NSW First time buyer, looking to invest ($1.2-1.5m budget)

Hi PC,

My partner and I are looking to make our first property investment(s).

Some basic details:

• Budget: Expecting pre-approval for around $1.2m, $250k in savings
• Age: mid 20s
• Incomes: 100k + 20% bonus each (expected to grow 5-10%/year)
• Getting married next year but we're both separately eligible for the FHOG (we think? We don't currently live together.)
• Open to the idea of buying one property combined OR one each
• Happy to rentvest (ideally rent around the inner west).
• Long term goal: Own a house in a premium suburb close to the Sydney CBD

Current ideas:

• Buy a free standing 3/1/1 house each in Western Sydney (e.g. St Marys, Colyton etc) but a little concerned about the recent boom and whether we're late to the party.
• Interstate purchase (e.g. Brisbane?)
• 2b/2b/2car Townhouse around areas like Five dock, Leichhardt
• Is it better to buy 2 cheaper properties (to benefit from FHOG, stamp savings of up to $35k each) OR buy one established property in a better suburb

What other areas should we consider?

Would really appreciate ideas from everyone and particularly interested in stories from people who've gone through a similar journey!

cb.

 

Slight update to the above. We've been pre-approved for $1.15m + 250k savings = $1.4m budget.

 

Technically as you are a couple you wouldn't be eligible to buy a property each and receive two stamp duty exemptions, but that isn't to say that people have done it and gotten away with it.

An answer to this can go on many different tangents. What is the purpose of having the lower priced investments? To sell when you are ready to buy the expensive house, or to hold onto after that time? If your only goal is to have the expensive house, perhaps buy the inner west townhouse and trade that in once your incomes increase/you feel comfortable taking out a larger mortgage. if it is to sell to buy the expensive house, you would be buying at or close to the peak of the market, so it would be some years before you'd have some significant gains to take to your next purchase - unless you buy something with scope to develop but that is a totally different kettle of fish.

As for Colyton/St Marys, the people giving it a very large rap on here haven't bought property there for many years, they are merely excited at the gains they have achieved by buying them when they did. I have a couple at Colyton and I wouldn't be buying there now.

 

Thanks for the reply beachgurl. I thought since we don't currently live together, we could go through separate home loan apps and buy in our own name each to receive the benefits. I'll do some more digging to see if this actually above board or not.

That's a good question. The thinking is to get a couple of positive geared IPs that are paying themselves off over time --> build equity --> fund the next purchase (probably another IP). It also feels less speculative than banking on appreciation in one higher end property. We're under no illusions that we will be able to get our dream house in the next 10 years, it will be a longer term purchase. Now that I think about it a little more, in the scenario we need to trade it all in, we could be up for a hefty tax bill...

Yep this is my feeling. Well done to those investors but my gut feel is that a lot of the future gains are being priced in quite early. I'll also be the first to admit that everything i know about property can be written on one side of a stamp.

 

Tough one. Sydney is really expensive and there are no signs to be slowing down.

Rentvesting may be the way to go and maybe look for opportunities where you can increase your equity without relying only on the market (reno/subdivision/duplex etc...) somewhere you can afford. Doing a coupe of those deals and increasing equity should allow you to wither continuing to do that or buy your PPOR somewhere you want to live

 

Need to consider the end game. Depending on your goals, having multiple cheaper properties allows you to sell down over several years to minimise cgt and provide more flexibility. Following interstate migration and pent up demand is also worth considering as you could end up with 20% equity in 18 months time for the right purchase. Houses are a better option than townhouses if you can afford them.

 

There's an idea... Thanks Daniel. Are you thinking of something like this:
6 Boyd Street, Blacktown
https://www.domain.com.au/6-boyd-st...tm_source=Android app&utm_medium=sharelisting

Sent via the Domain App

5 Judith Avenue, Seven Hills
https://www.domain.com.au/5-judith-...tm_source=Android app&utm_medium=sharelisting

Sent via the Domain App

 

I'd suggest checking with a town planner if they are suitable block for subdivision, but you will also need to consider all other costs for a subdivision (holding, professionals, council etc...) and if they fit your strategy, goals and risk appetite.

 

Thanks for the tips closet and Daniel. I have a few ideas to look into for now.