QLD Buying our second house - Brisbane Northside

Hi all,

I’m fairly new here and am just wanting some feedback/advice on buying a second house.

Basically we bought a nice, newly renovated 3 bed 1 bath post-war cottage in Zillmere (near Beams/Muller Rd) on a 665sqm block in late 2014 for $450,000. We are at the point where we’re wanting to either add a deck and possibly redo the kitchen and stay there for another 5-10 years OR buy a second (better/bigger) home for us and rent our Zillmere place.

I’ve been to nearly a dozen open homes the last 2 weekends around Wavell Heights, Northgate, Nundah, Stafford, even one at Everton Hills to see what’s out there and I think we’d need to spend around $600-$700k to get what we really want.

Must haves are:
- 600sqm min block (the bigger the better)
- 3/4 beds, 2 baths
- deck
- renovated kitchen/bathrooms/laundry

Basically, we’re wondering if this is a sensible thing to do or if we should potentially wait another year and upgrade then (having paid off more of our mortgage as time goes on). Financially, we can afford a bigger place but having made what we consider such a good purchase on our place at Zillmere (it’s been recently valued at $530,000 and we haven’t spent a cent), we don’t want to essentially “throw our money away” making the wrong purchasing decision on this second house

Sorry for the essay!

Any thoughts would be great!

Thanks

 

Ack!! If you have thoughts of turning Zillmere into an IP, the last thing you should be doing is paying off more of the mortgage (of which the loan interest will become tax deductible when it is an IP).

 

Oh okay? I really have no idea what’s involved in an IP and the benefits, negative gearing etc. Our thoughts have been to pay off as much of our mortgage as possible before turning it into an IP but by the sounds of it, that is the opposite of what we should be doing!

 

Correct, otherwise you will have a PPOR with heaps of mortgage and no tax deductibility for interest and low tax ded. on IP loan and possibly cash flow positive and paying tax on the rent income.

 

Yep, don't pay it off the mortgage, pay it into an offset account. Then you can use that money for the deposit on the next place (or to offset the new mortgage) without losing any deductibility off your Zillmere place

 

Hi @LittleBlueHouse
As others have suggested, if you have plans to convert this existing home into an IP, don't pay off more than required.
Also, if you do intend to buy next home in the next 12 months, it may be worth considering converting it to Interest Only, so you can save the difference for next home.

 

hi @LittleBlueHouse , welcome to @PC.

good advice above. it is pretty much " keep your non deductable debt ( own home loan) low, and keep investment debt high"

 

- Speak to a decent banker/broker about what you can do. No point having ideas of renovations or second home if can't be done.
- Speak to a builder about the cost of doing what you want to do
- Speak to agent or ask your banker/broker for comparable sales to see if you're going to over capitalise

Make sure you let them all know of what you want and why you're doing it. If they're decent they should be able to provide good advise for each specific area.

 

Great!
All good suggestions! Thanks everyone

I have a couple of real estate agents coming out this week for an appraisal and I’ll run the ideas of a deck and new kitchen etc passed them to see what they say re overcapitalising.

Will look into converting our home loan to interest only and we already have an offset account linked to our home loan which we have $30k in for a deposit on the new place. Will just start paying the minimum on the current house and continue to save the rest towards the deposit

Thanks so much for the advice! This rookie really appreciates it!

 

If it were me, I'd be buying that but not renovated. Buy the crappiest place in the area you like for as best a price you can get, then reno it yourself. You may be able to save money after your reno is done if you are savvy on the reno and/or you can reno it to however you like it.

 

We have thought of doing this as well. My husband is not so keen (probably because he knows he’d be doing most of the work), we both work full time so it would be a long process to get it all done but it is very tempting particularly to end up with a place we love and in a nice area etc.

 

These suburbs are 'better' than Zillmere and given prices in Brisbane are still relatively low, I
I'd opt to turn Zillmere into an IP and buy your forever home. No doubt in my mind at all.

If you HAVE to sell in order to buy your forever home, then so be it. It'll be CGT free!

And if you can afford to spend $700K, then sell Zillmere and get into a better area like Grange, Wilston, Windsor, Lutwyche etc

 

Without looking into these in any great detail, at a high level may fit the bill -
95 Mawson Street Stafford Heights Qld 4053 - House for Sale #129233522 - realestate.com.au - Kedron end, Padua Precinct, good school catchment. Probably needs some love though.

68 Niven Street Stafford Heights Qld 4053 - House for Sale #129132598 - realestate.com.au - similar, just not as good a location as the above

8 Brewster Street Stafford Heights Qld 4053 - House for Sale #129105886 - realestate.com.au slightly bigger block but definitely needs some love.

15 Belinda Street Aspley Qld 4034 - House for Sale #129130266 - realestate.com.au - solid house on bigger land again, but sacrifice the location.

I have a IP in Stafford Heights and monitor what's for sale, hence the above are from my 'saved' list on re.com

 

Oh great thank you!

I had short listed a couple of these. The first one looks particularly promising, just need to decide if we really are up for renovating or if we want a place already done

Thank you!

 

How do you think Stafford heights is going ?- and will go in the future?

I have a 700m2 corner block in a nicer street , at the moment it’s ppor but intend on moving on in the future
Interested to hear your thoughts
Some nice streets , but there is still some pretty run down parts?

 

I’m actually going to look at two places at Stafford Heights tomorrow. Both less than 650sqm though, would prefer if they were bigger blocks

Stafford Heights is a good area from what I know. Good schools, overall mostly nice streets and houses and still fairly close to the city

 

Stafford heights - gentrification city.

 

Don’t know still plenty streets with broken down cars in the front yard , but yes there are some nice streets/pockets

 

When we were looking not too long ago in North Brisbane (not inner north Brisbane) the suburbs that stood out to us were West Chermside, McDowall, pockets of Aspley (we love the Hypermart! Hoping it turns into a calmer Sunnybank.. hahahaha!), Ferny Hills (would you consider that North Brisbane? We kinda did..). Mainly for schools- and settled on a house that is in the McDowall State School and Craigslea High School catchment areas that is built in the mid 1990s- so whilst not fully renovated the unrenovated kitchen and main bathroom are still very functional and not too much of an eyesore. We both drive against traffic for work so not having the best public transport isn't an issue now... but we are hoping for a miracle for the land set aside for the supposed North West Transport Corridor (Trouts road). Most of the houses we saw are in the SQM range you are looking for... but may need around 650 000 to get something decent.

I can't help with the property finances part! I am still learning myself and this group is pretty good for that.

 

Sounds like you have a location you love (very important). I'd be tempted to just do up the place you have. Even paying tradespeople is likely to be cost effective.