Self Occupied or Investment advice please

• 

  ilostnemo on 15/03/2014 - 21:48

  +4

  It's easy
  Do what the wife says.

  Even though, I did it the other way, I'd buy your house first. With your wage, you should be able to borrow big bucks.

  Then 2 years reassess.

  Your 50k deposit is pointless if you have an investment property, as the bigger the deposit the lower your interest costs, the lower the deductions. You want to borrow the full amount, interest only with an investment property

  Good LUck

  • 

    StewBalls on 16/03/2014 - 08:42

    Agreed, good advice.

    I would add, that once you get into your first home you should live fairly thriftily for the first 3-5 years & pour every spare cent you have into reducing the principal (thus, interest burden) during this period where the lender has structured the early regular repayments such that they consist mainly of interest…you will thank yourself very much for doing this rather quickly! :)

  • 

    goguy on 16/03/2014 - 10:03

    Thank You for your prompt reply.

    The reason I'm planning for the investment property is

    1) I can borrow some more money about 40K from a friend which I can give it back after 2 years. The total deposit I would have is 90K. Look for a house with potential growth around 350- 375K with rental yield. No LMI
    2) The current Sydney property market is a sellers market and I would like the prices to stabilize a bit in the areas i want to move in. Everyone around suggests you should wait as the prices would stabilize in the next 2 years.

    Do you still advice to save up money for the next 2 years and then buy rather than using the 90k deposit to enter the market currently with an investment?

    Appreciate your inputs.

  • 

    allyemil on 17/03/2014 - 11:27

    I don't actually get how this works. I always thought, more deposit = lower loan amount, so win - win even if its an investment property.

    Don't mean to hijack the thread, but we are in a similar situation as OP. Have a mortgage on our current place and the place is worth a fair bit more than the actual mortgage amount, so we were thinking of refinancing and use the cash from that to buy a property which would be an investment first (permanent tenant or more likely a holiday let since the plan is to buy something by the water), with the long term plan being to eventually move into it permanently and use our current place as an investment.
    As a result, we were going to put down as much deposit as possible in order to borrow less.

    Should i not do this?

    • 

      mls82 on 18/03/2014 - 19:24

      +1

      Priorities in decreasing order:
      1. Reduce LMI
      2. Maximise percentage of interest costs against investments

      If you were renting and had money in the bank I would tell you to put (ideally) 20% of the property price into a loan to avoid LMI, put a buffer in an offset account and invest the rest elsewhere.

      As you are owner occupying put the minimum that you can in to the investment property (to avoid LMI) and put all of your spare cash into the property that you owner occupy. Whatever money you are paying interest on only becomes tax deductible if it is an investment property, so you want to maximise the proportion of your total loans against your investment property.

      When people say to minimise deposit in to an investment property they're presuming that money is being invested elsewhere. It wouldn't be wise to have money sitting under your mattress even if your only debts were investments (e.g. mortgage on investment property).

      • 

        mini2 on 18/03/2014 - 20:07

        Yeh let's not forget the school of let's borrow to the hilt + IO to maximise your deductions.

        You're paying for it, just that the taxman soften the blows.

        Don't forget most people effective tax rate is only 15-20%…

• 

  ilostnemo on 16/03/2014 - 10:54

  +4

  1st of all, when you say everyone suggest, the house prices will stabilize in the next 2 years, how many of them predicted the GFC, the truth is I don't know, what is going to happen, but everyone from a 3year old to an 80 year old can speculate.

  You need to enter the market ASAP, final.

  If you are using a big deposit, buy your own house, not an investment.

  Borrowing any amount from a friend is stupid, and your friend is stupid as well. 40k from a friend, I hope his crystal ball is finely tuned.

  As far as the bank is concerned, equity and cash in bank is the same thing.

  With a house if you buy today at XXX,000 dollars and the repayments are say $3,000 a month and the property prices go down, you are still paying your $3,000 a month.

  If the prices go up and you have to borrow XXX,000 plus $30,000 you'll be paying $3,000 plus a month.
  When you have your own house, you don't really look at month to month quarter by quarter flunctuations, the only thing I look at is the interest rate as that dictates my repayments.

  I don't think we will experience the growth we did over 2004 - 2009, I hope I'm wrong.

  You also didn't mention your current housing situation, if you are renting atm it's a no brainer, get your own house.

