propertymistroMemberAugust 4, 2010 at 11:17 amPost count: 28
Great forum. I would like experienced peoples' opinions on the following scenario. I am looking to buy my first property; either a duplex, villa, unit/apartment or townhouse. I am wondering if there are major problems with buying a 1 bedroom property. I have no children and do not plan to start a family in the short term and therefore a 1 bedroom property is big enough for my current needs. However I worried about it being a bad investment for capital growth or for being able to rent it out down the track. However by buying a 1 bedroom I can avoid mortgage insurance and obviously my repayments will be significantly less.
Buy a 1 bedroom, 1 bathroom property
Therefore no mortgage insurance needed
1 bedroom is currently sufficient for my living requirements.
Buy a 2 bedroom, 1 bathroom, seperate toilet property
Have less than 20% deposit
Therefore have to pay mortgage insurance.
Thank you for your replies…propertunityMemberAugust 6, 2010 at 5:59 amPost count: 136
If your 1brm unit is greater than 50m2, then sure buy it – no problems.
There are problems trying to finance smaller than that.
2brms are probably in better demand but good 1brm in the right location are fine too.www.propertunity.com.au Buyer's Agents Investigating Opportunity in PropertyquickchickMemberAugust 6, 2010 at 6:10 amPost count: 167
Or buy a 2 bed apartment, in a suburb a bit further out. ie similar price.
Ask your bank about their policy on lending for 1 bed apartments.
Banks are geneally conservative about lending for 1 bed apartments esp if less than 50 sq m.
Which caps your eventual sales price, and hence may limit your eventual capital gain.Ruth Agius, Realtor propertyinvestingusa.com Phoenix AZpropertymistroMemberAugust 19, 2010 at 11:47 amPost count: 28
Thank you guys for your posts. Great!!Jamie MParticipantAugust 19, 2010 at 12:16 pmPost count: 4258
Personally, I wouldn't get too concerned about mortgage insurance and therefore wouldn't allow it to be the main factor that determines my decision.
It's a borrowing cost that can be depreciated over 5 years, and without it, we would all have to save 20% deposits to purchase a property
Like prop said as well, any 1 bedroom unit under 50m2 will be difficult to source finance for.
JamiepetronaMemberAugust 19, 2010 at 12:20 pmPost count: 34
We have just divested ourselves of two 1-bedroom units and bought two 2-bedroom units instead. We've found that one bedroom units are more difficult to rent and have lower capital gain, hence the swap.Greg ReidMemberAugust 19, 2010 at 2:39 pmPost count: 89
As a PPOR purchase, I would try to minimise the debt and certainly minimise any MI costs.
If it was an investment property, I would do the opposite.
If a 1 bed flat is in a good location, suits your needs and you can borrow < 80% then it should not be an issue obtaining finance, especially for an owner occupier. The real issue on small units <50m2 is when you want to borrow > 80%, the MI's do not like them nor do most lenders either. You can get 80% finance for as small as 38m2 but the lender selection is limited.
For a PPOR, it is about lifestyle. If it suits you, more than likely it will suit similar tenants down the track.Good luck
GregReid Consultants Helping People through Finance
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