First Property Investment Strategy QLD

Discussion in 'Investment Strategy' started by NeilG, 1st May, 2020.

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What should I do?

  1. Buy cheaper house/unit now and pay stamp duty

    33.3%
  2. Save for more expensive house and pay no stamp duty

    66.7%
  1. NeilG

    NeilG Member

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    Gold Coast
    So, I'm debating as to what my strategy should be for buying my first property.

    Ideally, I want this property to be an investment property without living in it, although, I feel bad passing on stamp duty concessions as a First Home Buyer.

    I am certain that I would like to start with 20% deposit, and so this is what is limiting my options.

    Option 1:
    Buy positively geared unit away from where I live as investment property now for roughly 150-200k with 20% deposit and pay 4-6k stamp duty.

    Option 2:
    Continue saving for 20% deposit for local house/unit for 400k roughly and live in it for 6 months to avoid paying 12k stamp duty. This may take 2 or 3 more years.​

    Essentially, I am asking whether you guys think this saving of 12k is worth it or should I just jump into the market now? Please point it out if I have missed something obvious here.
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    quality is long remembered after price is well regretted

    ta
    rolf
     
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  3. db9

    db9 Well-Known Member

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    Consider what's next after each option and which will bring you closer to your goals. How much will a 12k saving in stamp duty contribute to your goals?
     
  4. Vicky1987

    Vicky1987 New Member

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    Buy with Option 2, use only 10% deposit instead. you will pay mortgage insurance buy can buy property sooner than saving for 20% deposit. Its important to buy first property which provides you with capital growth to buy more in near future.
     
  5. NeilG

    NeilG Member

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    Perhaps you are right and I would be more likely to see capital growth on the future house.

    But really, I can’t guarantee capital growth on either property and I would still be acquiring equity on the first property that I could use for future purchases.

    So, I’m still not sure...
     
  6. NeilG

    NeilG Member

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    Is that always the case even when the lesser quality property can provide a steady positive income stream?
     
  7. My House QLD

    My House QLD Well-Known Member Business Member

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    Which locations are you looking at for this option?
     
  8. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Re the 20% thing...

    You can't guarantee you'll be able to get your equity out when you want it. Bank policy changes, valuation changes...

    I'd rather pay a bit of LMI and be sure I'm going to be able to get into the properties I want.

    Right now we're seeing bank policy changing quicker than you can blink...
     
  9. Angel

    Angel Well-Known Member Premium Member

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    What is a positively geared unit for $150k to $200k?
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    In retirement phase thats a great thing.

    In acquisition phase ...............usually no.

    Say you make 100 a week gross per week on 200 k place

    After tax thats say 75 a week

    in 5 years time u have another 19 500 save for another IP

    Buy an asset that has reasonable CG prospects, lest say 400 k and its 100 a week negative

    After tax its 75 a week

    After 5 years you have lost 19 500 in your personal cash input

    If the property has grown 5 % PA of the 5 years non compound , the 400 k place is now worth 500

    assuming u have the borrow cap u now have an 80 k deposit.

    You are 60 k better off

    rinse and repeat

    lots of assumptions though

    ta
    rolf
     
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  11. Pete Love

    Pete Love New Member

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    Hi Neil. The best option here is to utilise the Federal Gov's First Home Loan Deposit Scheme. Buy the best located existing property you can up to $475k, and only pay 5% deposit without any LMI. You won't pay stamp duty either.

    This is provided your borrowing capacity reaches that far.

    There are still spots available with Auswide and with MyState. Speak to a decent mortgage broker and they can arrange it for you.

    Otherwise, you will save yourself out of the market trying to get to 20% on a decent property. Don't buy something $150 - $200k.

    They are usually sub-standard 1 bedroom properties in regional areas which are not investment grade and will not get you a strong return in the future.

    Interest rates are so low at the moment, take advantage of the FHLDS, buy a 3 or 4 bedder older house within 25 - 30km's of Brisbane on some land, and rent out the other rooms and you'll barely be paying $100 / week toward your mortgage. Try to get near the new Petrie campus of USC for a stronger rental demand.

    Cheers.
     
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  12. NeilG

    NeilG Member

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    Thanks for this reply. Much appreciated.