  • 

    goguy on 16/03/2014 - 12:27

    Thank you! SGTM.

    Yes i'm renting right now and would work out to buy a house to live in.

    Also, What do you guys suggest for a live in with unpredictable future for growth with a small family atm.

    1) A unit in an area close to city with 30 mins commute time by train to City where the prices are about mid 600k+
    2) A house with land in a growing suburb and avoid the huge strata fees about 1500 per quarter. The suburb would be less than 50 mins train to central and are in the range of 500 - 550k

    • 

      ygyf on 17/03/2014 - 14:30

      My experience:

      I just bought a 2bed room unit in Hurstville for under 500k including all gov't charge (an old unit but well maintained). I paid 20% deposit and if I'm making 1000p/w repayment, I'll be debt free in 10 yrs.

      Reason why I choose hurstville as my investment - It'll always under lease. My unit is 2min away from station and 4min away from Westfield.

      So my plan is to repay for 5 years and then search for my 2nd unit which I'll live in. With your salary it's easily achievable.

      SO:

      Buy your first property that's very easy to lease, live there for 5 years and get a 2nd property. :)

      The right moment to enter the market is always NOW. Market may stablize for 1, 2, 3yrs, but history told us, property value will always go up! Especially in Sydney, world's 5th most expensive city.

      • 

        goguy on 17/03/2014 - 18:32

        Thanks mate! So you have a investment property and you also pay rent currently?

        Yep i'm looking at a investment property which is close to amenities and transport.

• 

  Geekomatic on 16/03/2014 - 11:45

  Supposedly, a crash has been predicted by a number of financial analysts & inflated property values are going to drop- heavily. This is for 2015-2016, btw. Idk if it's the best time to buy right now, having read this.

  FYI (analysts can be wrong, but if they're right, you'll be holding a huge mortgage on a property of likely half it's value).

  • 

    goguy on 16/03/2014 - 12:33

    Thanks for your suggestion. Thats what I want to avoid :)

    Some of the units in well developed suburbs within 30 - 40 mins train to central are overpriced atm. If I have to buy now, wanted to check if buying a house in a growing suburb is better where I may have the choice of negotiation.

    • 

      jason101 on 16/03/2014 - 12:48

      +2

      Errr - massive population growth, stable developed economy in NSW, massive influx of migrants (HUGE numbers of Chinese coming into the Hills District in preparation for price rises which will come with the rail extension). I work in the property sector in NSW in Sydney/Hills District and Central Coast and I can confirm all areas are currently booming and will continue to boom for the next few years (imho) - if prices rise 10-15% this year and 10-15% the next year and then FALL 10% the year after - you are still way ahead, yet all the naysayers will be claiming they predicted the bust !

      • 

        Geekomatic on 16/03/2014 - 12:56

        I'm interested in investing myself & come from a family of realtors/brokers- which is why I've been researching. I wish I'd kept the articles to post here.

        The prediction isn't 10% loss- it was more like 40-60%…similar in scale to the last financial crisis.

        If the OP is working & saving money, there's no real emergency, atm, to buy. I'd say when the child is school age would be a good time.

        Imho

      • 

        jason101 on 16/03/2014 - 13:15

        +1

        Ok - I respect that, my prediction is 10% per year in the Sydney market so 3-4 years lost = 30-40% greater prices. I must have slept through that last financial crisis - I think our (property) organization had 1-2 flat years, then it was back to boom time.

      • 

        StewBalls on 16/03/2014 - 15:03

        +2

        I must have slept through that last financial crisis - I think our (property) organization had 1-2 flat years, then it was back to boom time.

        I think we all must have slept through it, because I don't recall any losses on my properties during the GFC…in fact it was only the people in the share market & with big bucks tied up in super that did their arse back then. People have been predicting the same nonsense every 2 years for the last 10 years IME…whenever someone points to the egg on their faces they just plead the wookie defence!

        IMHO all of these guys predicting major crashes in Australia are idiots. As you've noted, our economy is much better insulated than the overseas models most of the panic merchants are basing predictions on! As somebody else noted in a previous Chicken Little thread, we tend not to have boom-bust cycles in Australia…more like boom-plateau. ;)

      • 

        p1 ama on 16/03/2014 - 15:15

        Even people who invested heavily in the share market did not lose that much, with the markets having mostly recovered to pre-GFC levels now, looking at the all ords or the ASX indices.

