All Topics / Help Needed! / Advice please

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of SlaatsSlaats
    Participant
    @slaats
    Join Date: 2014
    Post Count: 2

    Hello my name is chris, im 20 and currently looking to purchase my first house. Right now i have 2 choices i have a little 1 bedroom unit less then 100 meters from toowoomba cbd for an asking price of 190k. The second option is a 3 bedroom house on a 1000 square meter block afew minutes from the uni for an asking price of 300k. I've been to see a mortgage broker and have been pre approved for a loan of up to 600k so finance for either property shouldnt be a problem. I will be living in the property for the first 12 months to recieve the free stamp duty thanks to being a first home buyer then will be looking to rent it out. Also as i am currently earning a substantial amount of money thanks to the gas industry and i am also looking to get a second property within the next year to also rent out in the toowoomba area, also with a max value of 300k what would you suggest in the way of finance. As in should i pump all my money into my first property for greater equity or save the cash for a second deposit? What would be ur recommendations or suggestions on which type of first property i should look more seriously into and how i should go about acquiring my second property hopefully within a year. Also is there any pitfalls or traps i should be weary of investing at such a young age? any advice or comments would be greatly appreciated thank you.

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Go for the land its a no brainer. Its a massive piece of block that lends itself for future development (if not short term).

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
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    Residential and Commercial Brokerage

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Land – 300k home. 

    As long as your focused about paying extra in the first 1-3 years you can really knock the long term payout down

    Also since you only get one stamp duty exemption you might as well get it on a higher value property. Although that shouldn't be your main reason for choosing a more expensive property.

    And yes you should put your money into a offset account set up against your first property because as you said you might only be there 6 months. So you want to keep the highest amount of debt on that property in case in becomes a rental prop. 

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Another vote for the house. There's more scope to add value in the future. There's not a whole lot that can be done with a one bedroom unit.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Mark CoburnMark Coburn
    Participant
    @mark-coburn
    Join Date: 2006
    Post Count: 181

    Questions:

    What is the yield for each? (the unit should be higher than the house)

    What is the vacancy rate in the area? (houses & units)

    What is the capital growth rate for houses and for units likely to be over the nest 3, 5, 10 years?

    How old are they?

    How depreciation are you likely to be able to claim?

    My hunch is three one bedroom units are going to out perform a three bedroom house, or at least they should in theory. I would prefer three rents over just one, especially if I was just starting out. Way less risk!

    Mark Coburn | Coburn & Co - Investment Advisors & Buyer's Agents
    http://coburnandco.com.au
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    |Ph: 0405 243 547 | Property Investment Advisors |Mortgage Brokers|

    Profile photo of Escal8Escal8
    Member
    @escal8
    Join Date: 2011
    Post Count: 8

    Hi Chris, congratulations for being in a position to purchase your first place at 20. I purchased my first place at 20 as well, albeit it was only a house on 500sqm. If I could go back in time, I would take the land as others have mentioned, greater room to add value. But as Mark has mentioned, do a little more research first to get a fair comparison.

    Profile photo of jayhinrichsjayhinrichs
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    @jayhinrichs
    Join Date: 2011
    Post Count: 1,177

    whow… impressed most 20 year olds in the US  buying a home is not even on their radar. they are worried about pay for student loans… Do you AUSSIES have to pay for College and or do you get it financed…  I bought my first home at 19 in Milpitas CA… But I was raised in a Real Estate family and the house was 60k back in the day.. So 6k down and 500 a month.. But made a pile on it in 2 short years and never looked back.

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    Land is what increases in value and building s decrease in value over time.

    As long as you can Tennant the house and land then that would be my option for the reasons mentioned above.

    Also would advise going interest only with an offset rather than pumping the extra funds into the first property. That way you keep your options open.

    Well done, sounds like you are in a great position to create potential wealth. 

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
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    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi Chris,

       Let me echo what so many have already said !!   First, welcome – you have come to a good place.   Take notice of the helpful suggestions, and you will be blown away by what you can achieve.   It is great to see one so young, yet knowledgeable enough to know when they don't know enough…. smiley

      The answers are all here – and yes, +1 for the land option from me – it gives you so many more advantages. 

