NSW Sydney FHB - apartment or house?

Discussion in 'Where to Buy' started by Fah, 11th Nov, 2020.

Join Australia's most dynamic and respected property investment community
  1. Fah

    Fah Member

    Joined:
    14th Jan, 2020
    Posts:
    11
    Location:
    Sydney
    Hi all
    Im a first home buyer with a budget of 550k, looking to take advantage of FHB grants and also for something that wont squeeze my cashflow too much but still offers growth potential.

    Considering buying an apartment in the lakemba/belmore area (400-500k) or a house in mount druitt area (550k).

    What are people's recommendations?
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

    Joined:
    31st May, 2016
    Posts:
    2,738
    Location:
    Australia
    Recommendations in what sense?

    Lakemba / Belmore are much closer to the city than Mount Druitt.

    What had you interested in either of these options apart from the budget?
     
  3. Fah

    Fah Member

    Joined:
    14th Jan, 2020
    Posts:
    11
    Location:
    Sydney
    Hi, I guess what would make for a better investment in the long run.

    The apartment would be more of a yield play, and the house a capital growth play. I guess im looking for a sense of whether the apartment or house makes more sense, given the number of high rise apartments being built in sydney
     
  4. rocean

    rocean Member

    Joined:
    24th Jun, 2015
    Posts:
    11
    Location:
    Sydney
    You're going to live in it right? So it's a PPOR? So you have to choose where you'd like to live, Lakemba/Belmore or Mt Druitt.

    If you are going to live in it, how long do you plan to stay there for? If it's an investment, what timeframe are you looking at? How long would you like to own the investment for?
     
  5. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    Try not to straddle the fence. A home is for lifestyle and is generally emotionally driven, an investment is lump of material in which we place research and money to drive its value up over time for a given purpose. Just because they both happen to be made of the the same thing doesn't make them equal.

    I understand it's tempting and yes, everyone wants the value of their home to go up, but buying a home and buying an IP are very different in many areas.

    - Andrew
     
    Mark likes this.
  6. Mark

    Mark Well-Known Member

    Joined:
    11th May, 2016
    Posts:
    312
    Location:
    Sydney
    I agree with what Andrew said. Buying an IP is very different from buying a home. If you decide to buy in lakemba/belmore,I suggest you buy a unit in a small block as it has a higher land component compared to an apartment in a tall building.
     
  7. preapricity

    preapricity New Member

    Joined:
    14th Nov, 2020
    Posts:
    4
    Location:
    Sydney
    I would always choose a house over a unit unless the unit is right next to my workplace.
    With the unit, comes Strata fees (and sometimes community association fees) and that will be on top of your mortgage. Particularly, some units will be charging you ridiculous strata fees of which most goes to lucrative admin costs rather than capital fund. You won't be able to renovate or add to your unit as you like. You need to inform the strata every time you want to make a chance and hope the management approve your requests. And with the unit, you are only entitled to a very tiny portion of the land your unit is built on - which is useless as you will never have a say over what can be done with the land. But on the other hand, units are easier to rent - if you wish to keep it for investment in the future. Also, they would be placed in nicer suburbs compared to the houses of the same price.

    For houses, you own that land which your house is on. You don't pay strata (only home insurance) and you can do whatever the hell you want with your place. Renovate it, demolish it, expand it - all up to you (subject to council approvals). But at least you won't need to seek a permission for silly stuff like installing an A/C unit, installing new floorboards (oh boy do I need that acoustic control to make sure it doesn't disturb my poor neighbours) or having pets. Houses always have the potential for growth. You can add another story to your house or horizontally expand it etc..
    But you won't end up living in an affluent suburb within that price range - which may or may not change in the future.
     
  8. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,861
    Location:
    Perth
    It might be the balance between strata fees in an apartment block vs daily travel time and costs to get to work everyday
     
  9. preapricity

    preapricity New Member

    Joined:
    14th Nov, 2020
    Posts:
    4
    Location:
    Sydney
    Very true. Thanks to Covid introducing "work from home" culture to our lives, more people will be looking to buy houses in the regional areas.
     
  10. Fah

    Fah Member

    Joined:
    14th Jan, 2020
    Posts:
    11
    Location:
    Sydney
    Thanks for all the replies guys!

    I should add - I was only going to live in it for the first home owner concessions. In both cases, it would be purely an investment driven decision.

    Hmm it seems like most people are recommending houses (which I agree with in hindsight) - what areas would you recommend focusing on for ~650k?
     
  11. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    Why have you changed from a budget of $550K to $650K? I suspect that's because the price point at which the Stamp Duty concessions stop SD being completely "free" and start to scale back. It's OK doing that but many FHB's are in the same boat - so expect lots of competition!
    Do you have finance preapproval to that level? If not, your first next step would be to talk with a Mortgage Broker.
     
  12. Fah

    Fah Member

    Joined:
    14th Jan, 2020
    Posts:
    11
    Location:
    Sydney
    Hey mate, thats exactly right. I figured whilst i have the FHLDS, it makes sense to leverage harder to get a better ROIC. Good point about the competition!

    Yes, ive got the finance pre-approval good to go :)