Buying a Home You Don't Overly Like for Some Reason (Good Deal, Get into Suburb, Proximity to Schools/Shops/Transport, etc)

isthisreallife22 on 18/04/2018 - 13:03
Last edited 18/04/2018 - 14:09 by 1 other user

With the ridiculous prices of property now, I feel that those of us who are not fortunate to have had an existing property double in price have to make more compromises than positive choices. Personally, as an ozbargainer, I'm finding that very difficult.

Does anyone have any experience/thoughts on where they are most willing to compromise, e.g.:

  • Getting into a suburb in the area you want to live in is most important, regardless of whether the house is any good
  • Being nearby hubs e.g. transport, shops, schools is most important, regardless of the suburb
  • The house itself (condition, amenities, floor plan) is the most important

I know it's not a binary decision and everyone will have different preferences, but it's clear we can't have it all, so wondering what most people consider to be the "normal" trade offs you make

Home & Garden

Comments

    • isthisreallife22 on 18/04/2018 - 16:39

      Thanks, good feedback

    • stirlo on 18/04/2018 - 22:54
      +1

      This, the worst house in the best street is always a good buy, as finances improve you can renovate/extend and you won’t have to uproot yourself or incur stamp duty expenses that you would if you sold and moved

  • AutomationGuy on 18/04/2018 - 17:39
    +1

    Proximity to friends / hobbies, outside sounds / sights / smells (so not next to busy road, smelly creek, buzzing high voltage etc), floor plan that lends itself to renovating, area that will suit the renovated value, suitable construction type (I.e. not abspestos)

    Mine is slightly different because I’m specifically looking for places that are worn out and have never been maintained, because I don’t have a big deposit and looking for a property I can easily add value to (ie convert space to more bedroom, make open plan etc) so I can then redraw on the improved value to finish the renovation to the level I want.

    I’m young and single so the whole living in a construction site isn’t a big deal, drive to work that is in the areas I’m looking at so transport doesn’t matter (except for future saleability / rentability).

  • Jackson on 18/04/2018 - 19:22
    +2

    In order

    1. Get into a place quickly, dont spend too long looking. 6 months is more than enough. If you really cant afford to buy where you want to live then rent there and buy somewhere else
    2. If you have kids the place has to be big enough and have a decent school if you arent shelling for private school.
    3. Linked to 2, some more affluent areas you cant go wrong with schools, other cheaper areas you have to do your research
    4. Dont mind buying a worse property in the better area and learn to work on it. Short of termites in wood a property can be fixed cheaply if you do your homework and put in the hard yakka. Work on the easy to do but physically laborious stuff like demolition yourself, and get a professional to do more difficult finishes like tiling
    5. Dont be afraid to spend as much as you can afford, if you end up selling later the income is tax free and could be significant (property is expected to double in Syd every 7 to 10 years)
    • isthisreallife22 on 18/04/2018 - 21:08

      Thanks… interesting it's often #5 that my OZB brain fights against

      • Jackson on 19/04/2018 - 06:55

        Everything on Oz is a liability, so avoiding depreciation buy buy cheap is important. Property is not and they are more unique and therefor less compareable than say 2 galaxy s8s. As such paying more usually bags you a better property. This in turn translates to a higher yield come sale time

    • daleyboy79 on 19/04/2018 - 14:10
      +1

      on #5 … any increases in value for a property you live in should never be factored into your "investment/how much am i worth" calculations, you have to live somewhere, and everywhere else will have increased as well … unless of course you are planning to move to a much cheaper area and/or make a significant downgrade when you eventually sell

      • Jackson on 19/04/2018 - 16:32

        You hit the nail on the head, you have to live somewhere, but you can always downsize e.g. when your kids fly the coup. Someone downsizing from a 2M property has more options than someone downsizing from a 1M property. You can always pull money out via a reverse mortgage and then spend it before you die and still live there. This is why politicians are currently debating whether this is a significant tax loophole and if it should be capped.

    • freakatronic on 19/04/2018 - 20:36

      Number 4 These days fixer-upper houses are priced as though their renovations are already completed. Houses with backyards are priced as though a second house is already built in the available space.

      • Jackson on 19/04/2018 - 23:48

        I know it can feel like that, but in reality you are overestimating the development cost or underestimating the amount of money to be made in property development. There is a killing to be made in property development and the larger the development the higher thr margin to offset the risk.

