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Buy investment and rent or buy to live

Discussion in 'Where to Buy' started by property newb, 7th Apr, 2016.

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  1. property newb

    property newb New Member

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    Hello,

    My partner and I are trying to figure out whether we should:
    1. buy in a cheaper suburb with potential growth and rent in a desired suburb (inner west)
    2. buy a 2br unit as a PPOR and live in it for a few years before either selling it to upgrade or rent it out

    I've calculated the following but I'm sure there are many more considerations that I need to factor in.

    Scenario 1: buy investment & rent
    2br unit Harris Park
    Purchase: $450,000.00
    Weekly Rent: $410.00
    Monthly repayments: $2,630.66
    Anuual repayments: $31,567.92
    Annual Tenant Rent Collected: $21,320.00
    Annual Rent Paid in Dulwich (living there): $24,960.00
    Annual Out of pocket: $35,207.92

    Scenario 2: buy investment as live PPOR
    2br unit Dulwich Hill
    Purchase: $550,000.00
    Weekly Rent: $480.00
    Monthly repayments: $3,215.25
    Annual repayments: $38,583.00
    Annual Out of pocket: $38,583.00

    Do you guys have any other things you think I should consider to help us make a more educated decision?
     
    Last edited: 7th Apr, 2016
  2. HUGH72

    HUGH72 Well-Known Member

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    With option 1 there will also be higher stamp duty payable when purchasing along with agent fees and transaction costs if its sold in 5 years.
    Rent is likely to rise at least with inflation over 5 years as well
     
  3. ashish1137

    ashish1137 Well-Known Member

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    Rent in NSW but buy in VIC an IP which will give you positive returns and your payments can be reduced.

    Regards
     
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Better financially to buy for investment and rent in the suburb you want to live in.
     
  5. samiam

    samiam Well-Known Member

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    on my way
  6. Nick Valsamis

    Nick Valsamis Well-Known Member

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    Your monthly repayments are equal to 7% of the full purchase price.

    To be more accurate you should calculate it on the loan size against the interest rate because that will make a big difference in your annual repayment figure.
     
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  7. Befuddled

    Befuddled Well-Known Member

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    In scenario 1 you need to add strata levies, council/water rates, insurance, property management fees (maybe). You can however subtract tax savings from depreciation (if applicable)
     
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  8. hash_investor

    hash_investor Well-Known Member

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    Any examples?
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not in NSW, the duty is the same whether owner occupied or investment.
     
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  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Don't forget rents tend to rise each year too.
     
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  11. neK

    neK Well-Known Member

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    Will there be more cg in dulwich hill or Harris park..... That is the question
     
  12. neK

    neK Well-Known Member

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    How about buy in dulwich hill as an ip, rent a smaller and cheaper 1 bedder in dulwich hill
     
  13. property newb

    property newb New Member

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    Hi guys thanks for all the helpful advice so far! :)

    @ashish1137 I've toyed with the idea of buying an IP in VIC, but looking at the property clock it seems like it's at the peak of the market, or would that not matter as much if it is positively geared?

    @samiam great link, thanks!

    @Nick Valsamis ahh yes I didn't consider that, I will re-do my calcs. Thanks!

    @Befuddled thanks for that! I'll try to create a rough estimate with the above factors. Is there a way to figure out roughly if and how much depreciation one would get?

    @Terry_w good point, I'll try to figure out an average annual rent rise and perhaps calculate it over the next 10 years

    @neK hard to say which will perform better dulwich hill vs harris park, although I've read that both suburbs will do well. I've tried looking for some 1 bedders in dulwich but none to my liking (for some reason they many have bathrooms that are only accessible via the bedroom which is pretty unattractive to me and I'm assuming future tenants/buyers)
     
    Last edited: 7th Apr, 2016
  14. Befuddled

    Befuddled Well-Known Member

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  15. ashish1137

    ashish1137 Well-Known Member

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    Hi,

    As a lot of experienced members say, melbourne is market within markets, quite true for every region in Australia.

    Inner suburbs/ cbd - a big no.
    Eastern Suburbs/ dev sites - a big no again
    Middle Ring suburbs - need to do the dd.
    Outer ring suburbs - a lot of opportunities and a lot of places had cg in past 2 years period.
    Geelong and vicinity - some good buys with cg and a lot of places had cg in past 2 years.
    Armstrong creek and vicinity - some good buys and mostly places had cg in past 2 years.

    All in all, melbourne has good buys in entry level markets. Entry level markets also have less probability to fall.

    Growth in Melbourne steadily increasing, a lot people moving, infra already there, good job opportunities, a lot of options for entry level oo's.

    This is all based on the way I see though. :)

    A lot of potential in Brisbane as well. Worth exploring. I just read though. Don't own anything in Brisbane.

    Regards
     
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  16. hash_investor

    hash_investor Well-Known Member

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    So thats why you are talking up Vic in a bris thread ;)