Seeking Advice for buying 2nd PPOR/1st IP

Hi,

Need advice from the experienced and helpful people here.

I understand that I have to seek professional advice but I appreciate the advice given in the forum. It serves as a good starting point before speaking with brokers/Buyers Agents.

Thanks in Advance.


Current State:

I have PPOR(Apartment) in Sydney Upper North Shore. It is in close proximity to Westfield and station.

Me and my wife have full-time permanent jobs. Annual income around 250K. We have also around 250K in offset. Credit Reports Clean.
We have a toddler.

Though the apartment is good in all respect , we are feeling space crunch. We decided to buy a house within 2 years (My little one will start school in 2024).
We have a max budget up to 1.5 m (The budget is independent of current PPOR)
Requirement is to have good connectivity to CBD(assuming we have to go to office 2 days/week) and good schools.
We are looking into specific suburbs into Upper North Shore/Carlingford/Hills. The latest increase in house prices over 4-5 months probably left only Kellyville in our search area. . Here I am not sure about using a BA.

We will keep current PPOR as an IP for the time being.


Scenarios/Questions:

1. If I buy the house now, but decide to shift after 1-2 years, can I buy as an IP and covert to PPOR later? In that case Can it be a major issue? I understand the Capital gain calculation need to factor the time it was an IP. Anything else?
2. Currently I have 560K loan(with SGB) left in PPOR. Assuming the valuation will be 800 K, I am looking for approx. (80%*800K - 560 K) = 80 K Equity Release. If this stands, I am thinking to buy an investment property with 400K-500K range (Here I am thinking of BA).
3. Is it possible to achieve both buying a PPOR and IP (or 2 IPs) at the same time given the general scenario?
4. I am also thinking to pursue a debit recycling strategy on current and future PPOR. Does it affect if the loan moves from PPOR to IP or IP to PPOR?
5. I have gone through the websites of few BAs in and outside of the forum. I understand BAs are focussed on specific areas/suburbs as that's what expertise demands. But as a new Investor I am confused where to invest (PC Where to Buy section confused me further) and based on that which BA to go with. Or is it simply the case that as long as any BA can help me to achieve my goal I do not really need to be concerned about specific areas?
6. Given my thought of two new properties, is it better to go with a single BA(If at all possible given difference in budget thus different area) or different BAs?
7. Specific to buying the house in Sydney, What edge can the BA provide in this market? Does negotiation works in this market at all? I have seen a post in the forum that BAs have access to off market properties through RE Agents, but I can see that few off market properties sometime land in my inbox too from RE agents. Or BAs have access to something more?
8. I can see that BAs charge a fixed fee but there is a time limit (4 month generally) for the search. While this is commercially understandable, what if there are a meagre number of properties of the market matching to my criteria within that timeframe? (e.g. In lockdown number of properties on market seems reduced).

Sorry for the long post. Getting overwhelmed within this lockdown.

 

Hi Rolf,

Thanks for your reply.

Yes, I understand. The budget I calculated based on that only.
Currently We are saving 6K per month, more now because of this lockdown, no travel expenses .
The Budget is calculated based on 4K savings after expenses.

I had a detailed look in @Jacque website before. That impressed me. Very clearly articulated without much marketing material. I will contact her.

Worth everything especially spending time with my little one

I am not looking for SGB to do that. Open to Refinance.
Part of it is fixed but I checked , it was only $51 breaking cost (on the day I checked). Also, I am closer to the fixed term (1-2 months away).

Fully agreed, I was aiming to get at 80% LVR for PPOR. But crazy market in last 4-5 months thwarted that plan. Is it necessary for DR?
I can probably still get there within 1 year but concern is that is seating in offset earning 2.75%.

 

If you have time, the long story is that as a Buyer’s Agent, I get a lot of calls, emails and texts from both private sellers and selling agents about off-market property they have to sell. In my experience:

1. The private sellers often want too much. They reckon they know more (than all the selling agents they’ve had out to give them an appraisal) about their property’s true value. They generally don’t.
2. The selling agents work their database of thousands (attendees of Opens who give their details at the door) and their database of Buyers Agents about “off-market” listings they have. In my opinion, these are ‘pre-market’ listings more than ‘off-market’.

‘’Off-market’’ truly used to be a situation where there was no advertising, no For Sale sign, no Open Homes and no (or little) competition from other buyers. It was just us, the selling agent and the vendor. Between us, we’d negotiate a deal that was satisfactory to all parties, sign a Contract and buy the property. And we do get these from time to time. Mostly it’s a situation where the seller is say, a woman on her own who is worried about security with so many buyers coming through her home, or someone selling to move out of the area, or has suffered a job loss and has to sell and does not want the neighbours to know, or a Land-Lord wanting to sell but not upset their good tenant with a full blown marketing campaign where the property needs to be clean and presentable all the time, and so on.

Look even www.domain.com.au is jumping on the “off-market” band wagon and emailing thousands on their databases. Domain’s definition of an “off-market” listing appears to be one where a full marketing campaign will not be done unless the property remains un-sold after 1-2 weeks of the selling agent trying a low key approach. I wonder how off-market a property really can be if 5,000 people know about it?

In the current market conditions (ie a seller’s market), in almost every case, vendors still want their property to go to at least 1-2 Open Homes to see what offers they get. More often than not, the offers are way over the selling agent’s expectations. So my question is, “What is the advantage of knowing about a property if it is going to come to market anyway?” And more to the point, if we cannot buy the off-market property?

1. unless we pay absolute top dollar plus a bit more,
2. or the vendor still wants to wait and see if they can get an even higher offer on-market, (which often comes in the first 1-2 weeks of a property hitting the open market),

what use is it to us as a buyers agent representing a buyer?

The way I see it is that as Buyers Agents:

1. We can use the time to do our due diligence on the property ahead of time, so we are ready with our offer to present to the selling agent at the close of the first Open.
2. We can and do, leverage our relationship with the selling agent to get our buyer client up to the front of the line, so they can purchase ahead of anyone else.
3. We can be detached and unemotional about the process and advise our client when it is not wise to match or better another offer because it has ceased to be good value at that level.

 

Hi there, what’s the best way to contact you if we’re looking for a local buyers agent? Thanks, Anna & Greg

 

1 - yes you can convert it, but you'd want to structure it correctly upfront. eg IO and P&I repayments. CGT best to ask a professional
2-with $80k deposit you may probably scrap in cause you'll need 10% deposit + around 2% for LMI + stamp duty.
3-you'd need a professional to run the numbers for you and provide you with different scenarios
4- you should have a better discussion with Debt recycling, but you wouldnt want to do it on a property that's being converted to an investment.
5- you probably want to find out what you can borrow first before engaging a BA
6- as per point 5
7- as mentioned by Rolf, i've actually had the opportunity to deal with Jacque Parker directly with a sale, she definitely ask alot more questions then other BAs i dealt with and shes from the Hills area.
8- Best for a BA to answer.

good luck.

 

If the BA is using a REINSW exclusive BA Agreement, then if both you & the BA agree, (or more accurately, if neither of you move to to terminate the agreement), then it just becomes a continuing agreement, much like a residential lease becomes a periodic agreement, even though expired.

We extend the agency period a lot, because stock on market is so low that the time to successfully purchase has blown out. BA's, ourselves included, are not interested in taking retainers from clients and not finding you a property. The success (buying) fee is the incentive for the BA to continue, as is his/her reputation.

 

Phone, sms text, email, contact form on our website - they all work most of the time

 

I would suggest you seriously consider getting the future main residence before any investment property so that you can maximise your tax savings.