What do I advise the kids.....buy or rent and invest?

I have a 28 yo at home with her fiancée. Yes they pay board.
They have a deposit for a 2 bed unit in shire...? Miranda Caringbah...or st George...mortdale etc.
the sydney boom has NOT stopped here...the kids can barely get an offer in.
After reading a lot of posts...should they be purchasing at all in these area?

Or rent and invest...everyone seems to not be investing in Sydney now. They are just starting out...and want money left over for more o/s trips. Advice?

 

If this were true, then we would not be having a Sydney boom that is currently ongoing. 80+% auction clearance rates and almost 20% annual growth in median prices to date do not support this statement. It's not all OO's driving prices you know.

 

Rent, invest and reinvest. Cashflow is king so look for rental yields that will cover the mortgage.

Get them into mindset where they are gradually building wealth/cashflow. The additional passive income will help them in the long run.

 

Can they move?

Serious question. A job in anywhere other than Syd/Melb will mean their housing costs are more or less half...

 

Sounds like you have typical Gen Yers. I want to invest in property but still have money for o/seas trips, oh and I still live at home with the folks at the age of 28. Doh!

Buy a PPOR or an IP, it does not matter which.

 

I meant that a lot of PC were not investing in Sydney. We can see the boom still in.
So you think that their strategy should be to buy as OO.

 

No...secure jobs and a mother who doesn't mind them around.
I know it is a serious q. My friend children are all moving to qld. She has to follow!

 

I'd suggest they buy a PPOR as they can afford it and then leverage off that CG to invest. At least that gets them out of your home

If they really want to grow a portfolio fast (and I'm not sure from what you said that they do) then they should live cheaply with you and rentvest.

 

I wouldn't buy a PPOR now unless they're going to use the PPOR as a means for leveraging into better yielding investments through debt recycling. It's been mentioned numerous times before, all I mean is:

1. Buy PPOR
2. Split the loan, pay down the split and redraw to buy LIC/ETF/shares or whatever
3. Do another split/redraw and repeat.

Or just rent + save regularly and invest ala Peter Thornhill method. Then buy a PPOR when really ready, then do the above

I wish someone had shown me that when I was 20 or 28.

 

My thoughts exactly. Pampered Gen Y wanting it all, and accomodating parents thinking they are helping, but in fact are doing the kids a disservice. Cricky, 28 and still living with parents.

Yeah @Wanttoretire why aren't you grown up adult kids on here asking questions.
Think your darlings are better of renting and investing ( to not cramp their lifestyle ). Or better. Invest and they can live with mama and papa until 40 ..

 

Thank you. This advice I can pass on to them as a strategy for them to investigate. I should mention that he already has a PI in outer Sydney bought 4 years ago. They don't want to use the equity yet. Is with his brother. And weddings and PPORs are first thoughts.

 

Problem is the boom been going for so long they could actually be buying close to peak?? who knows, but it wont be fun holding a property which corrects and they still have to service debt. Of course these rules don't apply if it is their primary residence.

I am helping my children with deposits for properties. However, they want to live in inner city, trendy areas, so I think they should rent where they want to live and buy properties with value, and a yield close to 6%. Hard to find in this climate but there are ways of achieving higher yields, such as land and house packages in the burbs. I have experience to assist with this. Still not pulled the trigger on this but pondering various options.

MTR

 

Do you actually have a strategy to present to them?
This was my q.

 

Bless your cotton socks.....clearly no children

 

Yes, no kids. But also sick off all the little adult princesses and princes not being prepared to sacrifice a lifestyle their parents have accustomed them to, to get into the market.

 

Seriously, get him to talk to a broker about releasing the equity in the IP now! At least it will be there if they want to use it if Sydney prices take a nosedive! Maybe encourage him to get legal advise on accessing the equity and managing the risk with his brother..

PPORs are totally unnecessary unless you have pets or kids (and even then...).. don't get me started on weddings.. I hate even thinking about what we spent on ours (modest by current stds apparently?) and for what???

 

Exactly...my kids have saved their deposit...they haven't asked for more...but on looking in the inner city they have now come down to earth and looking locally. We can help them if they ask. But should they buy? Or invest elsewhere?

My other daughter is renting inner city. She has a deposit...but can't make up her mind what to do...since she can't afford inner city.

They do need a different strategy to live their chosen life...

 

IMO, they should get the property as PPOR. Force them to grow up and move out.
The risk with them getting the property as an investment, and then renting, is in likelyhood, you would cave in, tell them how silly it was too spend money on rent, rather than pay off the property, and bring them back into the house (further delaying their path to independance and adulthood).
So my vote in PPOR.

 

As a parent, regardless of how grounded my children are and their ability to save and be smart with money, we will always like to plan and help them further along if we can.

Of course, they would find us a menace! Meddling in their affairs!

 

I won't give them this strategy to investigate. It sounds like it is based on flawed intelligence. Needs better DD. But thanks for contributing.