Need urgent advice with a property purchase

Hi experts,advisors and supporters,

I need sort of urgent help with regards to a property purchase.I signed contract today for a one bedroom+1 bathroom+1 car park unit in Artarmon.My wife and I went to see this unit Friday morning and things turned out such that I signed the contract by paying 0.25% and entered cooling off period ( 5 days ). The purchase cost is 632k.I have never owned or bought a property before and have been looking to buy a 'right' property for a long time.I am 36 and have 2 kids.We would like to upgrade to a decent house/town house in say 5 years timeframe and we thought this would possibly help fecilitate that.However after talking to friends and some other acquaintances we are having second thoughts.This unit in Artarmon is a ground floor unit with a bit of less light and also for family it would be a bit small if we plan to live there. Renting it out would mean we are out of pocket around 1k per month ( considering rental income of 480-500 pw and 1k pq strata levies ). We then plan to rent a 2 bed 2 bath in Epping where we are at the moment which means 550 pw rent outgoing. I am seeking your advice here whether I should continue with this purchase or forget the 1580$ that I paid cancelling the contract and consider buying a 2 bed 2 bath unit somewhere say in Hornsby/Asquith ? In that case I can live there for say 5 years and then may be able to upgrade to a house withought worrying capital gains tax.As opposed to the unit in Artarmon which if I sell say in 5 years may have increased in value but would attract capital gains and also the fact that 1 bedder have less growth potential. My worry is not being able to upgrade to a house in 3-4 years timegrame when the kids are of age 6 and 3 ( Now they are 3 and 1 month old ) . Currently wife doesnt work however she plans to start working within 1.5 years time frame. Thanks a lot for reading this through and coming up with any suggestions / advice.

 

I'd back out of that deal.

Now I am no Sydney expert (hopefully one will be along shortly) but I can safely say that Sydney is declining rapidly and a 1 bedroom unit in the burbs will be in the firing line for sure.

I totally understand why you want to buy and it's great you want to help your family, but a 1 bedroom in Artarmon is very risky and more likely to hurt rather that help you.

I'd keep looking. If you're prepared to move further out, you might be surprised at how far your 600k will go.

I'd keep reading and learning here for the next few months. You'll learn a lot that might make losing the $1580 the best money you ever spent.

Paging @Gockie !

 

I'm not familiar with your market, but if you're unsure please don't proceed with the purchase.

$1k odd loss is pittance compared to $632k and $1000/month out of pocket. If you want to buy an investment I'm certain you can do better, and if you want a home, it seems this purchase also won't be suitable.

BUT - you say you've been looking to buy the right property a long time - what made this one the 'right' one before you signed the contract?

Was it a desperate purchase to 'just buy something' or did it actually tick your boxes and now you've got cold feet?

 

I won't advise you but will say there is something that is known as buyers remorse. I have suffered it on every property purchase that I have ever made. Upon signing contracts you instantly regret it.all sorts of doubt enter your mind and you want to pull out. Some people also suffer this at weddings too.

 

Thanks for your reply guys . Looks like I have to call the agent and back out . I thought Artarmon was a good location long term and hence went on to sign this one

 

What changed your mind?

 

This will be a costly lesson!

 

Or a very cheap one....

 

So I want to buy my own home say in 3-4 years of time frame . I thought this property may help me doing that but looks like with 1k outgoing I won’t be able to afford good loan . Additionally capital gains will be there . If I buy and live there at least I don’t have the capital gains. Plus as people said buying 1 bedder may not be a good option .

 

@amipatil l Yes agree - forward planning is SO important these days, especially with borrowing capacity being so limited. You don't want to rely on selling the new purchase in 4 years to fund the new house.

 

I just talked to my solicitor and they said I will lose 1580$ if I back out . I am ok with that as long as it’s a better decision long term. I have still asked the solicitor to wait until say Monday and then let the agent know. I called the agent to let them know that Inam thinking of backing out and they seemed ****** off . Also told me that this property will be rented 500per week all the time and I don’t need to worry about as it’s Artarmon and not Asquith or Hornsby . I just want to make sure that I don’t end up tied to this property for long term before being able to buy a bigger home . Is it still better to buy that 1 bed in Artarmon is my question as the nearby units have been sold for more than this price and the location of the property is good. Near station about 200 meters

 

Due to the purchase costs and then the selling costs, it is very difficult to make money from property in 3 to 4 years, even in a rising market. It would be impossible to achieve in a falling market.

Can you share with us your Net Worth goals, your strategies, etc so we can better contribute?

When putting together your “business case” for this purchase, you should have been planning to pay heaps and heaps of CGT in your calculations.

I don’t think you will have a big CGT problem with this purchase in your timeframe.

 

My aim is to be able to buy a home in a good area say in next 3-4 years . This will cost around 1 million depending upon prices at that time .Having said that I don’t particularly crave for my home if a parallel property I bought is going to be a good purchase . Eg house and granny flat rented and giving good rental yield . In that case at least I don’t it extra from my pocket every month . I saw that Artarmon is near city and tenants want to live there due to good local proximity to city and it will be a good long term buy .

 

Where do you work?

If you keep saving like you are now will you have enough money for a deposit on a $1M house in 3-4 years?

Have you looked up older 3 bedroom units/townhouses near train stations around 600k?

You have options.

oh, and don't worry about ******* off the agent!

 

I don’t have a set location for work however currently I work in Chatswood. I am a consultant so I go from customer to customer end up working there . Wife is busy with new born baby 1 month old . She plans to work as childcare educator say in one and half years time frame .Also the elder one will go to school next year as he turns 4.5 years this coming January .

 

the only mistake I made was not acting on my buyers remorse for my wedding

 

Where about these 600k units are ? Thanks

 

cant possibly see how the purchase of a 1 bdr unit in a declining market, especially a more vulnerable 1bdr is possibly going to help you buy another house in 3-4 years time, especially a cashflow negative one

 

Map View of Real Estate & Property For Sale with 3 bedrooms between $0 and $600,000 in Carlingford, NSW 2118 (Page 1) - realestate.com.au

Start here, then zoom out. I'm in Darwin so you'll need to get local advice on a decent location, but you should at least get an idea...

Good luck!

 

Making money on a one bedroom apartment in Stdney in this declining market would be very difficult. Apartments are declining in values in suburbs that are much closer tot the city and I can’t see why Artamon might be different.

As far as I know a large amount of apartments is being completed north of the harbour. And while the North is more desirable from my perspective than the south, it’s sufficient to see what is happening with apartments in Dee Why and Chatswood to make assumptions about Artarmon.

Not knowing your situation and the apartment location. I can’t see how there will be any gain in apartment values in next 3-4 years.

I don’t think it’s a smart purchase at all. Nothing I said is an advice. I wouldn’t proceed.