Hello! So excited to have found this forum!

Discussion in 'Introductions' started by Waylah, 14th Mar, 2017.

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  1. Waylah

    Waylah Member

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    Hello everyone,

    I've come here to learn from all you beautiful experienced people. We're a young(ish) couple who've just about saved up our first ever deposit for our first home. We have so many questions!

    I'll make a new post (or maybe a few) about our various questions, but in summary, we're preparing to start our property adventures shortly, most likely with the purchace of a home to live in. At this point we -might- be convinced to start with an investment property, but I'm pretty sure we're going to start with our own home. We have pretty much a 20% deposit for an 'entry level' house in an outer suburb of Melbourne. At this point I'm looking for a good loan for us (can anyone recommend a good mortgage broker?), as well as watching the suburbs we're interested in. The changes to stamp duty are great for us, but I have questions about that too. I've been reading all I can, but I'm really happy to have found this forum as an added source of information.

    Cheers everyone!
     
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  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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  3. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Welcome Waylah!

    It sounds like you could use some planning advice - with a 20% deposit you may be able to have your cake and eat it too, and use the funds to get into both a PPOR and an IP. This will depend on your comfort with leverage, but it could be possible. :)
     
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  4. Xenia

    Xenia Well-Known Member

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    good to see you here Waylah
     
  5. kierank

    kierank Well-Known Member

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    One has already posted on this thread. I haven't personally used @Peter_Tersteeg but my son has and he was very happy with the service he got.

    Welcome to PC. You have come to the right place.

    Before heading off and buying property, do you have a plan? In other words, what do you want to achieve, where do you want to end up, how are you going to get there, ...

    Most people put more effort into planning their annual holidays than they do into their property investment journey. WTF!!!

    Many people would think that Melbourne is getting close to its peak. Do you have good reasons for buying in Melbourne right now?

    Also, I always recommend that people buy as close to the CBD as they can possibly afford. Why?

    If you draw two rings about Melbourne CDB; one with a radius of 5kms (let's call it Ring A) and the second with a radius of 10 kms (let's call it Ring B).

    The area of a circle = πr2. Hence, Ring A's area = 25π and Ring B's area = 100π. Ring B has 4 times as much land as Ring A.

    In other words, there is three times as much land (that is, three times as many houses) in the area between 5kms and 10kms as there is between 0kms and 5kms.

    You can do the maths for the area 30kms to 35kms :) :).

    The above is NOT advice. Hopefully, it does give you something to think about.
     
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  6. Waylah

    Waylah Member

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    We're looking in Melbourne because we work in Melbourne (and we like it). I hear what you say about further in, and if we were buying for capital growth then that's where we'd be looking. The reason the suburbs we're looking in are further out is simply because we like trees. Places without nature depress us.
    Long-term plan, well, depending on where we end up working in the future, and how good driverless cars get, I'd love to live on 10 or 20 acres in Kangaroo Ground or Maccelsfield or something about that distance (basically, as close as you can be to the city and have a hobby farm). At the moment, those places are beyond our 20% deposit limit, and also a bit far as my partner works in Fisherman's Bend. So we're looking around Belgrave.
     
  7. kierank

    kierank Well-Known Member

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    Even if the Melbourne market has hit its peak and might crash say 10% in the next 12 months!!!

    What I am saying is don't buy in Melbourne, just because you live there. Have a plan, do your research, crunch the numbers, ...

    What are you buying for?

    Have you considered about buying closer in (doesn't have to be Melbourne), rent the property out (so the tenants increase your income, you get tax benefits, ...) and you rent in the outer suburbs (of Melbourne) because of the trees. You get the best of both worlds.

    This is called rentvesting. Do a search if you want to know more about it.

    Just trying to give you options.
     
  8. Waylah

    Waylah Member

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    Surely this only matters if we plan to sell in 12 months?

    I've calculated exactly what the tax benefit would be if we bought an IP (as a function of interest rates, costs, etc). I've been looking at suburbs all over melbourne for two years. I even correctly predicted some suburbs that would spike. (but it was kinda obvious they would.) I've been looking at all kinds of options for us, comparing them, but so far it seems starting with investment just puts living in our own home further off.

    To be in control of my life.

    Where I am renting now, the ad said 'would suit any pet'. A few months after moving in, I asked for pet permission, and it was denied.

