First move if you were starting out today?

Hi guys,

I've spent the last year trying to figure out what to do with my first move and still haven't been able to decide on whats best to set me up for the future. Analysis paralysis at its finest!

The short term goal is to own and move into a PPOR within 3 years horizon within a 30 min commute to Sydney CBD. Fairly typical criteria: good access to trains, shops & secure.

Not fussed about this PPOR being appartment/townhouse/house provided it has potential for decent CG to support up-sizing and school catchment purposes in about 5-7 years or so.

I know there are similar threads out there but just wanted to know what YOU would do if you were starting out in your mid 20's in today's climate if you were in a similar shoe?

Current Financial scenario:
1. Work and Live in Sydney for the forseeable future
2. Can stay at home for approx 2-3 more years
3. Single Income of ~$100k, saving approx 30-50k a year
4. Saved deposit of ~$120k so far (can get a bit of assistance if needed)
5. No other assets/properties

Overall I think I am able to have a moderate risk appetite - Hoping to get it right first time should be able to tolerate minor downfalls with a bit of paternal support hopefully

I've listed some options that I've thought of so far, Am i missing anything?
Thanks!

 

No one knows the future. Only two of your options meet your PPoR in 3 years goal. So given your goal one of those is the path you should follow.

 

Why the emphasis on new properties? You can sometimes get better value with slightly older units or houses.

And if you do buy in Sydney, try to move in for long enough to satisfy owner stamp duty conditions or any FHB grants, and then move back home to take advantage of the up to 6 year CGT absence rulings before you establish another PPOR.
Marg

 

I love Tasmania and hope that one day I can have an IP there, but the last option of buying a house there for $600k is way too much for the one house.

 

If I was starting out again? Not sure, but I doubt I'd be buying into Sydney at this point.
Here's what I do know. Whatever your plans are now, they are likely to change. While you're young and single, you're better off rent-vesting.

 

I'd do none of the above...

With 120k saved that's 20% deposit + costs on up to ~500k property. That'd avoid LMI, minimise potential non-deductible debt if a PPOR now or in future & reduce any negative cashflows. Then wait until enough equity is built up to use as deposit for next purchase....

This notion of needing to spend 600k+ on 1st purchase is holding many people back IMHO...... Additionally, keeping undeductible debt to an absolute minimum will allow attainment of financial freedom far quicker.

 

How about just making lots of money and paying cash for your PPOR?
Start an Amazon Australia biz.
Sell crazy amounts of product and profit.
Become a multi within 3 years.
Buy house in Sydney.

 

Second the rent vesting notion. Why buy in Sydney at peak or market when renting is so much cheaper?

 

thanks for the responses guys.

I was quite open to the concept of rent vesting (option 2,3,5,6 were my take on rent-vesting) - I do pay rent currently at home! Unless you were suggesting I should be removing my focus on buying a PPOR at all in the 5-7 years?

I am conscious that old properties are better value but I was thinking that depreciation on new properties would maximise my tax scenario given I am working full time.

Regarding the LMI, my current working arrangements allow me to have the LMI waived if that changes anything

 

Basing your choice of property on tax issues is not necessarily a good idea. Sure, you may get bigger deductions, but you may not be getting the best value for your money. You have to factor in the higher buying cost, plus extra interest on the higher borrowings.
Marg

 

I'd take advantage of this big time.
Other than that... I'd look for house on land in Inner Brissie or Redcliffe area. Or both.

 

You can't have a Sydney IP that you get FHOG on.

There is literally a thousand paths, and what is good for you, may not be good for me, etc

 

Exactly. Every person has a different

• Risk profile and comfort level
• Financial situation
• Investment goals
• Skills and time availability

Depending on your mix of the above will largely depend on your strategy. There's no point suggesting a renovation strategy to a doctor working 80 hours a week, likewise suggesting commercial property investment to a 20 year old with 30k savings to their name.

Establish your goal (why am I investing, what do I want to get from this), work out where you currently are (what are your assets, liabilities, income, ability to borrow, how much can I save) and then work out the simplest, easiest way to connect those two points. Those factors above will dictate the strategy.

 

I agree with the comment above regarding investing to lower tax. I have always been of the opinion that if you are paying tax you are making money and in the end thats the aim of most.

I am in the process of starting to invest myself but your story is similar to mine. I purchased my PPOR on the gold coast at 25 with $140K deposit and went about paying that down. If i had my time again i would of purchased a smaller property and used my money to invest at the same time. But if you can stay home and put your money into investments that sounds like a good idea to me.