        Though to be honest, if you take into account the opportunity cost of capital, they would be at a loss, but hey, that's volatility and if you invest, you gotta accept it, otherwise just chuck your money in a term deposit or safe bonds.

        To be honest, the biggest losers would have to be those who invested in bonds and stocks of companies who went bankrupt, or investment banks in the US.

        Australian companies more or less remained pretty safe.

      • 

        goguy on 20/03/2014 - 09:39

        The predictions are the rates would stabilize as opposed to the current sky rocket increase every 6 months because of Chinese property demands. So my point is why buy when the rates are high and there's no bargaining power.

  • 

    afoveht on 18/03/2014 - 15:24

    +3

    I can't wait for this crash to happen.

    Even though I'm invested myself and it would hurt me as much as anyone else I otherwise have little hope for my children ever owning their own place.

    The baby boomers and gen-Xs have done well with property but it's to the peril of our kids and grandkids. I think it's time for them to have a chance too. IMO a major correction is necessary for future generation's sake. Unfortunately some will be hurt in the process - I sincerely hope it's not those younger ones who have tried hard to get in on the game we have created.

    • 

      ilostnemo on 18/03/2014 - 16:33

      Supply and demand.

      Fact Australia's population is growing.
      Fact Good land is scarce.
      Fact every crash is followed by a boom.
      Fact Baby boomers and gen x have done well on paper, a lot of these people die leaving the house
      for the next generation to reap all the growth.

      • 

        mini2 on 18/03/2014 - 16:59

        Or the vultures to circle around the estate…

• 

  p1 ama on 16/03/2014 - 14:32

  +7

  Don't listen to anyone who is "predicting" the markets, the problem with seeking investment advice from a place such as OzBargain is that a lot of people here give advice that is borderline on "speculative investing", things such as "oh, invest here, this is going to go up", "invest there, that's going to go up". That is not how you should be investing and anybody who has a financial education (I do) will tell you that in the long run, speculative investing is simply just gambling.

  When you buy a property, you should know what you want to do with it, otherwise you are investing blindly, you either buy a property to sell or you buy a property and keep it to make money from income. If you are buying a property to sell later on, what you want to do is leverage it as MUCH as possible, by minimising your equity stake in the property, you are maximising your return on equity. It is very unlikely that house prices will fall.

  Thus, if you have a million dollars and can buy one million dollar house outright, don't. Instead, buy ten of them with a 10% equity stake in each and the rest funded by debt. On top of that funding by debt allows you tax concessions on debt payments as well.

  When you go on to sell said properties, you will also be given a tax break on the capital gain, as you only need to pay 50% of your marginal tax rate on capital gain as opposed to your full marginal rate on any income.

  However, if you wish to buy a property to live in or to make income off, you are best to fund it with as low debt as possible, because you wish to minimise the amount of interest expense you are paying in order to maximise your income.

  I can probably stay around and discuss, but my suggestion is to talk to someone who actually has a financial education. A lot of people invest blindly in property and even though they think they are making money, they have no idea what their opportunity cost of capital is. If they are making $1000, when they can make $1100 elsewhere with the same amount of risk, then they are not making money, they are, in effect, losing money.

  • 

    goguy on 16/03/2014 - 15:22

    Thank you! Based on your experience what do you suggest with my current situation?

    1. With the 80-90 k deposit I have, invest in a property around 400 K. My intention here is to make money from property appreciation with the current deposit(equity) and use the tax benefits on the interest charged by the bank as I pay lot of tax. The downside is i'm still renting .

    2. Live in property in a growing suburb with the current deposit+some more savings. I wouldn't plan to sell the property for the next 10 years and expect the property price to appreciate.

    • 

      StewBalls on 16/03/2014 - 15:31

      The downside is i'm still renting .

      That's the kicker…how much is your current/proposed rent?

      • 

        goguy on 16/03/2014 - 19:27

        I'm paying 2200 per month

      • 

        ilostnemo on 17/03/2014 - 10:11

        +2

        $2,200 a month rent.

        I know one happy landlord.

        Surely you'd want that $2,200 to be paying off your homeloan.

        You come across as you've already made your mind up, ie you want the investment property. The best thing about an investment property is you have someone paying off your investment or two people helping the taxman and the tenant.

