What would you do !!!!

Hi Everyone,

Now since we cannot afford to buy a place where we would want to live, what do you people think about below options. Which one would you go for and why.

I may have simplified it a lot but that helps me understand it easliy. I have tried to guess best possible values for cashout and kept it bit higher that that, give me a reality check if you think it is wrong.

Current Situation: Couple currently renting, do not own a house in Australia, both working no kids.
Location: Melbourne

Option 1:

Buy PPOR 3 bed townhouse (established no off plan) in an upscale (best available) suburb with budget of $750k

Cash outflow: 12% deposit : $90000
Stampduty+Legal : $50000
Buyers Advocate : $15000
Total : $165000

Plan: Stay in it for 6-7 years and then sell off and move to place depending on situation that time.

Pro: Good quality of life, close to amenities etc
Con: Buying in an already costly place to CG may not be very high.

Option 2:

Buy PROP 3-4 bed established house with 500+ sqmeter area in not so upscale suburb, but still better than new suburbs with budget of $750k.

Cash outflow: 12% deposit : $90000
Stampduty+Legal : $50000
Buyers Advocate : $15000
Total : $165000

Plan: Stay in it for 6-7 years and then sell off as or knock down and build two units and move to place depending on situation that time.

Pro: May be close to amenities but no upscale feel. May get some gains out of it.
Con: No so good quality of life , higher transit time(may be)

Option 3:

Buy 1 PROP 3-4 bed established house with 500+ sqmeter area in outer suburb(western/northern) with budget of $500K.

Cash outflow: 12% deposit : $60000
Stampduty+Legal : $5000(First homeowner so stamp duty would be $0)
Buyers Advocate : $0(Would not hire one for it)
Total : $65000

Buy 1 IP 3-4 bed established house with 500+ sqmeter area in outer suburb(western/northern) with budget of $500K.

Cash outflow: 12% deposit : $60000
Stampduty+Legal : $35000
Buyers Advocate : $0(Would not hire one for it)
Total : $95000
Grand total of two houses : $160000

Plan: Live in PROP for 1 year and rent out IP. After 1 year rent in a suburb of choice and rent out both properties. After 6-7 year depending on situation, sell as is or develop units. May get some gains out of it.

Con: No so good quality of life for short time , higher transit time(may be). Need to have cash flow if IP is not rented for some time, I think we can manage it easily.


Thanks ,
IAM

 

I would like to see some responses from the experiences ones. we are in a similar situation except we have around 100k savings and new in australia so no other ppop/Ip yet

 

Yeah I put this thread on my watch list also, but no one seems to be replying unfortunately.

 

I can't tell you which path to take but can tell you what we did. We bought an IP and rented close to work. Our goal was to accumulate as large an asset base as possible so at the time that strategy helped us out alot.

At the time we could not afford the house we wanted but now because our investments paid off, we were able to afford something far better than we wanted.

 

Do you qualify for the new Victorian FHOG ?
Signing after 1/7/17 could save you a chunk on stamps !
If you are looking for a PPOR, buy smaller and what you need now as any debt is non deductible debt (spend less and pay it down sooner)
Then later use your equity to invest (deductible debt )
A smaller cheaper property means less in rates, running costs and interest donations .....
Or rent-vest

 

Also can be dependant on your employment
I spent years not buying a property due to regularly moving following employment opportunities.
Now regret not buying an investment property whilst I rented

 

This.

Plus you will improve your serviceability to purchase ip's if you keep your expense low.