WA Perth property makret advice for first home buyer

Discussion in 'Where to Buy' started by Jarred Ando 1995, 22nd Nov, 2016.

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  1. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Hi All,

    Just thorwing abit of a open ended question out there but i'm a 21yr old first home buyer in Perth looking for a PPOR. My plan is to purchase this PPOR as an established property with a budget of $400,000 (LVR of 90%) use the FHOG(stamp duty exemptions), live in it for 6 months and then rent it out and move up bush for 2-3 years with work.

    Once returning to Perth in 2-3 years i plan to move back to my PPOR and hopfullly have produced enough equity/savings to purchase my first investment property.

    With that all in mind and with Perths current market conditions would i be wiser to purchase a property like a 2x1 within 5km of the CBD eg.(Mount Lawley, Inglewood,Maylands,Mount Hawthorn, Como) or branch abit further out and look for a larger property around eg.(Bayswater,embelton,eden hill,Morley) with some room to add value to like subdivision,reno.

    Overall any advice for what types of areas i should be looking into would be grealty apppreciated. Also this is my first official thread so hopfully i have posted it in the right spot ect and haven't stood on anyones toes.

    Cheers,

    Jarred
     
  2. Jess Peletier

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

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    Hi Jarred,

    For me, I would always get something you can subdivide if you have the option. It gives you an easy way into IP 1 (subdivide and build), increases cashflow and increases equity. Particularly in the face of a potentially flat market for the near future, being able to add value is a way to manufacture growth rather than waiting for it to happen organically.
     
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  3. bob shovel

    bob shovel Well-Known Member

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    How do you know you'll return in 2-3 years? A lot can change in that time.
    Will perth move in 2-3 years enough to create equity?
    Is the fhb grant going to beat the growth you could get buying an ip elsewhere?

    But get as close to the cbd as you can with the potential to do or add more to it
     
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  4. Ross Forrester

    Ross Forrester Well-Known Member

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    Make sure you get an offset account on the mortgage.

    At 21 it is really hard to know what you will be doing in 6 months let alone 7 years.

    Whatever you do make sure you do so with flexibility in mind. You might want to go travelling so a set and forget could be attractive but potentially less profitable.
     
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  5. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Thanks Jess,

    And yes with Perths market like it is i'm definitely leaning more towards that option as i do worry about a 2x1 townhouse/appartment not producing enough equity in 2-3 years.

    Thankyou :)
     
  6. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Thanks for the reply Bob,

    Some very valid points made and with my current job i can only stay up bush for 3 years max. So i will definitely be back by then and yes i think with all that in mind i will be doing quite well if i can locate a property as close to the city as possible with some options to add value too it.

    Many thanks :)
     
  7. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Hi Ross Thanks for the reply,

    Yes i agree with the offset account. I'm currently looking at Anz with a 3.75% fixed loan for 2 yrs (no offset account option ava liable) then after that i could switch to a variable with an offset. would this be a wise option with my plans in mind or would i be better off starting with a variable. Obviously i haven't provided all the details so general advice would be greatly appreciated

    Cheers :)
     
  8. Blacky

    Blacky Well-Known Member

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    Jarred
    Good to see you asking stacks of questions.
    Firstly. Bed down the strategy. What is your strategy? Start at the 'end' and work back from there. What are you trying to achieve here? From what I can see its an IP and a PPOR in the next 3years. Good start.
    What about the next 5-7years? Where do you want to be? Dont talk the number of properties. Talk to me in $terms. xxx in net income, xxx in equity? (sorry - I cant help you with this bit).
    Then work back from there. Once you have the end goal in sight the 'right' property will be pretty obvious rather than looking the 'next' property.
    If you dont know what your looking for everything looks attractive.

    Why ANZ?
    Why fixed?

    These two questions are important. They can significantly impact your future, far more than you realise right now.

