NSW East VS South VS Northwest

Hey everyone, so i'm currently stuck between whether to hunt for 2 bedder units near the beach either in maroubra or coogee or if i was to buy a house it would ideally be a 3 bedder around the hills district (kellyville, baulkham hills) or Sutherland area (lugarno, como, gymea) This property is for ppor and will be held for atleast 10+ years. I'm a single guy in my my 20's. Have pre-approval for 1.25 mil.

 

Hard decision. South, Northwest or East. Where and what do you do for work? Transport is a key factor for me. Whatever you buy should be accessible transport wise, and trains with good train schedules are preferable. Failing that, good bus/light rail services are an alternative.

I also have a preference for something with land.

Ps. Do you have family in Sydney, or is it just yourself?

 

Thanks for responding
I'm an electrical engineer and work in the CBD, but distance isn't really an issue for me because I don't know where i'll necessarily be working in 5 or 10 years time. I'm mostly lookong for a suburb with good potential for capital growth in the next decade or two.

 

What type of lifestyle are you after?

You are young- could you live in the suburbs?

I would choose coogee/maroubra if I was you. Don’t spend the whole 1.25.

 

Hey Shazz

I tend to work a lot and spend most of my free time at home so i'm not too fussed about living in the suburbs. I'm a minimilast and easy satisfied. If leaving in the suburbs and hsving a decent land component means that it will outperform a unit in maroubra than yes, i'm willing to make that sacrifice.

And noway, I don't plan on using all my borrowing capacity. I'm aiming around the 1 - 1.1 million mark. Hopefully closer to the million if this downturn accelerates

 

An alternative idea. Surry Hills, Redfern, Pyrmont, Chippendale, Glebe, Ultimo apartment? It's a walk to work.

Or the other side of the bridge:
North Sydney, Milsons Point, Lavender Bay, Waverton

Also another question is, do you think you'll have a family sometime down the track, and how soon?

Maybe try renting an apartment in Coogee/Maroubra before buying anything.

 

I'm thinking, I don't know how much of a mortgage you are thinking of taking on, but sounds like you might be looking at a huge mortgage. How much have you saved already?

 

My mortgage won't be much at all. I have a 50% deposit for a $1 million property and i have an excellent credit history so my lender is offering 3.59% variable or 3.69% fixed. My repayment should be less than an average property rents for in Sydney based on my calculations.

I'm really only considering the suburbs i've already mentioned otherwise it just gets too confusing. What i'm looking for is data or someone who has knowledge in any of those areas and can offer some advice

 

500k cash, a good job and in your 20s. What are your goals?

 

Yes it was a combination of saving for 5 years and the help of an inheritance.

My main goal is just to buy a home and have it paid off as quickly as possible. I want to be free of debt and have passive income from a few investment properties by the time i reach 50 or so. Not looking to have a family in the near future and access to the city isn't that big of a deal for me. I'm looking at this first purchase as a roof over my head but also from a capital growth perspective.

 

You understand that leverage helps returns? Debt free is the goal. To get there it may be necessary to take on debt at first. Just because you want a leisurely holiday in bali doesnt mean you have to take a leisurely walk to get there.

 

Agreed but with all the uncertainty in the market and the economy in general at the moment, doesn't seem like a good idea tocbe taking on too much debt. I think i'd prefer to get close to paying off my ppor before i'll even consider buying an investment.

Back to the main question...for 1 - 1.2 mil, which region of sydney also unit or house & why?

 

Hey @Marcussyd

Awesome having a healthy deposit to lay down.
I'm in a similar boat, so will rattle off a few things that come to mind.

1. How you feel now, will change drastically once you start thinking family. It really creeps up on you. An apartment may seem fantastic, however someday, you may think of kids, and that 1 bedroom starts looking cramped.

2. At your age, I was in a similar boat, and invested out-west, made a motza, however it has made it difficult to lock in a decent PPOR, as a great deal of my borrowing capacity has been used on investment properties. I'm relying on my partners borrowing capacity for our home purchase.

3. I'm also project based, so purchasing to be in proximity to work doesn't really fall into place. That stated, it really helps to be within 30 mins of work. Two solutions, change to a job where you can stay local, or change jobs so you can work from home.

4. At your age, consider renting in different areas to get a feel for where you'd like to live. I have lived in dozens of suburbs over time. South is gorgeous, though a little too quiet for me. Bondi Junction is amazing, however terrible if you work anywhere other than the CBD. The west, well, it has its pros and cons.

My partner and I keep going in circles, and find we always 'settle' on Balmain and surrounds. I use the word settled, because what are the chances we both like one of the most desirable suburbs in Sydney... (fml).

5. As stated by @Trainee, it may be helpful to go through investment fundamentals again. LVR is really important to a healthy portfolio. You may consider purchasing more affordable properties with uplift potential, and keep a healthy amount in an off-set account to mitigate any risk. That healthy off-set may also be used as your deposit for a PPOR not too far down the track.

In the meantime, rent, and figure out where you can see yourself living. North, South, East, and West, are not only geographically different, the lifestyles are worlds apart.

 

Thanks so much NHG, lots of useful information there. If i'm going to rule out a unit i'd also be ruling out the eastern suburbs because that's all i can afford. Right now i live with my dad and i pay nothing, hence why i've been able to put together a healthy deposit. I'd rather not waste money on rent if i don't have to.

I can see the appeal in buying a few cheaper properties rather than the one expensive property but then again i do want to have my own home to live in aswell. Tough choice.

 

At $1.2m you’d be extremely close to being able to afford a house in Maroubra, particularly with the current direction prices are going.

 

Rent money is dead money.
The statement is a fallacy.
Meant for non-investors who play it 'safe'.

Eg. At 25, my portfolio cost me $1.2M all inclusive (stamps, renos, etc).
The rent for it was/is $113,000.
$113,000 / $1,200,000 = 9.4%
Positive geared by quite a bit.

Those properties as of October 2018, valued at $2M.

If I had used that $1.2M to purchase a PPOR repayments would be around $4,500/month.
Rent on a property like that is likely around $900/week, or $3,897/month. If you live in it, you will be paying that.

So in the first scenario, I have a portfolio paying itself and surplus to pay my rent in a desirable location. In the second scenario, I'm paying to house someone else. My capital growth was also higher than average over that time

Sure you can put down a huge lump sum, however that is money standing idle, and should be included in your calculations to account for opportunity loss. Also not using leverage which is the most powerful tool in RE investing.

Sometimes playing it 'safe' isn't safe at all.

As for wanting to own your own home. That's something entirely different. It's a personal choice. Yet be clear, it is a liability. You can do that first and invest later, though you will reduce the compound/time advantage.

It is tricky, however one is an emotional purchase, the other is financial. You gotta have a think of your end goal to see which works best for you.

 

Can I respond to NHG's post. When he purchased, the Sydney boom was just taking off so his capital gain may not be duplicable in the next five to ten years. Secondly, the majority of humans do not have his driven personality - not everyone needs to cruise to Bali in their own private yacht when a Virgin flight will suffice. He will make an awesome mentor should you get to know him.

 

NHG, thanks i can definitely see where you're coming from. However, for me personally i see a house as just somewhere to live and not really for investment. I would much rather use my money to start a business or invest in the stock market. Hence why i'm only looking for a ppor. We all have the same end goal, just different ways of achieving it

 

Your looking to max out your borrowing power and use all your cash on something you dont consider an investment. Where is the share investing money going ti come from after that?

 

I’m thinking he’s not going to max out his borrowing capacity, and he could use the home and debt recycle into shares?