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Buy a house or rent? (Victoria)

Discussion in 'General Property Chat' started by Tynan, 21st Jul, 2016.

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  1. Tynan

    Tynan Member

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    New member here (If I'm making a mistake eg. posting in wrong forum, please tell me!), basically posting on behalf of my mother.
    Here's the situation, basically we're planning to move towards the end of the year (Current house is much too small for us)
    My mother has 2 investment homes
    - Mount Waverley (Currently living in)
    - Clayton (Still currently being built, although mum says land value is really good)

    I'm saying to sell our MW home and buy a bigger home in Keysborough.
    Mum's friends/family have been saying to her to keep the Mount home and rent a bigger house to live in.

    My suggestion of selling and then buying is from the basis that we're going to have 2 home anyways 1 to live in and as an IP, and so to get a bigger much more suitable home to live is only a win-win situation as we'll be selling a house that has a lower value than the house we'd be buying

    Mum's been told to keep the MW home, due to the growth of MW over recent years, although the house we would end up be buying in keysborough (if my suggestion is followed) would already exceed the value of our MW home.

    I'm very ignorant in this topic although have been trying to learn as much as I can as quick as I can because this is the first time I've had a significant say in terms of moving (Last time we moved houses I was 10, now I'm 18)

    Mum does want to buy a third investment home, one that she can sell when she retires, use that profits to completely pay off the mortgage on the Clayton home and so she can live off the rent of the Clayton home as her retirement money.

    Regardless, I want to know what experienced people like you would do and would suggest, thanks in advanced! If you need any more info please ask :)
     
  2. tobe

    tobe Well-Known Member

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    Keep mount Waverley. I reckon it will appreciate in value faster than keysborough. Plus you won't lose the selling costs and stamp duty buying and selling entail. Rent where you want to live and maybe buy a third down the track.
     
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  3. Tynan

    Tynan Member

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    Mum reckons she could sell the MW home for at least 800k, and says she'd be able to buy a house in Keysborough for around 850k, if the keysborough house is already more expensive than the mount home, wouldn't it be a better option? Thanks for your reply, not trying to argue against you, genuinely trying to figure things out ;)
     
  4. Cactus

    Cactus Well-Known Member

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    Price Value and Growth are all different things.

    Just because a home is worth $1m doesn't mean it will grow % more than a house that is worth $500k. In fact the opposite is more often the case.

    Now consider 2 homes worth $500k vs 1 at $1M.

    Then Add the fact that the 2 homes at $500k most likely yield a greater net rental.
     
  5. Tynan

    Tynan Member

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    I see, awesome thanks for that! Learnt something for sure :)
     
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  6. Cactus

    Cactus Well-Known Member

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    Get yourself a Steve McKnight and Jan Somers book and you will learn some more.
     
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  7. Tynan

    Tynan Member

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    Yeah I'll do that for sure, home investment is quite an interest of mine :) also which suburb between Mount Waverley and Keysborough do you think has better growth potential?
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Without knowing anything about the specific properties or actual locations...

    Given a choice between Mount Waverley and Keysborough, I'd hold onto the the Mount Waverley property. Same goes for a property in Clayton.

    That said I'd be happy to own property in any of those areas. Actually I do own property around there. Yay! :)
     
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  9. Tynan

    Tynan Member

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    MW home (Valued at 800-850k) is quite literally across the road from the secondary college (The crossing is literally in front of my house) and is 4 min walk to the senior site. It's 15 min walk from the station and the local village (where safeway, IGA etc is)

    Clayton home is going to be kept regardless, as my mum wants to sell it when she retires and use that money to pay off the loan of a third investment property (still have yet to get that third one) and then rent out the third investment property and live off the rent as her retirement.

    I would really love to move to Keysborough because I really feel we need a bigger house as a family, although if that means impairment of future IP that could potentially be of great value in the coming years, I'm not sure if I should move then, thanks for your help! :D
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Consider purchase a house in Keysborough and renting it for a while if it's difficult for you to afford now?

    The MW property sounds like a great location. It's an expensive suburb but consistently performs well and I don't see why that wouldn't change in the medium to long term.
     
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  11. Tynan

    Tynan Member

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    Moving out to a bigger home is necessary, my mother says the bank isn't going to give her a loan to buy a third home
     
  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Does she feel that she can afford it? The problem with dealing with only one lender is you're only exposed to a single set of policies. Lenders have different policies which means the outcomes for investors varies across lenders. This is one of the reasons why mortgage brokers write about 55% of new loans.
     
  13. Tynan

    Tynan Member

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    Hmm I haven't asked her that, will do that when j get home from school. Lenders are banks yeah? Are you allowed to go to a bank other than your current one and get a loan? Although from what people are saying, it's seems it's better to keep the MW home and rent out a place to live in
     
  14. melbournian

    melbournian Well-Known Member

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    keep mt waverley and clayton - keysborough is not at the same premium as those suburbs.
    Mt waverley is gold, keysborough more like bronze or alumimum.
     
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  15. eskander

    eskander Well-Known Member

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    Have you considered keeping all the property and renting in Keysborough?
    Without knowing what you need, 3-4 bedroom houses in Keysborough seem to be renting for around the 450-500 mark.
    Taking an average of $475, that's $24700 p/a. An 80% loan on a $850,000 purchase will cost you about 860 p/w assuming 4.5% interest (don't forget purchase costs). That's an extra $20k a year, which could potentially be used to reduce investment debt, and also be put towards purchasing a third investment property. Add in income from the MW and Clayton place as well.
    Just another option to consider, good luck :)
     
  16. Cactus

    Cactus Well-Known Member

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    I agree with what @Peter_Tersteeg said.
     
  17. Tynan

    Tynan Member

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    We have! Although my mother says it'll be more expensive than buying (I don't see how that works) I'm completely for it and honestly it looks like renting is going to happen. If we were to decide to rent (4 bedroom house minimum) do you think keysborough would be ideal? My mum has suggested if we are going to rent, endeavour hills would be good although I'm not entirely sure. Personally I'd love to stay (rent) in MW, it's my most favourite suburb in the world, but 4 bedrooms are pretty expensive. Mum's budget for renting is a max of $680 p/w.

    Mum does really want to rent the Clayton home because it's like 5 min walk from Monash Uni and she reckons she could put it on the market for $750 p/w (4 bedroom, 4 bathroom), although I think a valuer told her she would only be able to rent the mount home for $450 p/w (2 bedroom, 1 bathroom, one of those cut in half two house thingies forgot name sorry). I feel like renting is the best option now it seems

    edit: added more info :)