New to property and wanting some advice (ACT)

I live in ACT, and have wanted to break into the property market/make my savings work better for me in the longer term. I am hoping to get some feedback from people on these forums before I visit a financial planner/some other experts. That way, I can have a bit more of an idea of what I think I would like to do and ask more targeted.

I’m single, don’t own any property, no shares/other investments. With my jobs, my total annual salary before tax is $129K, with minimal deductions. I’ve got $215k in savings, no other debts.

Long term, I’d love a new house or renovated house close (10-15kms) to the city centre, but don’t want to take on a super high mortgage at this point.

I am wondering if it’s worthwhile to start with a townhouse or apartment that I can work on paying off, while also saving more for a house longer time.


I’ve seen a townhouse for $735,000 close to the city centre (around 4kms away) that ticks my boxes for living in, and renting out the other rooms (maybe Airbnb, or could potentially find suitable flatmates). It’s a new-ish build and the body corporate $ don’t seem excessive.

There is also plenty of new apartments going up in the inner north, and I am kind of attracted to the 2 bedroom ones, where I could live in one room and Airbnb the other.

I’ve been reading a bit and as I don’t have many tax deductions currently, maybe an investment property could offer some decent deductions. I don’t need to live in the property at present, but it would be nice to have somewhere to live if my renting situation changes.

Would love to get your feedback/hear about what you would do if you were me.

Sorry if this isn’t the right forum to ask all my newbie questions to.

 

I'd read a bit more before jumping in. There are plenty of ACT threads. Apartments aren't a great investment in Canberra at thr moment due to over supply.

One thing you need to consider if you rent the property is land tax - if you rent a room this may not be payable, however you may lose the 100% cgt free status of a ppor - something for you to look into.

$735k sounds like a lot for a first property, particularly a unit or townhouse in Canberra. There are plenty of cheaper houses in Canberra. Location is obviously important to you if you're living there, however I'd weigh up if you could get a better investment for your money in a different location (even outside Canberra).

If you spend that much on a house you are living in, will you ever be able to afford other investments? Talk to a broker about your current and future plans.

Generally if you are increasing your tax deductions it's because you have lost money. Work out if that is what you want (and can afford) to do. How much will this property cost you after all costs?

 

Hi Summer,
Welcome to PC! Good idea to join this website, you will learn a lot. Make sure you use the search function on here, it is really good. Type in "Canberra" for example and you will see a lot of threads already on our great city. Plenty of comments on buying off the plan or brand new townhouses/apartments in Canberra, which nearly all advise to steer clear of, including me.
There are a few things going on in your post including investment property, PPOR, airbnb and tax deductions. Here would be my advice:
- What are your goals? Do you want a place to live or an investment property? Try to be clear on your priorities. Once you have your goals written down things might be a bit clearer.
- Understand what your borrowing capacity is - there are brokers on here who will help. Get in touch with a broker to get a clearer picture of what you can borrow now and in to the future
- Before jumping in to buy an IP or a PPOR, educate yourself. Read some books (do a search for books on this site). Read lots on this website.
- Don't buy an IP just for a tax deduction. You should be buying for capital growth OR or just something that meets your needs to live in.
- Understand how cashflow, tax deductions, costs of holding a property all works before buying a property (read some books, read threads on this site)
- A financial adviser is a good idea, but they are unlikely to advise on property. They will advise on super, share investing, insurances and a few more things. Don't expect to get any quality property investing advice from them.
- Before buying an IP for airbnb, ensure you really want strangers living in your house with you. How much money will you really make? Could you get a colleague/friend to live with instead? Do research on airbnb before buying a place just for this purpose.
Once you have a lot more knowledge and are clear on what you want to do and when, then start looking at properties.
It's buyer beware in Canberra for brand new or off the plan. I would recommend you buy something established (if an apartment or townhouse) where hopefully all the defects have either been revealed or fixed already. I would say the average BC rates in Canberra are around 4k for a 2 bed unit, very expensive. Don't forget land tax and rates, which are also very high.
Here is a link to a recent Canberra thread to get you started
Investment in Canberra or elsewhere? [ACT]

 

Stamp duty is tax deductible for in Canberra as it is leasehold - thus common to rent out for the first 12 months (obviously look into land tax, CGT, fhb implications.)

 

Congrats - well done!

At what point do you want to take on a super high mortgage? Properties that close to the CBD generally aren't going to get cheaper as time goes on.

Perhaps - but you need the overall plan worked out before doing things haphazardly.

Personally, I would not be spending nearly $3/4M on a t/house in Canberra.

I'm not a fan - and you'd lose the CGT free status of part of your home, as it is producing income.

So was the Opal Towers building. You cannot conduct DD on new builds which is why, as BA's, we avoid them like the plague.

They only start to get expensive when the warranty periods on lifts etc start to expire and the BC or OC of which you are a part, incurs the ongoing repairs & maintenance costs.

So unlimited supply coming online too - so no growth for your proposed purchase for some years to come?

You have to lose money to get a tax deduction. That's not what you invest for.

I'd fix this first: I’m single.(making sure the partner / spouse is not just in it for the "$215k in savings").......just joshing
This second: don’t own any property,
This thirdly: no shares/other investments.
Get a Financial Plan done and agreed, and make a start. Your post makes you sound like a bit of a procrastinator.