        But having an investment property and yourself being a renter, is robbing peter to pay paul.

      • 

        goguy on 17/03/2014 - 13:28

        Am i not paying the interest to the bank too? I did a calculation for a 600 K property with 20% deposit with the current overpirced market. I'm actually paying 10K more annually than the current rent paid which includes interest ,principal, strata and other fees.

        On top of that the current market prices are overpriced and for me to recover for the extra 60-80K principal would take easily 5-6 years

      • 

        ygyf on 17/03/2014 - 14:35

        but even if you paying 10K more compare to rent.

        What you paid into the loan become your money. what you paid to the landlord become someone else's money.

      • 

        redraoh on 18/03/2014 - 01:45

        +3

        What you paid into the loan become your money.

        A lot of what you pay is actually to the bank in the form of interest. You also have agent fees, transfer fees, maintenance, alterations, rates, insurance, etc.

        If a renter saves and invests their surplus cashflow, they can do just as well if not better than property owners.

      • 

        goguy on 20/03/2014 - 09:44

        Ya I would be better saving more to avoid the interest paid to the bank.

        @YGYF - Agreed but whats the point of paying 10K more. Instead of helping my current owner, i''m helping the bank to grow :)

    • 

      p1 ama on 16/03/2014 - 22:30

      +1

      At the end of the day, you need to sit down and do the maths. That's what a financial advisor will charge you a tidy sum to do :P

      Okay, so currently, the factors you need to take into account are:

      1) Your rent
      2) Interest repayments

      What you should do now is head over to your bank and find a variable rate loan which suits you. Since you intend to keep the property, you should choose an amortising loan (i.e. interest + principle payments) and work out what your monthly repayments will be.

      Then you can work out the two different scenarios:

      1) Loan Income - Loan Expense - Interest Expense
      2) - Interest Expense

      Obviously both situations will be negative.

      So at the end of the day, what you have to ask yourself is, can you loan out your property for a higher rate than with which you can loan out a place to stay? Since you have a family, I would say not so.

      You can probably play around with taxes and stuff like negative gearing and make small profits by going with 1) but you lose the opportunity and comfort of living in your own home.

      It's hard to really invest in property before you have a place to stay, but that's my advice anyway. I'm not a financial advisor, so this isn't my field, though I am university educated in Finance and have studied a bit about property investment.

      • 

        goguy on 17/03/2014 - 13:32

        Ya I did the math and if i'm living in, i'm actually paying 10K than my current rent more annually. This for a 600K property with say 20% deposit.

      • 

        p1 ama on 17/03/2014 - 22:16

        So at the end of the day is the 10K a price you are willing to pay to live in a rental instead of your own home?

      • 

        goguy on 20/03/2014 - 09:47

        I would have to save more to avoid that or reduce that 10K about 15% more than the current 20%. Also I have taken into the account that property prices are hiked up by min 50k and to cover that principal it would take 5 more years :)

• 

  mini2 on 16/03/2014 - 18:57

  +1

  Carlo's a funny situation - you don't buy that place for easy access to transport (i.e. that funny train line for a start..), you simply buy it for Carlo West or Murray Farm intake. Houses were around $800-850k last year, I could close my eyes and buy one all day long for that price then but now you'll be pushing $950k for a 4 bedder near Carlo West intake area (Kingsdene Garden or whatever it's called) and I think certain mixed boundary for Carlo/Murray Farm are now well over $1mil. The horse has bolted in particular the last 6 months.

  I think the 3 bedders apartment within the Carlo West intake area was around 600k…no idea what they're now. It's gonna get a whole lot worse this year I suspect. Rent's pretty cheap in this area though.

  EDIT: 2770/Blacktown/Quakers Hill in general have bolted as well. I was looking around there for sub-200k 3 bedders hopefully brick veneer but now it's all 300k fibro piece of crap. Yield got massively reduced consequent to the price appreciation. Brisvegas is slowly taking off (certain parts are gone too) and Melbourne is about to head that way too. Canberra on the other hand…..seems flat and might stay that way until the Mad Monk has stop this whole doom and gloom down there.

  Just buy whatever you can, rent it out and become a little landlord while you're renting something else. At least you'll own a piece of real estate some day. Oh find a decent mortgage broker, there's multitude of ways to stretch your deposit.

