First home buyer: House or unit?

Hello everyone,

I am new to PropertyChat and have been going through a lot of older posts which are rich in information. Just had a few questions about a situation. Any suggestions, opinion, advice will be much appreciated!

I am a first home buyer looking to put my first step on the property investment ladder. I live in brisbane and would like to buy something here first to start so that I can use it as my PPOR and rent out the spare rooms to help with my mortgage.

My max borrowing capacity (after talking to a mortgage broker) is 500k.

I am looking for a property with at least 2 Bedrooms,2 baths and single garage.

Earlier my strategy was to go for a unit in one of the inner city suburbs (like south bank, west-end maybe?!, Spring hill, bowen hills, new farm etc) so that I can stay there rent out the spare room and it would be very convenient as I work in the city. From the research I have done, it looks like there is quite a lot of demand to rent places in the inner city suburbs so it should be easy enough to rent.

However after I spoke with the mortgage broker, he suggested considering getting a house with some land in it so that the property experiences good growth in the coming years, however since I have a lower budget, I might only be able to afford a house in suburbs like Arana hills, Ferny hills Ferny grove etc. Which will put me in a situation where I would have to travel about an hour (one way) to get to work.

I am ok to go through the short term inconvenience of travelling 2 hours everyday (both ways) for work but I am not sure if it is really the right way to go.. Here are my questions:

• Is is worth buying a house that far and will it grow in the next 5-7 years?
• Would it be hard to find people to rent so far away from the city?
• Should I wait till I save up some more and probably create a larger income before I buy my first property so that I can afford a house closer to the city?
• Should I instead look for a unit and get the convenience of short travel-to-work straight away?

I intend to buy more investment property in the future to create a good passive income flow so that I can quit my job one day.

In addition, I would like to clarify that I prefer living in a single level dwelling so a townhouse is a no-go.

I apologise if I am being vague about anything, if you need more information to answer the question, please ask and I will provide as much information about my present situation as I can

 

IMO, if you do go the unit route, don't buy off-the-plan or new units, as Brisbane especially has a unit oversupply, not sure if it's still as bad as it was but i would suggest buying a unit in a 4-pack instead of high-rise, alot less bodycorp fees/sinking fund elevator/gym maintenance.

Have you thought of investing in a Buyers Agent to help find a good deal for you?

When you buy a property for a land component, you are banking on the land being close enough to the CBD to appreciate, but not far enough away that there is an abundance of new land that can come onto the market.

 

If you can buy a house with some land in a good neighbourhood or neighbouring a good neighbourhood with add value potential then I'd pick that any day of the week and twice on Sunday, as opposed to a unit, generally speaking. Try to stay within 12km of the CBD.

If you must get a unit then @Archaon gave you good advice on that.

 

$500k would get you an entry level house in Arana & quite possibly Everton Hills, but they go quickly.

Usually are in need of a Reno but this is a perfect way to add some value and build some equity if you can get your hands dirty. - Houses around Everton rent well & quickly as it’s a nice safe family suburb.

To give you some idea i completed one 6 months ago, bought mid 5, Re-Val mid 6 12 months later. This was in Everton so I know it can be done

It would also help you into the next one creating a little equity, look forward a few years and create a plan so you don’t shoot your self in the foot early. Re work, go for a drive out there, it’s actually bloody close to the city on a good run, 20min

If you do consider a Unit, I think you have to much more careful. Small blocks, very good suburb, low density, I notice you listed new farm which historically has performed well by Brisbane’s standard.

But personally for your first option you have less chance getting it wrong on a house and more chance to build equity imo

 

Thank you all for your replies. I really do appreciate it.

@Codie I might keep looking around arana, everton hills etc. However they are a little more than 10Km from the city about ~13Km. Do you think this is still ok? Also, are you aware of any other suburbs that might have houses in my budget that are about the same distance from the city or less?

@Archaon Not too sure about buyers agent a this stage as my budget is already quite low.. I also want to avoid putting too much pressure into myself in terms of repayments. (I already feel that $500K is the very upper limit)

@Sackie Thanks for your advice mate! I might try and pursue the 'houses' route while still keeping an eye out for units in a smaller building and on demand suburb.

Does anyone know of any other methods of looking for properties apart from realestate/domain? I have heard that sometimes you can get access to a property by talking to agents before they are advertised? how does that work?

Edit: Spelling

 

As someone who has gone through the same thought process recently I would advise you to think about the time horizon you may be in the place and how it will impact your lifestyle. If you’re young you might want to still be around the action, you can still get a decent unit that will do well (maybe not as well as a house).

 

Yeah Arana is slightly further at 13kms, parts of Everton can range down to 11km, remember it’s a mid to long term play, growth is starting to hit that area as new shops & area’s popping up everywhere, as we head towards 3m+ Being 11km out will be widely accepted and already is imo.

Another option which gets over looked, is coopers plains on the south side, similar budget yet boarders Robertson, Sunnybank, and just past mRooka. Which are a lot more expensive. See link below for example of what you can get in both.

15 Vereker Street, Coopers Plains, Qld 4108

328 Dawson Parade, Arana Hills, Qld 4054

I personally use RP data & on the house to get more data, on the house is a good free site that often gives a lot of info on past sales/rents etc. Good luck mate

 

THanks for all of that. Much appreciated.

 

I am in my mid 20s. Just trying to get the most out of the my first investment (and get in the property game early) as I have heard a few people regretting buying a unit. I do understand that not all units are a bad investment, however since I am just starting out, I might be better off taking the less riskier option. I know I will take a hit in terms of comfort and lifestyle (living in one of the inner city suburbs atm) but hopefully the short term pains eventuate as long term gains.

 

@kartonator best thing you can do to reduce your overall investment risk and make better decisions is educate yourself on this game, from the basics up. Some good books out there and pod casts to soak up. As your knowledge ( and experience) increases you'll be able to have your own informed perspective. It will be alot harder to make the newbie mistakes and you'll be alot more alert and aware to know which deals ( and slick sales ppl) to dismiss quick smart. Knowledge really is power in this game.

 

Yes, I understand. I listen to the property couch podcast which I found to be good. Just looking through this forum and other online tools. Would love to know about some books if you can recommend any...

 

These are some of the books which helped inform my basic knowledge and I found useful. No single book is the holy grail, just various viewpoints and perspectives however most after on the main things to avoid.

Michael Yardney, How to build a multi million dollar property portfolio

Jan Somers More Wealth from Residential Property

Margaret Lomas How to achieve property success

Margaret Lomas How to Create an Income for Life

I buy Houses, Paul Do

20 must ask questions, Margaret Lomas

Negotiating Secrets, by David Brown

A property investor's guide to negotiating, by John Potter

The negotiation book, By Stave Gates


Seasons of life pdf attachment by Jim Rohn. ( Undoubtedly the most important book which shaped my investment philosophy and my overall results)

 

Thanks @Sackie much appreciated!