NSW Better to help kids buy 1st property as unit in capital or house further out?

Both boys are about to graduate uni and start work next year. We've said we'll help them each get their first rung on the ladder. They're in Sydney, studying/ living near NSW Uni.

What are you thoughts on:

• An apartment near a rail line/light rail, closer to the city they can rent out the other room (or 2)
• A small house further out they can do the same
• A larger house in a regional centre (Wollongong, Central Coast) they don't live in

Goal is to leverage capital growth to keep investing in more properties, say borrowing against capital gain every 5 years to keep adding 1 or 2 or more properties. We can help with borrowing capacity.

With living in the unit/house, there will be a capital gain tax exemption benefit. With rental only, there will be gearing benefit.

Thoughts?

 

which do you think will grow more?

 

Most likely Sydney based, although larger apartment nearer city/east vs smaller house western/southern Sydney, not sure which yet.

 

With either option - I think the underlying thing to focus on is making sure they buy a quality asset that will provide them that growth or stepping stone to leverage in future.

It is great that you guys are able to help. Have seen quite a few parental guarantee scenarios with mum and dad helping out allowing the kids to purchase with no capital down, allowing them to get in earlier or to preserve capital for future owner occ purchase.

 

I prefer the idea of a unit/duplex, not a high rise with massive strata fee's but a small unit, maybe even free standing......

It gives each a place to live and won't burden them with a $1.6m loan, a smaller loan will soon sort out whom is prepared to have a go in life and pay down the mortgage asap to use the equity for an upgrade V's paying the minimum and having new cars and OS holidays every year !

Most don't truely appreciate building wealth without having had to work and do some sort of hard yards for it

 

Very first thing is what are they studying ?
Where are the jobs they are targeting ?

Where their job opportunities are for their chosen profession makes a big difference to the way to proceed.

 

Def no high rise for me.
Townhouse/duples near city I'd be ok.
Hous with land out in the stix my prefered.
Don't be too concerned there are none of Biden's cannibals out here.

 

House in Western Sydney will be the clear winner.
Blacktown is my bet for the biggest growth.

 

A small house or semi in Canterbury, Campsie and surrounds if you have $1.2 - 1.4m. I’d even look at the townhouses with good land if have a smaller budget. They are not building anymore of those. Wouldn't touch units if you’re after CG, unless they are in tightly held areas. If you want a more desirable area for your sons then a semi in neighbouring suburbs that flank these suburbs north or south could also be good options.

There’s up-zoning potential, new infrastructure and metro line upgrade in the works; all of which are proven ingredients for outsized capital growth. This formula is not restricted to Canterbury and Campsie, but it can also be applied anywhere else in the capital cities (I.e. St Mary’s in Western Sydney, SE Melbourne along the SRL corridor). With national infrastructure spending peaking this year, it will be harder to find these kinds of opportunities in the next decade.

 

Older one is doing Mechatronic Engineering (robotics). He's also on the Redback Racing Team: About Us - Redback Racing developing the world's first autonomous driving battery powered F1 car. Think he'll be OK for a job - hopefully not developing sniper drones for the US military.

Other one is doing psychology targeting high performance sports teams.

 

I have a somewhat similar background to #1.

I'd suggest to try and, as much as possible, focus on moving to the US if a strong career trajectory is desired. AU is not the country for high tech jobs, nor is it a country that truly rewards brilliance.

Historically speaking, they'll be monetarily rewarded far more for buying the right property/ies than being at the top of their profession, even in tech.

Just my 2c.

 

Agree @rvo, though at least for the first few, a good salary will help with borrowing capacity. On another point, robotics son is looking for an internship for his final year project. Any suggestions?

 

For context, I switched to ML/AI several years ago (Many of my colleagues also ended up switching to software dev roles.)

There really aren't that many good companies/roles in AU that do proper robotics. Anduril would probably be #1 if he can land an internship there. Other companies I know of but can't vouch for would be Emesent, Abyss, Hexagon. Rio and BHP may also have something going on, and they also tend to have good relationships with Unis. But he should be networking enough to know.

It may take a few years before his salary gets into swing by the way. He'd be making 2x as a fresh grad, and anywhere between 3 to 5 times (or even more) once experienced in the US. And there would be an endless supply of good companies to work for there.

 

Appreciate it @rvo, I'll pass those names on.