  • 

    goguy on 16/03/2014 - 19:29

    +2

    Quakers hill now all 3 bedder houses are about 480k + :)

    • 

      mini2 on 16/03/2014 - 20:06

      Ouch. Worse than what I was expecting I'll be honest.

• 

  danb on 16/03/2014 - 22:22

  Not sure if you have ever considered a bus to work but from Oakes rd bus stop on the m2, it only takes 30mins to wynyard station. Really good down the m2. Alot of buses and they nearly get a bus lane all the way in and out of the city. So if you are considering living in Carlingford that is definitely an option.

  • 

    goguy on 17/03/2014 - 13:32

    Thanks! How are the unit/house prices in there?

• 

  manno786 on 16/03/2014 - 23:10

  +1

  Hi,
  I am a business analyst and runs my own private practice of for accounting, taxation and financial advise. Just recently moved from melbourne to sydney and have been following the sydney property market for quite a few months. I have a portfolio of propa in melbourne and i was thinking to invest in sydney. Having said that my research says as follows. Please do not hold ke liable as i am in no way posing anyfinancial advice over your financial circumstances as ido not have the clear picture
  1- Sydney is definitely a sellers market. From dec 13 to march14 the market has moved massively, all houses have gone up by 15-20k minimum in inner west
  2- drive in the inner west is not only cuz of influx of chinese investors but its the hype caused by media
  3- interest rates have beens stable for a while but looking at banks prediction policies in the next quarter there is more than likely a chance for it to go up!!
  4- you can save yourself from cgt and yet acceas your FHOG if you wish certain ways to so it so your 50k deposit is actually 70k cuz of 18-20k of stamp duty
  5- the property that interests you are not in inner west and thus the hike wouldnt be massive. If a real estate persona says otherwise do not believe them
  6- give me a call on 0434396270 to disuss you circumstance more. As a fellow OZPAL a free consultation for you anytime

  Goodluck mate :)

  • 

    goguy on 17/03/2014 - 13:34

    Thanks mate! Would definitely use your knowledge . Thanks for the offer!

• 

  nomoneynoproblems on 16/03/2014 - 23:44

  +1

  Making 130k and on Ozbargain..

  • 

    ujwols on 17/03/2014 - 03:45

    +1

    Why not?

  • 

    Windows7forever on 17/03/2014 - 06:02

    +3

    I was thinking the same thing. It made me laugh how he is going to be using his friend as a "bank" to borrow up to 40k. Hope they stay on good terms ;)

    Being frugal and chasing bargains does not only apply to "poor people", it's a mindset or attitude.In fact, they say "the rich" guard their money the most and watch every dollar, they didn't get that way by being loose with their wallets.

    • 

      Thaal Sinestro on 18/03/2014 - 18:52

      I read that about 70% of genuinely rich people are misers.

  • 

    manno786 on 17/03/2014 - 06:55

    +2

    Making $130k a year doesnt make you rich :) not in sydney anyway where you pay an arm and a leg just in property rent :)

  • 

    forever saving on 17/03/2014 - 08:50

    I know.. then again you don't get rich by buying RRP.
    Wish I earned this much.

    • 

      goguy on 17/03/2014 - 13:35

      Hehe as other mentioned, 130k is about 85 K net and with kids you dont have much mate

• 

  lplau on 17/03/2014 - 09:14

  +1

  making $130k doens't make you rich, cuz the government chops you for $40k or so.
  Take home is realisticlly around $90k.

  If you have a kid, and thinking of taking advantage of good public schools in the more posh suburbs, then you'd might want to think about renting and investment. Not sure about Sydney, but with melbourne public schools, you need to live in that suburb for at least 2yrs to be eligible.

  You can still make a good investment for a owner occupied house though. Not sure in Sydney but in Melbourne the rental market is around 3-4% yield, which isn't that lucrative.

  If you are planning to live in a place for the long term, then don't look at the price, as long as you are paying market price at that point in time. The market goes up and down, its a vicious cycle.
  If it drops, then 10yrs later it is bound to go up again.

  If you buy in a good area, then the drop wouldn't be that bad. I remember 2yrs ago, the news papers were saying "ohhhh market is so bad, house prices dropped alot like 100-200k and people's loans are worth more than their house". When I checked the market price for my place, the price dropped only $20k.

