What to advise your grown up childern in Sydney marketplace

my kind of philosophy. People wonder why we didn't buy a million dollar house 2 years ago and my answer was "Why?" the ability to afford something doesn't mean you need to have it.
So I think you need to decide on your long term plan. Buy, sell and upgrade to nice PPOR or acquire more and pay down later to buy a home you really like. Or spend less and enjoy what extra money can do...travel, education etc. So sit down with wife and dream big, ink on paper and implement it.

 

That's probably more appropriate than Canberra

 

My advice to my work mate years ago, was to buy a unit, somewhere cheaper and not necessarily where you want to live.
Later on, when you earn more or have enough equity trade up to something bigger that you might then want to live in.
Just remember that should you choose to rent in the interim, don't forget to put aside extra dollars like you are actually paying off a home loan.
If you buy and rent out the property straight away you have CGT issues, you could move in for a while (on paper) immediately after purchase (while you paint and tidy it up for renting out) even though you remain at the inlaws for as long as you can

(for the record, my work mate is 4 years younger than myself, he earns more yearly than I do, and to date still rents and never bought . I did it hard the first few years and 15 years later have gone on to have a great PPOR, a neutral IP and another IP in the pipeline)

Nothing is for free, you need to work at getting what you want.
For the kids, "if you don't like it here, there's the door" ! (most of them are still here)

 

Sounds like a smart honest Man,all my Father ever taught me as he did not stay with us for very long..
Buy it for 20 cents and sell it for a dollar..

 

Invest in Brisbane, parachute your way down south when it hits the top and on the way down, pick a house you want to buy in Sydney

 

Maybe you could start by buying a 2 bed unit in a good/convenient location. Something you can afford. Gives you a place to live, a foothold in Sydney in a location where you can conveniently access both jobs and entertainmentlifestyle stuff. With a 2 bed unit you even have enough space for a little one, so it gives you some space to breathe down the road. If you eventually outgrow the place, you can then look for something bigger.

I guess it comes down to personal preference: how important is it for you to live in a house? For some it is worth the long commute. Others would prefer a unit more conveniently located.
You also need to think whether you want to put your savings towards a ppor you like, or direct them into an investment with the goal of selling off to fund a ppor purchase sometime in the future.

Personally I would be inclined to keep it simple and buy a place you would like to live in for now. Not everything is about investing, and don't forget that no one has a crystal ball with regards to what markets will do. Especially there is no guarantee that investing outside Sydney will outperform. But of course, perhaps Sydney prices will stagnate long enough - or even drop - and that could mean a better opportunity down the road. The important thing to remember is that it's all speculation, no one knows. If you buy a ppor, somewhere you like and you live in, at the very least, no matter what the market does, you have yourself a nice place to live.

Good luck!

 

I don't have adult kids, but I do have nieces and nephews. I told them recently that they should buy a well positioned flat in a small building that badly needed a reno. They could live in the place and do the reno and then perhaps rent it out and do it again.
I sometimes wish I wasn't so attached to Sydney.

 

Everyone knows that the sydney market is really tough for 20/30s .
I would perhaps start off in an affordable place, one that has potential to grow CG wise, but not discounting rental returns, and start off there. After some CG and rents saved, think about cashing that in ( either selling or leveraging equity) to enter the sydney market at that stage.

 

Don't spend money on cars.
(Do that after you've established yourself a bit better financially)

 

That sounds fairly reasonable.
Probably still a bit difficult in Sydney at the moment though.

 

I'm just going to say... some very good ideas here for someone starting out.
My journey was I bought a 2br unit in West Ryde back in 2005... it did nothing for a while but suddenly it went up. From that, there's potential to buy something bigger and better.
It's still solid advice. Even though prices are much higher now, the interest rates are so low. I don't see rates rising in the near future. So buy something with repayments you can afford without any stress.

My sister and her husband bought a 3 br townhouse in Castle Hill as their first purchase. Interest rates started high (and ouch, they had a fixed rate loan at 8.xx% rates). But they rented out a bedroom to a friend for the first 1-2 years so he helped out with the rent. By the time my sister was 30 they managed to pay the whole townhouse off.
I would say though, keep your extra money in offset... if they did that, rather than paying the principal down, they wouldn't have had to sell that townhouse (they would have kept it as an IP... Its only ~100m from the new rail) when buying their next home.

 

Ever? What if you need one... a really really fast one?

 

Honestly, the same advice I got given:
The first house you buy is not gonna be your dream house so what's the point in stressing and stretching yourself by making it your PPOR. Invest elsewhere, rent where you can afford..
Why would anyone need an old 3 bedroom shack when there are only 2 of them.. My fiance and I are about to get married and we have a 4 bedroom place building soon in Sydney with repayments at 650/week and we'll rent a 1-2 bed granny close by for $300-350/week. Saves us $300/week if we rent our place out compared to living in it.. Tell them to invest where they can afford, in a market that will grow...personally, as hot as Melbourne is atm (still parts that have barely moved btw) i'd rather invest there for my first home than invest in Brisbane.. not to bag Brisbane as I have an IP there and don't have one in Melb, but if I were a first time investor i'd go Melbourne cause I'd sleep at night knowing their population grows by 100,000 people a year and it's affordable still.. next step is to encourage the kids to get on this forum or come to the next meetup..

 

We are not looking for houses at all... that dream is for up north past sydney . Looking at 3 bed townhouses/ duplexes but they are still $500K! I was only thinking 3 bed for the longer term as kids would be soon but not a fan of units, especially for that price but might have to look for 2 bed places in the mean time

I already have a coupe of IP in QLD and pulling equity from one to buy the PPOR - other hasnt got the legs as yet.

 

@MoneyMan You should have provided more information in your original posts. Anyway townhouses and duplexes are expensive anywhere in Sydney. A newly built duplex is asking for $1.295 million near me. Pretty shocking. Alternatively, just rent.

 

"A newly built duplex is asking for $1.295 million" is that for 1 half or the whole thing???

Sorry about the missing info, thought some may know me from somersoft and i didnt want to make this all about me but general ideas i guess

 

Just rent and invest til they get their dream home...

 

Haha, I didn't know you from SS. Anyway, that's for 1/2... yes for each. Crazy eh but people are tearing down and developing around me.

 

Well..... then you put a supercharger / turbocharger in don't you
I've been reading up about supercharging the 86.... not sure if i should do it

 

ah sorry had another name on SS

turbo 86 kit for sure!