WA Concerned Parent

First Timer here

I have a Son and partner currently renting in Mandurah. He's told me they are now saving to buy their first property in about a year which is great. The concern I have is that he is in the navy and therefore moving around and hes looking at this as an opportunity to get into the market that will help him step up later if they end up in another part of the country.
The properties are certainly priced well, but if they dont increase and are hard to sell, he could be in for a harsh surprise.
I dont know the area so I cant really advise but it still concerns me.
They are talking at a max $350k

What are people thoughts on the best strategy?

Any advise would be appreciated.

Thanks Meinoz

 

Hi Meinoz,

I have a son in the navy also. (you know you need to cut the apron strings and let him go, right?) But I understand your mother concern.
He will do better if he's a buy & hold investor that never sells. He could buy a place after he's been stationed there a while and gets to know the better properties. Then he keeps that place and moves onto the next posting and repeats the process. Keeping each one in turn and renting out to a tenant.
That way he will become very wealthy.......as his income and confidence increases, he'll be able to buy more than 1 each time. After he's learned a few things he could pull some equity out of a property/ies and invest in shares too. ......and on he goes.

 

I live in Mandurah.

It's an awesome place to live - if he was going to move back, I'd say go for it. But I wouldn't invest here.

There's a LOT of supply and despite the area growing I can't see that changing any time soon. So if it's strictly for investment, unless he's buying right next to the beach - as in, views - and plans to develop it later or something, I'd invest elsewhere.

 

Thanks.
Rest assured there are no apron strings but I have given him plenty of advice and hes been happy to take it on. The one issue with property is you need to know the area and as I dont I cant really help. Some other threads on here about Rockingham etc where a little concerning and I hate seeing a young kid lose their hard earned making a mistake.
But you are right, if he can hold and rent it out he can start his empire.
PS hes already started on shares

 

Hi Jess

No, this is a first home (22yr old). But Navy life means he probably wont be in it for long.
I'll have to convince them both that sometimes its the worst house in the best street and not all about the house. But thats a lesson theyll have to learn.
So anywhere with water views or close to water would be the go if possible? There seems to be a lot of it

 

There's a bit of scarcity in ocean view...but unlikely to get that for $350k. Much more likely to get a dime-a-dozen new build in an estate - which I'd avoid like the plague. If he's thinking of getting a keystart loan, please tell him to keep saving!

 

The other thing to bear in mind is that the Navy often pays rent assistance BUT if you purchase a property then they request that you live in it (and cut you out of your rent assistance). So many Navy personnel buy / invest in property in nearby areas (1-1.5 hours travel away) so they can continue to rent in their postings area & get rent assistance. Check with the Navy people what the distance rules are.

 

Mandurah /Rocky investment aside, your son is 22 years old now.
As politely as I can suggest, you need to let him make his own financial mistakes (if that's how it turns out).
A 350k lemon at 22 years old is not going to ruin the rest of his life. Unsolicited parental 'advice' only risks harming either his or his partners relationship with yourself.

If I was in his position I'd keep adding to shares over buying a rental property regardless of where it was, but that doesnt necessarily mean I'm right either.

Support whatever decision he makes, he will need to take some independant risks in life at somepoint, and there are certainly worse things he could be doing with his money.

 

Time in the market is better than trying to time the market, per @MTR
He is better to buy today
Should he be posted to another location he can take advantage of the Navy rent assistance as per @Propertunity and claim the 6 year rule as @Terry_w might suggest
Then when equity allows he could look to the local market of the new posting to also buy, and likely rent to fellow defence force personnel (guaranteed rent) .
Rince & Repeat (as @MTR say's )

 

How long has he been stationed in Mandurah?

 

Make sure he does not pay this property off, park all excess funds in an offset account. When he moves to another area and buys again he can move the cash to offset the place he is living in and minimise the tax on the rent for the first one.

 

The best method to help implement this is using an Interest only loan.

 

Probably a whole heap of better places in Perth to spend $350k

 

Op what is your own experience with property? Are you so sure it is going to go wrong?

let him do it. Let him make mistakes and learn. Hes 22 and willing to buy a property.

 

OP's son will be stationed at Garden Island in Rockingham, 30 min north of Mandurah. Property in this area is not likely to shoot the lights out with capital growth, but it's not all terrible if you select your area, plus there are certainly good yields to be had. Buying a nice family home close to the beach in Mandurah or Rockingham isn't a bad idea.

$350K in Mandurah will get you a family home one street or so back from the beach if you're willing to give it a cosmetic reno. Live in it for a few years and enjoy the good lifestyle then rent it out down the track for 5% or more yield and a bit of capital growth. But avoid the 'inland' suburbs and certainly don't go near the greenfield estates.

Sure there are better performing areas you could put $350K purely from an investment perspective, but its certainly not the worst and if he's going to live in it for a while and likes the great lifeatyle then I don't see a problem.

 

So I would disagree and say that on average, spending $350k or so around mandurah/rockingham is one of the worst places to buy in the greater Perth area - especially for the types of properties that are nice to live in or make a quality PPOR.

 

Just this year. A 2yr posting.

 

I think people have mistaken my post. Im not saying hes going to go wrong, Im asking where in that area are the places to buy a property given that other threads on here arent glowing about property in the area. Im from the other side of Oz, I dont know the area but I thought someone here who does might have a suggestion.

He does his own thing but he also asks my advice. I dont think suggesting he makes his own mistakes is great advice.

 

Thank you, this is exactly the advice I was after from a local. Theres a few here who have suggested to stear clear of the greenfield estates, so thats something that he should know, esp when buying to live in, you can tend to buy with you heart and then regret you didnt buy the worst house in the best street. Thanks Mate.

 

Well, hes decided to buy a house when 6 month ago he was going to blow it on a holiday, so hes on the right path. If he wants a house to live in then it has to be in this area and depending on grants etc he will want to look at following guidelines to maximise his access to housing.