All Topics / Help Needed! / Building vs Buying in Toowoomba/Brisbane

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  • Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42

    After many weeks and months of research I am confident of either building of buying a property preferably in Toowoomba or some part of Brisbane.

    I will have approximately $30k, possibly more but I would like to remain conservative to put towards purchasing an IP.

    I currently live in Muswellbrook though, so I definitely won't be getting a FHOG so my instincts are telling me building would be the better option seeing as I would save quite a bit on stamp duty only having to pay for the land.

    I have crunched some numbers and have figured out it would cost the same in purchasing costs to build a house and land package that I have looked at in Toowoomba for $375,000 than to buy something worth $275,000.

    Give the deductions (depreciation, interest on loan etc) that would be larger on the new home and also being attractive to renters/easier to maintain would it make sense that building is my best step forward? Also depending on the market I guess there is a possibility my house could be valued more than what its built for?

    I believe I would still be eligible for the FHOG to my knowledge if I were to then buy a house as my PPOR. So after 6 or 12 months I plan to move back to Brisbane where I would use my equity/line of credit to buy a house, live in it and renovate, then sell/rent out after 12 months given that I would receive an exemption on stamp duty and depending on the regulations on FHOG by that time, a further $7000.

    Does this sound like a sensible way to get into the market to anyone?

    All comments/advice will be appreciated.

    Thank You.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Matt

    Couple of quick points that might be worth thinking about.

    1) FHOG has been and gone and has been replaced with $15K Great Start Grant. As long as you move in with 12 months and live in the property continously for 6 months you should qualify. Course assumes that you have never owned another property in Oz before (PPOR or not).

    2) Your property will only be valued at land cost + fixed price construction cost by any lender. Sure might be worth more but you wont be able to access the available equity.

    3) Stamp duty concession will not be available if you don't reside in the property from day 1 however as it is based on land alone wont be a killer.

    Course you need to factor in the sales costs, interest whilst you are living in the property etc.

    Seems like a lot of effort to get into the market when with 30K you could start to build a decent investment portfolio especially with some clever use of your capital.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Qlds007 wrote:
    Hi Matt

    Couple of quick points that might be worth thinking about.

    1) FHOG has been and gone and has been replaced with $15K Great Start Grant. As long as you move in with 12 months and live in the property continously for 6 months you should qualify. Course assumes that you have never owned another property in Oz before (PPOR or not).

    2) Your property will only be valued at land cost + fixed price construction cost by any lender. Sure might be worth more but you wont be able to access the available equity.

    3) Stamp duty concession will not be available if you don't reside in the property from day 1 however as it is based on land alone wont be a killer.

    Course you need to factor in the sales costs, interest whilst you are living in the property etc.

    Seems like a lot of effort to get into the market when with 30K you could start to build a decent investment portfolio especially with some clever use of your capital.

    Cheers

    Yours in Finance

    Thanks for your advice mate it is appreciated. Seems I've been slightly misinformed on the FHOG, I guess living in Muswellbrook, NSW for the past 18 months or so means I'm not as exposed to the news in Queensland as I once was. I was meaning stamp duty towards purchase of a property but from what you're saying if I own an IP beforehand it means I'm not eligible anyway. Not a real big problem, was just trying to see how best to take advantage of any grant/concession available. I had a stamp duty exemption of $5000 down here when I bought my land which was great cause it only cost $3700 so the remainder was given to me in a cheque.

    Those points taken into account, what do you think my next move could be? Once my land sells here in a month or two factoring savings like I mentioned I may have something around the 30K mark to invest.

    I live in Muswellbrook for now but will return home (Brisbane/Ipswich) in about 18 months so would prefer to invest in the south east queensland region for that and since prices are quite low at the moment. You mentioned with 30K capital to invest that could go a long way? Can you give me any suggestions?

    Thank you once again.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Matt

    Ok if you have owned before then hate to say NO you wouldn't get the S/D concession or indeed the Building Grant.

    With $30K it depends on what you are trying to achieve from your purchase / s ?

    If you want to spread it across a couple of purchases then your choice of finance is quite important.

    There are a couple of options to reduce your LMI premium yet maximize your borrowings depending on your repayment ability.

    Limited deposits are a killer for many investor going forward so you need to be creative and inventive going forward.

    Cheers

    Yours in Finanace

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Qlds007 wrote:
    Hi Matt

    Ok if you have owned before then hate to say NO you wouldn't get the S/D concession or indeed the Building Grant.

    With $30K it depends on what you are trying to achieve from your purchase / s ?

    If you want to spread it across a couple of purchases then your choice of finance is quite important.

    There are a couple of options to reduce your LMI premium yet maximize your borrowings depending on your repayment ability.

    Limited deposits are a killer for many investor going forward so you need to be creative and inventive going forward.

    Cheers

    Yours in Finanace

    Thanks for the reply sorry for not getting back sooner I didnt realise there was a new post. I would like to spread it across a couple of purchases. I know my borrowing power is 550-600k so maybe a house around the $250k mark to start and also a unit around the $170k mark.

    ideally I would like to buy and renovate within approx 6 months then sell. My goal is to realise gains in equity through renovations to build up a deposit large enough to buy commercial property which I may develop in some way and then keep long term. Residential property is only something I would like to deal with in the short term (3-4 years). I am interested in the options to reduce LMI?? I am new to the concept but have heard of ways to basically carry over your LMI to another loan? 

    Maybe I should give you a call sometime as I'm in the market for a broker?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Sure Matt drop us a line or call if easier.

    Going back to the numbers what you have to bear in mind is the acquisition costs associated with a Qld purchase.

    With a 30K deposit you certainly aren't going to be buying 2 properties at the same time as the deposit and acqusition costs alone will make a significant dent in your savings.

    We deal with a couple of lenders who might look at a 100% loan but going to depend on a couple of things.

    Hate to say that LMI isn't transferrable.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Qlds007 wrote:
    Sure Matt drop us a line or call if easier.

    Going back to the numbers what you have to bear in mind is the acquisition costs associated with a Qld purchase.

    With a 30K deposit you certainly aren't going to be buying 2 properties at the same time as the deposit and acqusition costs alone will make a significant dent in your savings.

    We deal with a couple of lenders who might look at a 100% loan but going to depend on a couple of things.

    Hate to say that LMI isn't transferrable.

    Cheers

    Yours in Finance

    Thanks mate Ill give you a call once i find a buyer for my land. I will probably scale back to just the 1 for now anyway. Our work is downsizing so whilst I have my job now I'm actively seeking other employment with the possibility of a pay cut, one would be ok for now. I'm just a little impatient haha. I'm intrigued about the 100% loans?

Viewing 7 posts - 1 through 7 (of 7 total)

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