    Blacky
     
  9. Jess Peletier

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

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    The first thing to be aware of is the when it comes to finance for building a portfolio, the rate is not the most important thing. Much more important to set it up based on policy and have it tailored to your situation both now and into the future. For eg, what if you buy a property at high LVR paying LMI, use ANZ for the loan b/c they have a decent rate, and down the track decide you want to build 3 units on it? ANZ won't fund them, so you'll be moving to another lender and wasting all that LMI. Much better to have gone to the right lender in the first place and saved your thousands.
     
  10. Ross Forrester

    Ross Forrester Well-Known Member

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    Jarred

    It is hard to say. I do not really like fixing rates because I effectively think you are taking a bet against the bank for future rate moves - and the bank knows more than me about future rate moves.

    Whenever I have fixed I have lost to the bank. And fixing part of the loan simply meant that my loss was a bit less.

    If the property will stretch you then maybe fix rates - but if you are going to be stretched then do not do anything.

    Also just remember that the transaction costs of property are high (but admittedly their are stamp duty exemptions for first home buyers). Anyway the high transactions costs generally mean that property is a long term hold.

    At 21 you might meet an incredibly attractive person who wants to go backpacking for 2 years. This might mean you have to sell soon after you acquire. You could resent the property.

    Just take care. The exciting property with potential does not have to be your first property.

    Cheers.
     
    Last edited: 22nd Nov, 2016
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  11. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Thanks Blacky and you really opened my field of vision with that response and i definitely have to start making that plan now before i make this first move.

    Thanks alot and inregards to Anz my main reason to chose them was due to there interest rates but as i have just learned from some of the responses and posts choosing a bank just because of there interest rates is very narrow minded and i really need to look futher into my options before making that decision.

    Thanks heaps :)
     
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  12. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Welcome Jarred,
    It's certainly a buyers market here at the moment and that's what you want if you are happy to wait for the gains to come.
    Whilst it's best to get as close to the city as you can @Jess Peletier makes a good point that you might be able to squeeze in something that can make more money if you expand it to something you can carve a block off.
    It does come down to strategy or the end game. It's ok to change strategy as you adapt to what suits you but @Blacky gives you some pointers on how to find what works for you.
    Personally I'd be steering clear of a townhouse - someone has already made the money on that when they built it. Look for something with some land content even it's it's not subdivisable. If I was to give an example of what Jess was talking about it might be something like this - 37 Wickens Street Beckenham WA 6107 - House for Sale #123610010 - realestate.com.au . Note I have not done ANY due diligence on it - just did a big search in your price bracket for a possible duplex block.
    I would definitely recommend spending some time with a good broker and talking about the different type of products and which will suit you best.
     
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  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    BTW there is going to be a Perth meet up I think next week and another in December. Come along and you can have a long chat and get lots of ideas to make your head spin :p
     
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  14. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Thanks for all your advice and id love to come along and meet a few new faces and get my mind boggled ahahah. Keep me posted thanks :)
     
  15. Blacky

    Blacky Well-Known Member

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    Most people overestimate what can be achieved in a year, but greatly underestimate what can be achieved in 10.

    Moving forward is good. But you dont want to be taking one step forward and two steps back.
    As others have pointed out the money has already been made on appartments and townhouses. The developer did that already. So its a tough game (not that it cant work). Plus often the strata costs kill the returns (esspecially at the cheaper end of the market).

    In terms of rates a fixed rate which saves you .25% over two years is $1800 saving. As Jess mentioned if it means you need to shift your LMI, your savings plus some have evaporated. One step forward... two steps back.

    Get your strategy bedded down first, then call Jess to have a chat.
    Come along to the meet up. We rarely actually talk about property though. Not sure if I will be back for December meet up - but Jess, Westminster, and others will be there and more than compensate for my absence (they are far more knowledgable that I am). Plus, cops make me feel uncomfortable :p

    Blacky
     
  16. Jarred Ando 1995

    Jarred Ando 1995 Member

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    Cheers Blacky and see yah around soon mate :)