First Property Advice

Discussion in 'What to buy' started by Skcoddam, 27th Jan, 2020.

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  1. Skcoddam

    Skcoddam Member

    Joined:
    21st Jan, 2020
    Posts:
    7
    Location:
    Adelaide
    Hi,

    We are looking to buy first home in Adelaide Southern suburbs at about $400-500k (which is how much it costs to get what we want in this area). We would aim to live there for at least 5 years, potentially a lot longer if we get something we really like. We like the area and we can’t currently afford what we want in more expensive suburbs, hence looking here. We do want to buy a couple investment properties down the track but don’t have a firm plan. I am a junior doctor and my salary should increase significantly in the next 2-3 years, hence greatly improving our borrowing power.

    Required Specs:
    4 bed or 3+study
    Large living area and kitchen
    Good size yard and at least 700sqm plot size (note that plots in this area are often generous)
    Outdoor entertaining area
    Something that is not falling apart as we are not particularly handy

    The area has good rental yields at around 5% but sluggish growth (2-3%) which will I assume will likely continue.

    Questions:
    1) Given the likelihood of relatively low capital growth, is this purchase likely to be detrimental/delay our next purchase?

    2) although we really want our own place now, would we be better waiting several years till our borrowing power increases and we could potentially get what we want in a more affluent area with potentially higher growth?

    3) should we aim at the higher end of our budget with the thinking that the house would suit needs for a longer period, or the lower end of our budget in the hope that we may get a second property sooner?

    Apologies for long question and thanks in advance.

    cheers
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,534
    Location:
    Gold Coast
    When you move out of this property, will you buy another home ? and importantly, what will you do the existing one ?

    Sell or convert to ip ?

    ta
    rolf
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    3,472
    Location:
    NSW
    Yes, if low CG the there won't be equity available to draw down for a deposit for your next purchase. The deposit for property no.2 would have to come from savings instead.

    It depends on how many properties you want/need. This comes down to your admitted lack of a "a firm plan"

    You should perhaps be asking a property lawyer & accountant what structures you need to have in place for asset protection - to avoid losing your assets from a medical negligence claim.

    Once you have all the above set down and agreed, then the answers will become self-evident. :)
     
    FatElephant likes this.
  4. Skcoddam

    Skcoddam Member

    Joined:
    21st Jan, 2020
    Posts:
    7
    Location:
    Adelaide
    The plan at this stage would be to convert to IP