      Take special note re Offset accounts (there are several recent posts re these).  They are the best thing since sliced bread.   Seek specific advice from the experts (those whose signatures and replies show they know what they are talking about).   I'm sure many of them would jump at the chance to assist you with your first purchase.  

      Well done – go for it !!

    Benny

    Profile photo of Cherie16Cherie16
    Participant
    @cherie16
    Join Date: 2011
    Post Count: 3

    Hi Chris

    The best property for you to purchase is the one that will provide you with the best outcome, in the shortest time for the least pain!  Before you buy a property you need to understand how you expect the property to make money for you – are you planning to buy and hold and rely on capital growth or do you plan to renovate/sub-divide (with the Kearneys Spring) property to make a profit from the investment.

    Are you buying the property as an investment or somewhere to live – all these things impact on which property will best meet your need.  

    I would suggest that you develop an investment strategy before you purchase (ie know why your buying it, how you expect it to make a profit for you, how much profit you want to make, in what time frame, how you will manage and ultimately sell it!).

    Also do you know the median prices for properties in each area you are looking at and the median rental you could expect?  Do you due diligence – buying is the easy part being sure you have invested wisely takes time!

    Cheers Cherie

    Profile photo of mattstamattsta
    Participant
    @mattsta
    Join Date: 2011
    Post Count: 604

    If I were you, I'd buy the house and land. The value of land goes up much faster than buildngs. My first investment property included both house and land.

    Profile photo of Mark CoburnMark Coburn
    Participant
    @mark-coburn
    Join Date: 2006
    Post Count: 181
    Cherie16 wrote:
    Hi Chris

    The best property for you to purchase is the one that will provide you with the best outcome, in the shortest time for the least pain!  Before you buy a property you need to understand how you expect the property to make money for you – are you planning to buy and hold and rely on capital growth or do you plan to renovate/sub-divide (with the Kearneys Spring) property to make a profit from the investment.

    Are you buying the property as an investment or somewhere to live – all these things impact on which property will best meet your need.  

    I would suggest that you develop an investment strategy before you purchase (ie know why your buying it, how you expect it to make a profit for you, how much profit you want to make, in what time frame, how you will manage and ultimately sell it!).

    Also do you know the median prices for properties in each area you are looking at and the median rental you could expect?  Do you due diligence – buying is the easy part being sure you have invested wisely takes time!

    Cheers Cherie

    Chris, 

    Cherie is spot on with her advice, to say that strategy is 75% of what it take to be a successful investor is an understatement. The right property IS important, but the right strategy is MORE important. It is the strategy that will determine what you buy, where buy, how much you borrow and when or if you ever sell. I spend 50% of my time talking to clients about strategy, this is the first subject to master in the property investing process. I am happy to talk to you want to speak further about strategy.

    Mark Coburn | Coburn & Co - Investment Advisors & Buyer's Agents
    http://coburnandco.com.au
    Email Me | Phone Me

    |Ph: 0405 243 547 | Property Investment Advisors |Mortgage Brokers|

    Profile photo of Escal8Escal8
    Member
    @escal8
    Join Date: 2011
    Post Count: 8
    jayhinrichs wrote:
    whow… impressed most 20 year olds in the US  buying a home is not even on their radar. they are worried about pay for student loans… Do you AUSSIES have to pay for College and or do you get it financed…  I bought my first home at 19 in Milpitas CA… But I was raised in a Real Estate family and the house was 60k back in the day.. So 6k down and 500 a month.. But made a pile on it in 2 short years and never looked back.

    Not many 20 year olds buy houses here either, preferring to travel or spend money in other areas until we settle down. There's no college here only university which is financed to citizens at 0% interest, with the debt amount only raising with inflation. Then we pay it back once we're working, but only if we're earning more than $51,309/year.

    I love the responses in this thread! Had I made a thread like this a few years ago it would've saved me quite a bit of money and missed opportunities.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,850

    why settle for one or the other?

    The flat suits your lifestyle today, the land for the future.

    Between them they’re $500k, you can use the fhog to most effect on the flat which will have the least interest and be non-deductible until you move out.

    The house will generate an income and can be used to support the loan.

    If you buy both, you’ve started investing and will have your own place.

    Consider the returns and whether you can afford to take up 2 loans.

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