Help!! Rent now and buy in year or two in Sydney or buy now with available funds??

Discussion in 'Investment Strategy' started by Interested, 7th Apr, 2017.

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  1. Interested

    Interested Member

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    Thanks Noogie
    He is single, kids grown up and moved on. He said he is prepared to hold for the long term once he buys if need be. His career is pretty much city based with Sydney being the best career wise. If in the unexpected event he had to move interstate, he would rent out and rent a new place for himself I guess
     
  2. Interested

    Interested Member

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    Stagnant is much better than a fall in value of 10% that some are talking about.

    So sounds like you are suggesting that borrowing is better than using his money. Not sure how that works. Would have thought that it would be better to use your own cash and pay it off completely and save paying rent rather than getting a mortgage at a higher rate of interest. I guess I don't know how it works. Might need to do some reading. Doesn't sound logical to me but maybe I don't know enough
     
  3. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    It gives him the option to put the balance in the loan and "re borrow" later on to make the funds tax deductible for investment purposes. Keeps more than one door open
     
  4. Cimbom

    Cimbom Well-Known Member

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    There is higher supply in the inner suburbs because (generally speaking) there is higher demand - more people want to live closer in so will live in an apartment to do so. This is for both purchasers and renters. The same can't really be said for those areas you've listed as much. They are fine for a townhouse/house but I wouldn't get a unit. You obviously won't be able to buy a unit in the very inner ring for that price range but certainly closer in than what you've listed
     
  5. Subodh Shirodkar

    Subodh Shirodkar Well-Known Member

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    Hi,
    Lot of masters have given very sage advice.
    I will share with my our story, might give another perspective to this discussion. When we migrated to Sydney with 2 kids and no work to start a new life. We initially rented for 3/4 months and just bought a very old house very well located close to everything in the same suburb. I remember only one of us was working when we took an 80% LVR loan.Admittedly different time and property cycle etc.
    We got on with life learned about property investing much later and got down the investment path after about 3/4 years. Work / settling down / getting kids to school / understanding new place and people was of higher priority. The simple thought was to have our own patch of earth in Sydney and Australia as new migrants and why pay rent to other person.
    In next sort of 6/7 years we renovated our own home. Used a buyer agent and now we buy on our own and have a decent portfolio of 4 mill. We understand much more about things down under and how property markets work here.
    IMO your own home give you security in a new place, just don't overdo things initially and keep some emergency cash.
    Who know the market in Sydney might go slow, down or sideways end of the day over 10-12 yrs it won't matter. If he can afford or adjust it would be nice to own a patch of earth as land will always have more value.
    Good luck with decision.
     
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  6. New Town

    New Town Well-Known Member

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    if a person in a shop is happy to buy a pair of shoes or a shirt that is twice the price than the week before and around the shop are signs saying "sale on next week" then they're probably OK to buy in Sydney at the moment
     
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  7. radson

    radson Well-Known Member

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    Im a big fan of the Economist.

    Here is what they say

    Australia's housing bubble could be the first to burst.

    http://www.economist.com/node/2736477

    From June 2004

    My point is that people have been predicting a bust in Sydney for a looong time.It could happen tomorrow it could happen in the great robot recession of 2027..who knows.
     
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  8. hammer

    hammer Well-Known Member

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    Tough call!

    If you must buy but you're worried about the market buy something cheap. The cheaper you buy, the less risk you own.

    Have a look at old brick units in Campsie.
     
  9. David Shih

    David Shih Mortgage Broker Business Member

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    Hi @Interested,

    My thoughts are if he can afford it and there's a strong desire to buy to live in (which is his goal) then he should get in now. No one has crystal ball on what will happen tomorrow, but IMO if he is intending to keep it long term ie 10+ years then I don't see how short term price fluctuation will affect him much. Sydney is a good market to keep long term so I don't see he'll go too wrong.

    I would also support what other forumites have said with the idea for him to borrow the funds and park his cash in the offset account. That'll give him options later down the track should be wish to invest in property or even just as a buffer when interest rate goes up. Note lending condition is only going to get tougher and tougher so this may not an option two years down the track.

    Cheers,
    David
     
    Last edited: 8th Apr, 2017
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  10. Cimbom

    Cimbom Well-Known Member

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  11. Interested

    Interested Member

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    Subodh
    Appreciate your time and thanks for your perspective. Appreciate it. And well done. I see what you mean that over the long term, it may average out.
     
  12. Interested

    Interested Member

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    Yes very true....I thought the burst would have happened around the time of the GFC. But we survived and the bubble just kept growing. Personally that worries me coz we have the mother of all bubbles.
     
  13. Interested

    Interested Member

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    Very good point and one that has crossed my mind.
     
  14. Gockie

    Gockie Life is good ☺️ Premium Member

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    :)
    Definitely if he does buy, suggest to him to try for something with some land.... If budget and location doesn't stretch to buy a freestanding house or terrace, then a villa, townhouse, duplex or semi can all be better than a unit. It's the land that appreciates....
     
  15. Interested

    Interested Member

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    Thanks for your contribution to the discussion.. A favour please..Could you pls explain how borrowing money and paying interest on it could be better than just paying for the property outright?? Don't you then have to pay interest IN ADDITION to the cost of the property??? Would appreciate an explanation if you don't mind.
     
  16. Interested

    Interested Member

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  17. Interested

    Interested Member

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    Just thinking, perhaps one strategy for him would be to get in cheap with a PPOR, even if it is a unit. Then when the market settles in the next couple of years and the market comes back from insane levels, then go for an investment property.
     
  18. Gockie

    Gockie Life is good ☺️ Premium Member

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    If he sits his money in offset... no interest to pay! But it gives him flexibility in case he ever wants to rent it out later... he can pull the money out, use it elsewhere (eg. a new ppor) and he'll have tax deductible debt. It's a much better use of money... situations change and you might as well start with the flexibility upfront.
     
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  19. Gockie

    Gockie Life is good ☺️ Premium Member

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    Longer term though... something with land should perform better than something without land. Get him to see what he is comfortable with though.
     
  20. Interested

    Interested Member

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    The no interest to pay sounds interesting. Worth looking into that. Thanks for raising that. Few others have kindly mentioned it. Had no idea that it could be tax deductible. Starting to see the benefit. Definitely worth mentioning this to him. Thank you and others that mentioned this
     

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