First home or IP

Discussion in 'What to buy' started by Sebastian777, 9th May, 2020.

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  1. Sebastian777

    Sebastian777 New Member

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    Hi,

    My wife and have I have been married for 4 years and have a 7 months old son and we are looking at buying our first property but don’t really know what we should do.

    We are currently renting in Castle Hill which is the suburb we would want to live in but can’t afford.

    We currently have $75K in savings and our mortgage broker said that due to our savings the max we can buy is $750K. This would only give us pace to live in Blacktown or similar which we aren’t too keen on but we do want to enter the property market and started thinking about a potential IP.

    Don’t really know where to go from here, does it matter if your first property is your first home or IP and what would benefit you long term?

    Thanks
     
  2. Morgs

    Morgs Well-Known Member Business Member

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    Plenty of people rent where they want to live and invest where the numbers make sense.

    The only tactical benefit I see you'd get from being a FHB (presumably) in NSW buying an owner occupied house are things like the stamp duty concession. This is an exemption up to $650K and then a discount up to $800K.

    At $750K you'd still benefit but it wouldn't be by a significant amount. One strategy might be buying at $650K and living there for a defined period of time before converting it to an IP. Needs to be the right property though and you'll need to compromise in terms of the area in which you live for a while, but if you couple that with some potential value add improvements then it might help.
     
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  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Yeah the 2 suburb is pretty much Chalk and cheese.

    I think it comes down to the sacrifices you're welling to make if you want to stay in the Hills District.

    Maybe buy an apartment around the area or at best an townhouse?

    Proposing to rent and buy an investment property will decrease your borrowing capacity and to be honest you will most likely be negstive cashflow property.

    I've had clients that were adamant they were going to buy a 2 bed apartment in Rhodes..but ended up buying a bigger house at Jordan Springs.
     
  4. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    I actually don’t really like Jordan Springs as the solution because it’s so far out. I suppose if they can WFH then it’s ok, but I think most employers would like employees to be at the office at least a few days per week once the Covid pandemic is under control. Rhodes has a lot of apartments though, so it’s also not ideal either when it comes to resale.

    The OP could maybe get an Townhouse in/around Castle Hill now, otherwise I actually think a house in the Blacktown region is solid. I have a friend who bought in Seven Hills maybe 18 months ago, and there’s really nothing wrong with that.
     
  5. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    I used Rhodes and Jordan Springs as an example from one of my clients. I'm not telling the OP to move there.
     
  6. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    I’d say that explicitly otherwise someone might take it as a buying recommendation.
     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    No, i think just youre reading my post wrong.

    Read my post again, I said he could maybe buy a house or townhouse in the area, which is what you recycled.
     
  8. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    But then you mentioned Rhodes and Jordan Springs. Neither places I’d recommend. If I were in your shoes, I would have suggested to your client to not buy in Jordan Springs.

    If you are an advisor, I personally would think the responsible thing to do is to have tried to talk your clients out of it, outline all the negatives of buying there, pointing out all the downsides in buying in that location. If you didn’t do that, then that purchase is partially your responsibility but you made a gain out of it at the expense of your client. Sorry.
    But on the other hand, if you pointed out the risks and the client decided to go ahead, then all good, but I would mention that in this thread, saying you don’t actually recommend Jordan Springs. People may follow what you read and consider it good advice, so it’s up to other forumites to call out anything that might mislead, anything that may make someone do something they may regret.

    Of course, everybody uses the forum at their own risk, but as a community, I believe we must look out for the best interests of the people seeking assistance.

    As someone who may be an advisor/broker, you should be particularly careful with your posts.
     
    Last edited: 10th May, 2020
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  9. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    I still don't think you've reed my post properly.

    For starters, the clients chose Rhodes themselves, they chose to buy Jordan Springs for affordability.

    And if I was in your shoes, id mind my own business and not thinking I know everything.

    Most importantly you're assuming Jordan Springs is a bad place, just becsuse you don't like it doesn't mean everybody needs to follow suit.

    The area wasn't developed for no reason, nor would thousands of people move there for no reason .

    Why would you even tell your clients where and where not to live. If a client grew up in Rhodes and want to stay living in Rhodes, why would you advise them to not buy there if that's where they want to live? (Example)

    Your comments quiet biased without facts.

    Ignored.....
     
    Last edited by a moderator: 12th May, 2020
  10. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    I just think you should have point out the good and bad of the intended purchase for your clients. New becomes old quickly, and you can’t ever change location. Buying in say Blacktown region would imo have been better. Bigger land, closer to city, much better transport. If they have their heart set on it, fine. But I wouldn’t post that as an example of an outcome, there are just much better buys to be had.

    PS. My uncle is a lawyer and I engaged him in the purchase of my first property (and my subsequent PPORs too). In my first ever purchase he pointed out the property I was proposing to buy was small. Pointed out the negatives, before I committed to buy. He was right, it was small (54 sqm if I recall correctly) and he did his job.

    If the person is a FHB, they particularly need help from professionals who:
    A. know what they are doing, and
    B. have their best interests at heart.

    Ps. My uncle also talked my sister out of a proposed purchase, as the property (a unit) was right on Epping Road and there was an easement to widen the road. Yes, it meant my sister and her husband had to continue their search, but in the end they bought something good, quiet, peaceful, well away from traffic. That’s a great outcome.
     
    Last edited: 10th May, 2020
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