  From my investment experience, buying in far places outside 30km from CBD is usually where the risk starts to go up, if the prices drop thats where they start to drop alot more as the further you are away from CBD.

  Feel free to comment on anything I posted which is wrong, since I don't know anything about the Sydney market, and only know about the Melbourne Market.

  • 

    infinite on 17/03/2014 - 11:48

    -3

    No way you lose anything close to $40K if you have an accountant/financial adviser.

    • 

      mlburnian on 17/03/2014 - 21:08

      +4

      please substantiate your claims? If you are not negatively gearing a property, self employed..etc, how do you get out of paying 40K on a 130K salary?

    • 

      manno786 on 18/03/2014 - 04:21

      Lol i am an Accountant and i would agree to OP above but with a slight if to the statement… IF the person earning 130k is a contractor then yes 40k is what an accountant can play with an bring it down to alot less… For paid employees its very less room to move unless you have smart investments put in place … Its the art of managing and not borrowing that makes you rich :) overtime just overkills you … Makig extra money just ensure that your krazy lifestyle gets more krazier with extra influx of dollars :) … Getting rich is a strategy one follows either thru gut/blindly or by making wise choices

      • 

        mlburnian on 19/03/2014 - 22:50

        what smart investments? please dont tell me that negatively gearing a property is a smart investment. Shares get CGT, a 50% discount applies if you hold them for more than 12 months, if you make a loss, you cannot offset it against your income. move money to the cayman islands then?

      • 

        ilostnemo on 20/03/2014 - 12:39

        +1

        Negative gearing is a smart investment especially if you can bring your tax down.

        Unless you are mega rich every home owner has to pay interest, if you have an investment property, it's tax deductable, if its your own home you can't claim it.

        It's all about building wealth. (for the future)

        Who cares if your shares are subject to CGT, you also receive a dividend.

        I think you should remove the blinkers, come over to WA and speak to the miners, the accountants/financial advisers have them receiving money tax time and they are on rockstar wages.

      • 

        mlburnian on 20/03/2014 - 18:45

        I think I will use an accountant next time!

• 

  Apothecary on 17/03/2014 - 09:27

  Another option maybe buying off the plan like I am currently. That way I can lock in current prices and have another two years to save up a bigger deposit and smaller debt.

  • 

    goguy on 17/03/2014 - 13:37

    Thanks mate! I did consider buying off the plan. The prices are hiked up as Chinese prefers buying new properties and the sellers have hiked up by 20%

    Which areas are you looking?

    • 

      Apothecary on 17/03/2014 - 14:02

      +1

      About to sign a contract in Wentworth Point. Being first home buyers we get the First Home Owners Grant and the concession on duty too.

    • 

      ygyf on 17/03/2014 - 14:42

      +1

      off the plan is definitely overpriced. their price is already the price for 2 yrs later.

    • 

      ilostnemo on 18/03/2014 - 10:12

      If you believe your own evidence/claims/facts/fiction, then why are you even considering investing in property. If someone convinced me, that something was overpriced, I wouldn't be rushing into it.

      Perth must be different to every other city, as buying off the plan, is buying wholesale, and many have made a tidy sum of money, selling at completion.

      1 year ago, 2 years ago, 5 years ago etc, I still remember people saying that the houses are all over priced.

      Good Luck OP.

      To post you are 10k poorer a year by continuing your arrangement makes no financial sense. You also posted that it'll take you 5-6 years to make 10%, that also makes no financial sense.

      Don't buy real estate, on your fiqures you'd be crazy to.

  • 

    mini2 on 17/03/2014 - 14:43

    +1

    Hmm…more often than not OTP already added a premium a la what it's worth when construction is completed (and fatten up). If you're happy with it then who's to argue? ;-)

  • 

    mlburnian on 19/03/2014 - 22:52

    to Apothecary, what if the off the plan purchase is worth less in two years time?

    • 

      Apothecary on 19/03/2014 - 23:44

      I need to prepare a bigger deposit as the bank would be offering to lend less. We've already got 20% so we're aiming for 30%
      We're still going to live in it, and knowing the Sydney markets, it'd go up. We're looking for our first home and not really an investment property.

      • 

        goguy on 20/03/2014 - 09:54

        To add to mlburnian question about the property being not worth in 2 years time, other problem if you are considering bank loan and you are in the following situation.

