VIC To buy in regional or melbourne first.

Good day,
Silent reader and posting here for first time.
I am looking for a advice regarding where to buy and whether the strategy I am planning is the correct one. Eager to learn from the best in this forum.
Currently working in regional Victoria (Bairnsdale) and renting a house here with my partner( No kids). Partner not working atm.

Thinking of getting into house market but not sure how to go about it. I might come back to Melbourne after 10 years or so and would Like to have a house in melbourne near decent school zone. I am in dilemma whether to buy house here in regional first or melbourne. I am considering following options-

1. Should I buy PPOR in melbourne first (live 12 months and convert into IP. I work 4 days a week in Bairnsdale,happy to travel back to melbourne on Weekends ( Was doing this for first 6 months inintilaly when I moved for work). After 12 months I can move back to Bairnsdale and build/buy here a decent house.


** MORE CG This way and can save stamp duty for melbourne PPOR and claim FHOG if possible.

2 Buy/build PPOR in Bairnsdale/lakes entrance, claim 20k FHOG. Covert It to IP after 12 months. Keep saving and then buy a another house later in melbourne.

**No CG here in regional.
Have to pay stamp duty for melbourne property and will be delayed to enter in melbourne house market.



3 Buy land and build IP in Bairnsdale/lakes entrance first. Do not claim FHOG and decide later to buy PPOR in melbourne or here.
** Can claim depreciation for new property
But almost no Capital growth here.

Background:
1. Married , Age - mid-30's, migrated 2.5 years before To Australia.
2. Working FT 2 years, same job.
3.Tax rate - 37% might go to next bracket by end of this year.
4. Own 3 properties back in my country all paid off.
5. Invested in shares, mutual bonds, which are currently giving me 7% return back home.

6. Cask in hand (50k)

7. Currently saving at the rate of 4K Per month after all expenses.
7. Current rent 300/week.

8. Partner not working atm not much jobs around here in regional.

Aim is to buy 2-3 properties in next 5 years and have balanced portfolio.
Gain CG and Claim Back on tax where possible ie depreciation/NG.
Please feel free to leave your comments and ask me if I have missed anything here.

Regards
MJ

 

Hi Mj

Is buying and paying a mortgage cheaper than renting in regional?

What is important about living in your own home vs renting?

If you aim to buy 2-3 properties in the next few years, have you looked at your overall borrowing capacity, as your partner is not currently working?

 

Is it possible to be eligible for FHOG when someone owns property overseas?
If so, it seems to go against the point of the grant, in my opinion.
I wonder how the current economic climate will impact FHOG - will it be scrapped, or considered important in putting some momentum back into the construction industry?

 

Thanks for reading the post.
Yes for a 3 br house, mortgage is cheaper then renting in the area I am living atm.

Me and my partner are pretty happy to rent.

That’s a good point, I have to build a portfolio in a way that I can still afford 2nd and 3rd property and hopefully my partner will find job in next 5 years.

Regards
MJ

 

What is the population of your town?

 

True but also due to few mins drive to coast/Gippsland lakes.

 

Hey MJ not sure how much your borrowing power is but you sound like my position a couple years ago (I also live in Melbourne). I would hold off buying your PPOR and rent vest for the start. There are however a lot better places than the lakes entrance area to invest in and this will come down to borrowing power and how much you wanna spend per property. In terms of using your FHOG there's no need to use it on your first property especially if you're going to turn it into a rental as it will ruin your depreciation. At some stage down the track you will purchase your PPOR so use it then.

 

Hi Spiralkut,
Could please shed some light on how turning a PPOR into an IP could result in ruining depreciation.

Say i build a new house on land as PPOR and convert it into IP after a year, how bad would it be from depreciation angle (Apart from first year that i live in property as PPOR, I cant claim depreciation)

Cheers

 

Because as soon as anything classified as plant and equipment becomes second hand it is ineligible to be claimed as depreciation which includes you living in it once built.

 

Wow.Thanks for clarifying. I was under impression that because I was the one who installed equipment and plant, therefore they will be considered as 1st-hand not second-hand, hence I can claim depreciation for them

 

Nope because even if your property for example was in Brisbane and you lived in Melbourne but you decided to renovate the house over the course of a week and you stayed inside the house it would be considered 2nd hand