Should I buy a shoebox in Sydney

Discussion in 'What to buy' started by arja, 3rd Jun, 2017.

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  1. arja

    arja Member

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    Hey guys - long-time reader of the great questions and advice found here on Property Chat, first time posting.

    Am somewhat seriously squishing into a 20sqm unit that's been recently listed in Potts Point. It's come on for $280k, and I find the idea of living mortgage free tremendously appealing. I'm fairly sure I can manage living in such a tiny space for a few years, mostly looking for opinions on how to approach this financially.

    * Asking price is $280k
    * Its company title and under 30sqm, so I realise getting a mortgage may be challenging
    * Can provide a deposit of around $100k that's currently sitting in my IP's offset
    * Optimistically, I would expect to pay off the $180k loan balance in under 3 years
    * The most recent sale of a unit in that block was back in 2014 for a similarly sized studio for $160k
    * Selling it down the road will be slow going, another unit is on sale at the moment and it's been so for over a month

    I'm obviously very excited by the prospect of not paying $2000 per month in rent indefinitely, but what am I not considering? What are some alternatives that jump out to you that haven't occurred to me?
    20sqm potts point.png
     
  2. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    TBH in this day I don't think you will get finance for a place so small. Last time I inquired the banks where getting real strict on small places (i.e) < 50sqm total.
     
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  3. Beano

    Beano Well-Known Member

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    What are the body corporate charges and rates ?
     
  4. Guest

    Guest Guest

    I'm assuming your $2000p/m rent is getting you something much nicer &/or larger? Move out of it and into a $1300p/m studio rental at Potts Point (equivalent to what you are looking to buy). Continue saving your $4000+ per month surplus and in 3 years (or beforehand) you will know whether it's a suitable abode for the long term and have a much more substantial deposit (to buy a studio outright or for something larger).

    Likelihood of substantial growth over the next 3 years after a 75% boom the past 2-3 is low (IMO).
     
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  5. Anthony Brew

    Anthony Brew Well-Known Member

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    20 sqm ?!?
    I thought my place of 45 sqm was a shoebox!

    But yea I see the appeal of not paying 20-25k/yr rent as a single person. It's a massive and ridiculous amount of money down the drain when you only need a room (but still want the privacy of not sharing).
     
  6. Kis Kis

    Kis Kis Well-Known Member

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    But you wont survive in that room for 20/25 yrs. What about when you have a girlfriend if you don't have one. What about having a social life once your family grow? You'll have to buy another ppor or rent pretty soon unless you are antisocial. There is only one life and its not all about saving money and living in a jail room. If you r planning for a few yrs only and rent it or sell it later thats a different story. You have to think what will be your gain when you rent/sell it
     
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  7. Inov8ive

    Inov8ive Well-Known Member

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    Dont do it. You have 100k, go and buy an IP in Brisbane and continue to live where you want. I am all for saving money and making sacrifices but don't give up your entire life.
     
  8. jins13

    jins13 Well-Known Member

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    I can totally understand the appeal of being debt free but I think the size is way too small for it to be enjoyable, but to each to their own.
     
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  9. Rich2011

    Rich2011 Well-Known Member

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    It's a great area, I know a few people that live in there and they love it (I lived in Darling Point for 2 years). I think it really depends on the lifestyle you live. So many people eat out all the time if you are the type of person that stays at home a lot then it might not suit, if you are out every night and weekends for coffee and meals then it could work well. Lots of parks and great transport options.
     
  10. Mr Properties

    Mr Properties Member

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    I also think it's a great idea but couldn't live without car space
     
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  11. EN710

    EN710 Well-Known Member

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    Talk to a broker to see if it can be financed at all? If it's not your final loving place, offset to 'pay off' the loan

    I personally think it's too small for a long term living, it it might work for others
     
  12. Trainee

    Trainee Well-Known Member

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    Assuming youre pretty young, get your head around the profitable use of debt.
     
  13. hammer

    hammer Well-Known Member

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    To be fair. Not having much debt IS a profitable use of debt....

    It's a bit small for me (and probably the banks) but the value in the shoebox isn't necessarily in the real estate. It's the fact that you don't need a car, its cheaper than renting, you can pay it off quickly etc...

    Edit! If you were prepared to make the sacrifice to live in a place like this...you could also make the sacrifice to move somewhere else where 300k goes a lot further. Food for thought..
     
  14. Trainee

    Trainee Well-Known Member

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    And a term deposit gives a return. Good luck with that.
     
  15. jins13

    jins13 Well-Known Member

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    I don't think @hammer is referring to term deposit.
     
  16. Trainee

    Trainee Well-Known Member

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    And i think not getting into debt is about the worst (though still a 'positive' return) that you can 'do' with debt.
     
  17. WestOz

    WestOz Well-Known Member

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    I've never seen one of these, is that it, 4.5x4.3, no separate bedroom?
    Better layout in a caravan, just need to find someone to let a bit of back yard.

    Guessing the current owner is off loading at peak?
    120k more than the one in 2014 :eek:

    Being 3 years (even if 5yrs) is that possible with a personal loan rather than home loan?
     
  18. Trainee

    Trainee Well-Known Member

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    If it takes that long to sell in a hot market, when it cools.....
     
  19. Angel

    Angel Well-Known Member

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    If you own it outright in a few years when you move into a larger home, don't sell it.
    The new tenant can pay a nice Potts Point rent which will subsidise the cost of the new home. You will have to talk to a broker here to get the finance as the banks wont do it. Or you can sell to someone from Asia who will have the cash, if the FIB rules still allow.
     
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  20. sash

    sash Well-Known Member

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    Why not wait for and watch for OTP fallovers....you could probably pick up a better property for less.....Sydney has peaked.....watch the bank rule changes over next few months....investors will be hit quite hard ...FHB will be in the driving seat but will have much less dollars to spend

     
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