        Construction is completed and bank does an evaluation and finds out that your property values less than 20% than what you paid for. Did you know that you would need further 20% more deposit? 3 of my friends are in that situation now. They are paying LMI inspite of the 20% deposit to cover up for the hiked up prices :)

      • 

        Apothecary on 20/03/2014 - 10:39

        Yep! I've done all my calculations, the 30% takes into account if the property falls 22%.

• 

  MementoMori on 17/03/2014 - 10:40

  Now is probably the WORST time to invest in Western Sydney. The time to buy there was 2 years ago. Don't follow the herd.

  Ask on a proper property forum like Somersoft.

  • 

    goguy on 17/03/2014 - 13:38

    Agreed. Its getting much worse now.

    I hope this thing works out :)

    http://www.dailytelegraph.com.au/news/nsw/fears-chinese-inve…

  • 

    manno786 on 18/03/2014 - 04:16

    Again i wouldnt agree with you … If you have a decent enuff deposit to jump in and jump in quick … Inner west is where you want to be … My areas of the pick would be strathfield homebush concord or burwood…. The range for 2bedrm 2 bathroom is around 480-550 with a rental yield of around 5% which is pretty good cuz then you would have capital gaina to top the icing … Just go for a low strata unit… Off the plans are good if they are 40-50k above the market price because lets not froget they are brand new … You have over 200k off depreciation that you can claim out of it and as an investor u get 5k from government for free :)
    I can keep going on … Outer sydney is where the change is minimal and you can wait another 1-2 yrs where market would bring the prices down a bit … Inner west would def see a drop but would it be comparable to the hike in prices? I do not think so

    • 

      goguy on 20/03/2014 - 09:56

      Off the plan apartments

      Homebush 2 bed - 600K
      Strathfield - 630K

      So they are about 120K+ more than the old properties.

      Buying an old apartment sounds good under 550k but would wait for the prices to stabilize.

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  ashikk on 17/03/2014 - 14:15

  my 2 cents:
  With $600K you can buy two properties (townhouse/unit)in Kingswood,Werrington area in western suburb. One to live in and another to rent out. Currently rent is going for ~$350 a week for 2-3 bedroom unit/townhouses. Good schools (http://www.myschool.edu.au/ResultsInNumbers/Index/74993/Woll…), shopping- ~8 min to penrith westfield or ~2-5 min to st marys village. fast train ~1 hr to city from werrington.
  These suburbs are gem, I wish I had money to buy another one.

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    manno786 on 18/03/2014 - 04:11

    Lol… Houses that far from the city would see capital growth in 30 yrs nothing before that since there is heaps of development plus a vacancy of 5-10% is what you tend to ignore if you are an investor :) goto realestate and do a quick search pf rental properties available in those areas … You would see what i mean

    • 

      ashikk on 18/03/2014 - 10:55

      +1

      Mate..
      I have a townhouse in that area which I bought 5 years ago for 190K, a month ago another townhouse on the same block sold for 310K. capital gain of 120K in 5 years is not good enough for the investment of 190K I donno what is?
      vacancy rate? Those owners are greedy, wanted more for rent that's why they are vacant, make $5-10 less a week and it will fly at the door. mine has never been vacant for more than a week.

      • 

        manno786 on 18/03/2014 - 16:33

        +3

        You are comparing a property you bought five years ago to what you are going to buy in todays market? Anything in sydney market bought pre 2013 has seen significant CG but would it be consistent over the out suburbs to inner suburbs is what i meant … Also as for the vacany rate the reason i mentioned it is … Its different what you can borrow and what you can afford to borrow … Some people might think that investing in property may be okay cuz bank is providing them with the loan amount but what they fail to realise is the fact that the cashflow issues and other discretionery expenses that the bank hasnt taken into account would affect the serviceability of the loan, also would you be able to sustain an interest hike. All of these combined with a higher vacancy rate and you would see a family guy struggling to meet both ends :)z

      • 

        goguy on 20/03/2014 - 10:00

        I agree with ashikk .

        Any future developments planned in this area ashikk ?

      • 

        goguy on 20/03/2014 - 10:02

        As long as there is appreciation in the area, I could afford the off period of no tenants but if you have a place in a good location and close to transport the vacany rate is very minimal IMHO