    When I was a kid, we rented. My parents wanted somewhere they could stay indefinitely. All the agents told them what they wanted to hear. We lived in five houses in six years. Actually, I think it might have been more, when I was a baby too. House after house, we'd just be settled in somewhere after a year and we'd be kicked out. We weren't bad tenants, the owners would just be moving in themselves or selling the place. It was all I knew, but it was a massive toll on my mother, who has CFS.

    I want to live in a house that no one else has the keys to. That no one else can demand to 'inspect'. Somewhere I don't have to nag for repairs. That no one can kick me out of at their whim.

    I want to live somewhere I can plant trees and grow crops, and know I'll be around to harvest them. Somewhere I don't need someone else's permission to have a pet.

    I want the rights to my own life.

    Thanks for your suggestions. I can totally see where rentvesting would suit some people. But for us, it wouldn't help us with what we want. I do want to learn what I can here about investing though, as I see us doing that further down the line, and I especially want to make sure that how we set up our home loan helps and not hinders any future investment options.
     
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  9. Gockie

    Gockie Life is good ☺️ Premium Member

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    That totally sux... I get it.
     
  10. ellejay

    ellejay Well-Known Member

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    Sounds like you've got drive (partly due to past experience). I also think it's fantastic that you know exactly what you want and don't swallow advice from others without considering your own position. A surprising number of people don't have this maturity. I'd be interested in hearing more about what Jess was saying above. Fully understand all the options that are open to you before you choose.

    Most importantly, take action. Much easier to recover from some inevitable investing mistakes earlier on in your career.
     
  11. kierank

    kierank Well-Known Member

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    Hell no!! Just for illustrative purposes and to keep the maths simple, let's say you bought a PPOR for $500K. Then property prices drop 10% over the next 12 months, then flatlined for two years and finally you get 5% growth for the next two years. So, after 5 years, your PPOR is still worth less than you paid for it.

    I bought a $500K property in another town/State and I get 5% growth (not great growth) each year for the same 5 years. I now have nearly $140,000 equity in my property. I can draw out around $110,000 to use tieards a deposit on my next property.

    Note that neither of us sold any property. When one starts out in property, zero/negative growth in those early years really halts one's progress,

    I am interested to know how you did this as, from my experience, the numbers vary from one property to another due to price, rent, maintence, depreciation, capital growth, ...

    That's obvious. One option is to buy your PPOR now; the other is buy an IP now and you rent, then buy PPOR later.

    I don't wish to be harsh but, IMHO, that is not a goal, it is a 'motherhood' statement

    Yep, some times, life sucks. I am a big believer in that life experience should inform one's life decision BUT not make them. When I was 12, my 10 year old sister died in a car accident. That hasn't stopped me driving cars but, I bet, I am a lot more driving aware than a lot of people.

    Sounds like you really want to buy your PPOR first and that is fine.
     
  12. willair

    willair Well-Known Member Premium Member

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    That sounds like you have put some serious thought into this as your soul is rebelling against entrapment,well done ..Just get up each morning and say to yourself this is going to be the best day of your life no matter what happens..
     
  13. teetotal

    teetotal Well-Known Member

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    Welcome.
    Take your time to sync in all the info you find here and do your own due diligence using that info.
     
  14. Waylah

    Waylah Member

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    I do get this. I've definitely thought about this. I recognise the difference between an investment and just buying something because you want it, and I'm under no delusions that buying out ppor would be the most strategic investment move. I understand that building equity to get more loans to buy more houses to get more wealth, etc, would be easier starting with a higher capital growth area. But for our circumstances, it's not actually a massive difference. The interest portion of the repayments would be much lower than our rent, so from that perspective it's a 'win', except for the opportunity cost. I know it ties up capital in a house that isn't generating wealth (at least for the the next few years probably) and would delay the investment property journey; I am aware of that. But our aim isn't to die with the most money. It's to have a great life.

    Yeah, that's why I said "as a function of" ;)

    Yeah, it was a general statement that was the intro to a whole paragraph explaining why we want to own the house we live in.

    I'm so sorry about you sister. I can't imagine what that would have been like.
     
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  15. Waylah

    Waylah Member

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    Thanks for the welcome! How often do meetups happen?
     
  16. Waylah

    Waylah Member

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    Thanks for the welcome! I would definitely be interested in planning advice, and am open to ideas.
     
  17. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    When you choose a broker, have a chat with them about it - a good, investment savvy broker will be able to do this for you no problem. :)
     
  18. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Second Tuesday of every month in the Eastern suburbs. Last Thursday in the Western suburbs.

    Keep your eye on the "Networking & Meetups" section. The details are usually posted about a week in advance.