will need to pay LMI as my parents are acting as guarentors to get our LVR below 80%. I also believe stamp duty is waived for first home buyers in NSW on properties under $500,000.

Our aim is to have all the necessary capital to live in the property for 6 months before we even move in. This allows us to continue saving whilst we are occupying the premise.

So, my question is, are the amounts OK? Is there anything I have forgotten? What are your thoughts?

Any advice is greatly appreciated.

Regards,
Steve  

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Other than the Buyers agent fees, all other amounts look honky dory.

With such little funds at your disposable, are you really prepared to fork out 7.7K for the BA to do the legwork for you ?? If you are going to grow beyond one or two IPs, at some stage you're gonna have to do/understand the legwork process so you can "see" yourselves.  

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hmm a bit light on the deposit me thinks....

you should work it out the difference it will make if you save another $20k over the life time of the investment loan...  

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Dazz said: ↑
Other than the Buyers agent fees, all other amounts look honky dory.

With such little funds at your disposable, are you really prepared to fork out 7.7K for the BA to do the legwork for you ?? If you are going to grow beyond one or two IPs, at some stage you're gonna have to do/understand the legwork process so you can "see" yourselves.Click to expand...
I can definitely understand this. My view is two fold:
a) I'd prefer to pay for the advice of someone who knows the market properly as opposed to backing myself. I certainly don't know it as well as what I would like, but I will eventually. I would much rather be mentored through the process for my first property as opposed to paying overs.
b) It takes the emotional attachment out of buying, not to mention the stress.  

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radelaide said: ↑
hmm a bit light on the deposit me thinks....

you should work it out the difference it will make if you save another $20k over the life time of the investment loan...Click to expand...
But the majority of the loan will be paid by tenants, not me?

I would have thought that the less money (deposit) you need to get approved for finance the better. The less money effectively out of my pocket.

I could be wrong, but that was my view.  

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Steven Fulop said: ↑
But the majority of the loan will be paid by tenants, not me? .Click to expand...
While the rent will pay some of the mortgage don't forget the other costs (rates, strata, management fees etc). I hope you've done your figures for that. Add it all up and work out a weekly figure. Deduct the anticipated rent from this to see how much out of pocket money you need. Of course this is tax deductible and if you have a depreciation report you can deduct more.
good luck. It's a big first step.  

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travelbug said: ↑
While the rent will pay some of the mortgage don't forget the other costs (rates, strata, management fees etc). I hope you've done your figures for that. Add it all up and work out a weekly figure. Deduct the anticipated rent from this to see how much out of pocket money you need. Of course this is tax deductible and if you have a depreciation report you can deduct more.
good luck. It's a big first step.Click to expand...
Yep, I've made sure these have all been budgeted for.

Thanks kindly for the feedback.  

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On a practical note, renovating a bathroom in a single bathroom apartment whilst living in it is not without its challenges. I would do it prior to moving in.....  

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Parental guarantee, 20 yo buying with girlfriend, 500k property (how much do you make?), 5% deposit. Risks galore.

How much of that choice of area is based on where you want to live in, as opposed to the balance between yield and expected growth?  

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Agreed - lower north shore in Sydney is a hell of a flash place to start !!  

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The last thread I read about a forumite and their young partner buying a flash apartment, ended in them splitting up within 6 mths, from memory.

Better get your parents to talk to a soli and acct about associated risks.  

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Steven Fulop said: ↑
I do not believe we will need to pay LMI as my parents are acting as guarentors to get our LVR below 80%Click to expand...

I'm not so sure about this bit. Acting as guarantor won't help lower your LVR. To lower your LVR, the parents must put up cash or property as security.


I'm not an expert as I haven't done this, but merely signing to say they will pick up the tab if you fail won't effect the LVR.  

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WinstonWolfe said: ↑
The last thread I read about a forumite and their young partner buying a flash apartment, ended in them splitting up within 6 mths, from memory.

Better get your parents to talk to a soli and acct about associated risks.Click to expand...
While I don't wish you any relationship problems, I think you should tread carefully if you are wishing to purchase with a partner. Property is a long term investment. Many relationships aren't. Sometimes the two don't mix.

How strong is the relationship? You mention you are young, how young? How young is she? Is she as committed to the relationship as you are? Have you thought about how you would proceed if the relationship went sour? Are you contributing an equal amount for this purchase?

These are questions I would ask my own children if they were thinking of investing with another person.

If you can afford $500k combined, then it stands to reason that you should be able to afford $250k each. Why not each purchase a cheaper property? You can still find good value. You can still get the FHOG (maybe even twice if you live separately for 6 months). You have less risk. If the relationship sours, you both keep your properties.  

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I agree. Try buying cheaper props in ur own names. Then u both get fho and props needing less cash flow.

Don't over commit to early. You also need to live  

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I won't comment upon your numbers except to say that you may want to look at saving more and depending upon what your time is worth, you already live in Sydney so the geography and market forces should be known to you, hence you can also save the BA's fees.

Next, you need to be crystal clear on what your criteria are; from your opening post..........................." We hope/intend to purchase a 2 bedroom, 1 bathroom, 1 car spot apartment in the Inner West/Lower North Shore of Sydney with value adding potential if possible. We are hoping to renovate both the bathroom and kitchen"


A lot of hoping and possibility type goals won't give your BA a concrete brief to go and find your gem.

If it were me (and I were very young again :p), I would be looking at buying something a little further afield that may suit your pockets more and has more land to it. Nothing wrong with two by ones in the inner west or lower north shore at all, however it doesn't sound like you have the financial horsepower to do this and watch for relationship problems down the track. Ensure your purchasing entity on title reflects risk optimisation. Seek legal advice.

Good luck :)  

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Thanks for all the replies guys - definitely some hard thought needs to be given.

Regards,
Steve  

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I have also heard of a couple who bought an investment property together. Both sets is parents helped financially and the questions she was asking me made me think that all parties involved were on the title. The tenants had barely moved in when they broke up.
Her parents didn't want to speak to her. And her mother had her childhood house on the line in this house. She won't talk about how it was resolved at all. I can only guess it wasn't pleasant.  

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I just wanted to clarify to all that this property will eventually become my PPOR. I'm only 20, and will live in it for the first 6 months, and then rent it out until I'm 25-26 (when I move out for good).

I don't know how this changes your perceptions of the strategy, but the property is not going to be bought purely as an investment (hence my desire to live in a nice apartment in the inner ring).

Regards,
Steve  

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Relationships aside, much changes from 20 to 25-26, let alone to 30 and so-on.....

Employment status/income, maybe living in a different state or overseas, travelling overseas, further study, property preferences (ie want to live in house, different location etc), marriage (?), kids (planned or unplanned)

Some of these may seem so distant or just not realistic for you. However sometimes stuff happens and forces changes.

As long as you stress test your ultimate choice with some of these variables at least you will be prepared. There is some sage advice in the previous posts. Good luck with your ultimate decision.  

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Steven Fulop said: ↑
I just wanted to clarify to all that this property will eventually become my PPOR. I'm only 20, and will live in it for the first 6 months, and then rent it out until I'm 25-26 (when I move out for good).Click to expand...
And then what? You own your own place at 25, still with a big mortgage, and that's it. That's assuming you don't move cities, countries, etc.

Steven Fulop said: ↑
I don't know how this changes your perceptions of the strategy, but the property is not going to be bought purely as an investment (hence my desire to live in a nice apartment in the inner ring).Click to expand...
If that's your end goal, fine. If you want to think bigger, consider this. You can only have one PPOR at any one time. How many IPs can you have?  

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