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

My advice for myself: rent where you want to live and invest elsewhere.
Yes, I'm GenY. I want lifestyle.
I work hard. I earn good dosh and I invest it well.

Nothing wrong with living at home but I believe someone did make an argument that it's not doing them any favours. I agree with that sentiment.
Essentially, you're their safety net. They feel safe. Discomfort and hunger for more is a great motivator. Nobody ever achieved much in life being comfortable.

Sydney is expensive. Buy now if they want a PPOR and deal with a mortgage. If they're not interested in property investing as a pastime then this is probably the way to go (this is my opinion if it were me in their shoes).

 

good points

 

Moving from a comfortable, friendly house into an unattractive dirty apartment doesn't sound fun at first but is very rewarding once it's been cleaned and painted and possessions decluttered. I see that many units have dropped back that 10% or so in Sydney. Almost affordable in the right ("wrong") suburbs.
Either this or your friend's family is onto a winner. Keep the Sydney property and go Brissie, Tassie, Adelaide, regional NSW or why not Perth?!

 

Valid or the alternative is to rent where you want to live and invest where you want to live (as well). This is if a PPOR is important to you - a CGT free investment makes it fairly compelling over the long term. Even better if you can do the six year thing although moving in for a period would be a little painful.

 

Lots of good advice given.
However, there are a lot more options than simply buy or rent and invest.
No need to limit options.
Look at the stuff Taku is doing.
If you take this and apply it outside of property, anybody could make millions in the next 10 years.
There are so many options available, property is the lazy way in my opinion.
It can make you super rich, but you still have to do the hard yards elsewhere to make it pay off big.

 

An investment really is putting effort and money in for an improved return, doesnt matter if it is a PPOR or IP, they will feel ownership in servicing a loan.
I look around the Shire and consider renting to be quite cheap (which only works if you are saving additionally or have an IP)

So my vote is to buy an interstate IP now (to build equity)
They have some privacy with you (the safety net)
And in 6+ months see how their situation is, if they can/want to go rent........

There are so many projects starting between Sutherland and Cronulla that i dont see rents going up much

 

??? Sorry...still getting the lingo...6 year thing?

 

No worries - You can only have one CGT exempt main residence at a time (for the most part) but you can maintain that benefit up to six years after moving out. So - the strategy is to move into it for to establish it as your residence...

Treating a dwelling as your main residence after you move out

 

Tell them to consider moving to Gold Coast. They can buy an nice house there (and which will go up significantly in value and give them positive equity over the years ahead. They are too late for the Sydney boom and indeed buying there now risks them suggesting a serious financial loss that could set them back 10+ years finically).

And if on the Gold Coast they may not need "overseas holidays" as the lifestyle is so good there already that no one really want to "get away" and a holiday in Byron or Noosa are only a drive away if needed.

 

@Wanttoretire in addition to what big max said, if they want to stay in Sydney, maybe they need to lower their expectations a bit. if they cant afford the inner ring suburbs, have a look in the middle ring suburbs, and if they can't afford the middle ring suburbs then maybe the outer ring suburbs may offer some opportunity....

 

Since your daughter doesn't seem to be sponging on you, just let her stay on if they want to. If they didnt want to they'd think of someway to move out, even if it means wasting rent money.

U and hubby only need one bedroom and if u live in a 3 bedder, that's 2 rooms that will be empty if they move out. Better to collect rent from them and save it up for them. Who knows in 5 years time you might collect enough to help them pay for a place so they only have to do like 70 or 60% LVR with the bank.

And since property moves in cycles, just be patient. Pretty sure there'll be many nice new 2/3 BR units that will be discounted in the next couple years.

Best option is to sell up and move up to Darwin ;D

 

My advice would be to purchase a 2 or 3 bedroom apartment/townhouse/house and live in it as her PPOR initially - long enough to make it CGT free, and hopefully a stamp duty concession? (not sure about NSW stamp duty concessions given already has an IP). Then look at renting out the other 1 or 2 bedrooms on flatmates and being able to claim 1/2 or 2/3 of all deductible property expenses as a tax deduction. Best of both worlds and makes it affordable for FHBers.

