Hi Everyone
Am looking to purchase my first property sometime soon and would like to know what your thoughts are on suburbs such as Tullamarine and surrounding suburbs near Melb Airport… Capital Grow Potential?????????
I would move into the property and rent extra rooms out to friends (airline industry).
Sarah
Hello.
Back up inMelbourne now?!
Future growth potential of established sbrurbs can be pretty accurately determined by examining the average annual growth over the previous decade. Barring any major public works (such as a sporting arena, shopping centre, highway, sewage works etc) the value of these areas should keep level pegging with the previous decade’s figures.
This being said, my recommendation would be to drop some (tax deductable) dollars on something like the Residex Future Growth Predictions Report for Melbourne (www.residex.com.au). It will set you back around $185 (a small price to pay in relation to the cost of real estate) but it will give you stats and graphs for every postcode in the Melbourne area. Look at the average 10-year growth and determine if the suburb you’re examining has performed at over 10%pa capital growth for the last 10 years. If it has then you’ve taken your first step towards determining a suburb’s continued long-term growth potential.
The next step I would take would be to look on the local council’s website to see if there are any major works sceduled for the coming months/years and what effect they will have on the local community (positive or negative). You can also call the council and talk about any future plans thay may have. Don’t worry about feeling a bit silly…it’s their job to tell you and they do it every day.
If both the stats and council info look and sound good then you can start loking at the local market to see what places are going for and what your affordability levels are. Remember, though, that some suburbs have ‘good’ and ‘bad’ areas so it pays to talk to a coulpe local RE agents about the local scene. Looking near the airport, for example, you might want to find the exact flight path of night flights and make sure they are not DIRECTLY over the place you’re looking at buying.
You are looking to make an investment that will increase your nett worth and perhaps be the first step on your path to financial freedom so make sure you do your homework. It’s okay to ask questions and to get a feel for what you are doing before diving in with your cash – we all have to start somewhere. But do make sure that your investment decisions are based on Objective Research and not Emotion.
Good luck.
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Thank you so much Art for your detailed response. Discovering this website has been so helpful and it’s great to see everyone sharing their experiences and tips.
At the moment I am investigating all my options and reading everyday so hopefully I can make a good start in the the property market.
Unless I found myself an ‘out of this world’ +CF property do you think moving into a property for a yr (getting HO grant and saving G Gains) is a good idea. I work in the airline industry so getting good flatmates to help pay the mortgage isn’t a problem, especially if i purchased close to the airport.
I am living at home at the moment and saving like crazy for deposit and my only debt is a $28,000 personal loan, would u suggest I pay extra off my loan as well as saving for deposit or spend the next year paying off my loan first before buying.
Have a great day and thanks once again
Sarah
Sarah, I’d say pay off your loan.
I’d dispute the Residex idea (I work with statistics and I like to read there ‘analysis’ whenever I need a good laugh) as well as the suggestion that “Future growth potential of established sbrurbs can be pretty accurately determined by examining the average annual growth over the previous decade.”
I estimate that by waiting 24 months you can realistically expect to purchase in the area you are looking at for somewhere 7-15% below current prices. My estimate may be off the mark, but I’ll bet it’s a hell of a lot closer than Artuad’s estimate of 20% above current prices (based on homepriceguide’s 9.7% pa average over last 10 years).
Cheers, F.[cowboy2]
Hello again.
One of the great things about this forum is the fact that you get all kinds of varying (and often contradictory) information. The best thing to do is to research, research, research and make up your own mind. By all means, ask questions…but make sure you do your own sums and investigation before acting on any of the answers given to you here.
In short… due diligence pays dividends.
Having said that, as I’ve said in a previous post on one of your other topics, get rid of that personal loan ASAP. If you have money left over (which you should if you’re thinking of budgeting to pay off a mortgage) then stick it away in an interest bearing account until you have your deposit, plus a little gravy for unforseen events.
Remember, too, that you’ll have to factor in 5% closing costs like conveyancing, inspections, stamp duty (if you aren’t living in the place straight away) and the like on top of your deposit. If you’re claiming the FHOG then your stamp duty will be less (or non existant) so your closing costs will be lower but remember that you won’t be able to claim deductions while you’re living in the place.
I’m not an accountant so I’m not sure what tax implications there are with sub-letting rooms in your own home, nor am I a lawyer and I’m sure there are insurance issues to look seriously at, but I will, in relation to sub-letting to friends, offer a couple words of caution.
Living together in a rented house is quite different to living together in a house that one of the parties owns. Even if you only plan to do it for a year to claim your FHOG I would suggest strongly that you get everything in writing when it comes to the sub-let/boarding. After all, investment is a business and you don’t want the risk of suddenly losing all your flatmates (and your rental income) over some small or unforseen incident. I know it’s weird to say to a friend ‘here’s a lease to sign’ but it just guarantees that everyoine is on the same page (so to speak) and takes the arrangement seriously.
There’s my 2 cents. But again, the choice and responsibility is entirely yours.
Good luck,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
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