Brisbane Advice for a Low Budget Buyer

Hi All, Happy New Year!

I just have a couple of questions. We are looking to buy a home at the bottom end of the market (Pre-Approved $500k), and just wanting to make the best decision keeping in mind future growth and value add potential.

Question 1 - Would a house of similar specs on a smaller (Say between 250-300 sqm) block in a Brisbane Middle Ring Suburb Outway a larger (Say 500-600) block on a Outer Ring Suburb? and how does the land size react to the median price? i.e. 2 br @ $575k Median vs say a 2br on a 290sqm block? I understand the specific suburbs themselves play a lot to this but moreso want to fin out in general.

Question 2 - When a house has a valuation is it unlikely for a run down old house going cheap in a higher value suburb to be value dramatically low? example, we bid at auction on a home in an inner ring and get it for $500k could the valuation go lower than that purchase price?

Sorry if the questions seem silly but this is the first home and we want it to be the right investment and trying to get best bang for buck.

Cheers,

Jeremy and Crissy

 

Maybe dont do auctions? If your stretching to buy a place you cant afford even a slightly lower valuation.

 

Hmmm that is the thought on our minds, there are just a few trustee auctions on the boil atm and know one in Milton went late last year for $540k so thought might be a foot in the door with a potential cheap purchase.

 

Location is key, do not substitute location for the property. You are far better off buying a run down home in a good suburb close to Brisbane CBD then a 4 bed 2 bath property 40K away. If your budget won't stretch to a house in a good suburb, look at town houses next, if still to pricey look at units instead. The land closer to the CBD is always valued higher even when you have a unit instead of a house.

 

Thanks Lawrence, this is our thoughts as well, we just weren't sure a small block would appreciate percentage-wise to a larger block say 5-10km further out.

I guess one thing to consider is we will be living in the place for the next coupe of years while renovating so closer will def be better for us

 

Yeah this is a common mistake that people always make, they think a large parcel of land will be worth more but it's 30k out of the city. The unit close to the city still have a land value, yes smaller but it's worth more. I would rather own a unit close to the CBD then an 800sqm 30K out of the city. It's all about land to asset ratio.Those large houses in the outer rings of our capitals the on a 500,000 house the house is worth 400,000 and the land 100,000.

 

At the end of the day your borrowing capacity will always determine where you can buy. At 500K it's tight for Brisbane, you need 600K in most suburbs now.

 

This is true, still the odd bargain out there which is what we are prowling for and budgets are budgets. We have been spoilt renting a house in Auchenflower which means 8 min drive to work....

 

Yep we all have to create magic with what we have. If you want to get ahead you have to be willing to make sacrifices, for example I moved my family from a fully renovated house to a 1950';s home that we plan to renovate so we could put the kids in a better school due to the catchment and do the house up whilst renting our own home. You have been spoilt. Now the hard work begins...

 

Thanks for the advice Lawrence, really appreciate it!

 

No problem at all. I have learn't a lot on my 8 years of investing.

 

This is somewhat similar yo the land vs location debate.
I won't add to it here (I agree in your post)...
About half of this forum will say as big land component as you can outer, and the other half will say much smaller inner/mid.

 

Sure is. At the end of the day it's all about supply and demand, basic economics. Buy in the areas with high demand and low supply provided you can afford them of course. The only way I can do this for the most part is buying homes in need of a renovation.

 

I never understood the pro 'land' ppl in locations which are crap. There is heeeaps of land in oz that's worthless and its due to the location. Best scenario is good size land in desirable locations I'll take desirable locations with smaller land over crappy woop woop locations with larger land any day of the year.

 

Exactly. I tried the house and land further out and confirm it does not work.Inner and middle rings are the way to go. Much safer investments as well with less price movements.

 

They have also been the best for me though if an outer ring area has a desirable location then I'm definitely open to it. Also I categorize different cities with different 'distance from the cbd' rules.

 

Yes that's true you cannot just say 10Km for every major capital in Australia. In Brisbane my home ground this is true as property is still affordable within that 10Km radius. For Melbourne and Sydney you can push out much further.

 

My friend's house sold last month for mid-high $400ks, 8 kms from cbd. 405m2 land, needs reno, potential city views. It sold unconditional in five days.
Ideal first home.

 

Perhaps look at cheaper cities like Adelaide or Hobart if you're budget is low?