This has been my tactic for a townhouse that I bought and live in, in Brisbane. I am out of pocket about $100 per week for living there, when renting a comparable room would be $250.

 

property in Aus has twisted people's mind so much. You never used to give that kind of advice to your children. I mean you need to work on your career and personal growth and buy property where you need to live. These days people people buy property where they can afford and then look for jobs that are available in the area.

what kind of twisted approach is that and what good is that going to bring to the economy?

 

For a range of reasons, property "back in the old days" functioned more as a utility, whereas now its more of a financial vehicle. This is due to various reasons, including in particular how banks began to finance property, as well as the costs that go into building a property these days being protected by unions, minimum wage laws, etc. So the reality is, parents now need to be a lot more sophisticated with their advice to "buy a property ASAP and pay it off as fast as you can" type of approach that used to work many decades ago.

If your children want to "live where they work" they have the option of renting. That's the reality (and in many countries, renting is no big deal - its just a cost of living). Right now, renting is a much more sensible option for people in Sydney, provided they patiently and diligently save as much as they can, and then wait for a market correction. Your children do not "need to buy".

I personally, have sat out major booms (and bubbles) in a range of assets in my time - its tough to do when everything seems to be going up, but feels awesome when you get "rewarded" as everything comes back down. In my case, in terms of property, I have been in markets where for every 100 properties on the market it seems like I am the only buyer. Beautiful, and a scenario that I feel entitled to exploit to the fullest. This is the time you want to be buying (not the current scenario in Sydney where it seems there are 100 buyers for every property that comes on the market).

However, if for irrational reasons "eg I just feel more secure if they own a house", you do want your kids to buy, then again, they ideally do it where they will make some nice profits on capital gains. This gets them off on the right and positive footing for the years ahead. Sydney right now is NOT at the right point to be doing this. In fact its likely close to the very worst point to be doing this.

As for what good it brings to the economy for people to move their investment to places where they get the best return, I do believe this is good for the economy. Free movement of capital is in my view almost always a positive thing, long term.

So can I ask, is moving to Brisbane or Gold Coast feasible for your kids? Or out of the question?

 

I would go with that.

Now the whole point of this discussion is to not regret not buying in Sydney on time which I do not agree with. What if you regret later not being able to do a particular type of job because you moved out of Sydney or got yourself in a huge mortgage early in your career?

I get that property is a very important piece in the puzzle of life but that is not the sole reason you aspire to go to uni or take that degree. Aiming for a PPOR will only get you a PPOR. It is the love for what you do that makes you rich.

 

I agree renting can be quite cheap in the Shire.

I also agree that there is quite a bit of apartment supply coming online in the Shire in the next 1 - 2 years.

If I were buying a unit in the Shire, I'd buy one in Cronulla, either in a building with redevelopment potential, or in a building where there are 90%+ owner occupiers. I see that these types of properties are being picked up like hot cakes because there is fundamental demand for them (and that demand will only intensify with time).

 

I just spent 30 mins giving them all the alteratives being discussed.
And then they said....

" so we can do anything we like "

Well. Yes.

 

I don't like to be taken advantage of,
Be it by an employee, a business transaction or a family member.
We all love our kids, but there comes a time where they need to make their own decisions & move on & deal with them accordingly....obviously that differs if a child has a disability.
But a healthy 28 yo with a fiancee, both not wanting to interrupt precious o/s holiday experiences in the future yet still wanting the pretense of buying?....paying board, not real life expenses c'mon.
Your being bled imo presently, next shoulder they weep on will probably be marriage expenses.
Life is an experience, not a parental handout imo.
Sorry if my opinion comes across as harsh.
Cheers

 

Well. No. Tell them doing nothing is not an option.

 

At 28 they certainly can, and should, make their own decisions.

Of course, if their decision includes continuing to live with you for the next xxx years, then obviously you get a say too!
Marg