    • virhlpool on 20/04/2018 - 00:56

      Dont be afraid to spend as much as you can afford, if you end up selling later the income is tax free and could be significant (property is expected to double in Syd every 7 to 10 years)

      Do your own math to validate feasibility before believing random talk that people do. Price doubling EVERY 8 years on average will mean 4 times the current price in 16-18 years from now. Do you really think that today's $1m house of Sydney will be worth $4m in 16-18 years and median price will be somewhere around $3.2m-$3.5m? Give me a break! How optimistic can people be that they lose the rational sense completely.

      • Jackson on 20/04/2018 - 08:05

        And yes while they are doing their own maths they should be looking at the historical data which is what these numbers are based on. My parents bought their last house 30 years ago and paid 100k, its now worth 1M. By the 7~10 year rule on 2016 it should have been worth roughly between 1M and 2.0M so its inside the range of what it should be. Do the maths across most properties in Sydney and you will find it is in the ball park, some in the recent boom doubked in 6 years.

        The bigger problem we have at the moment is that people are too scared or dont have enough knowledge or think they cant afford to get into the market, and spend way too much on crap and holidays that is non-appreciating expenditure/not an investment before taking the plunge on an invesmtment compared to people who grew up in previous generations.

        • virhlpool on 20/04/2018 - 08:32
          +1

          Keeping every other argument aside, I simply say that current median house price in Sydney is say at least 15 times the average household income (after tax, yearly) which is already very abnormal by global standards especially when we don't have any land constraint as a country.

          It is simply impossible that in 16-18 yrs it will be say 50 times of average household income. Sure, income grows as well but not as fast as housing price so I took 50 times instead of 60 times. Even educated people speak rubbish at times. Past trends don't reflect future as the base and price to income ratios were never the same in the past and nor were adjacent situations around housing (debt system, economy, global conditions, etc).

        • Jackson on 20/04/2018 - 18:11

          @virhlpool: no one is arguing that Sydney is an expensive city, and cities are not the same and therefore not all are comparable, but it compares well with NY and London and many other wealthy caoitals that dont have a lot of market regulation. In respect to those its perfectly in line. And why are they so expensive? Because people would rather live there and complain about it than live elsewhere. And this is exactly the reason its expensive and the reason it will always be unless more regulation is put in place, which according to both current govts isnt gping to happem any time soon. Evem labours cap on neg gearing is pissweak and will mske little difference in the lomg term

  • buckster on 18/04/2018 - 21:02
    +2

    What state do you live in?

    Location should always be key, if you have a young child you want it to be in an area with a suitable school, and not too stressful with your commute if possible

    Land size might be next, you can always expand or renovate the house eventually, but you need enough room on the plot to do it.

  • GourmetFoodie on 18/04/2018 - 22:04

    Location absolutely #1. Safe affluent suburb and house walking distance to train, shops, schools.
    Bid your max +10%.
    No regrets.

  • CricNix on 18/04/2018 - 23:41

    Unfortunately for a situation I am in, I cannot choose at all as someone rightly said,"Beggars can't choose". I am just trying to get into the market by getting something so that I at least save rent over the next few years. Fortunately enough, I have found a unit close to station, school and mall. Not so close to the city though. So my advise would be to compromise on everything for now and just enter into the market. Rest can be sorted out later in the coming years.

  • jjjaar on 19/04/2018 - 07:57
    +1

    You and other posters keep saying house. Can you compromise on this? Can it be an apartment, unit, or townhouse?

    • IMadeYouReadThis on 19/04/2018 - 08:19

      You and other posters keep saying house. Can you compromise on this? Can it be an apartment, unit, or townhouse?

      Exactly! This is what we did when we realised that we can't afford house.

      • isthisreallife22 on 19/04/2018 - 10:12

        Just some more details:

        • Already own a house in the burbs for last 10 years
        • But renting in a great apartment for last 4 years (have a tenant in our house)
        • Baby has just got too big need to move somewhere bigger
        • So looking for our next house and sell our existing house
        • Unfortunately due to poor capital gains of our existing house while we've been renting, the market has run away from us a bit

        We love apartment living, but it's time to move on

  • bighead on 19/04/2018 - 08:28
    +1

    I'm in a similar position. Found a property in a nice area. Shops, schools, nice neighborhood, but the place is by the main busy road and very small to suit my family. Still can't decide to go with it or not. Been looking for a 8 months now. Compromise space for location?

    • isthisreallife22 on 19/04/2018 - 09:13
      +3

      It's tough isn't it. And the houses in good areas that are just a "little bit better" e.g. not on the main road, maybe a slightly better floorplan or yard, often go for double the price. It's like the market has driven the base price for a "decent" abode to +50% what the actual affordable price is

      • sj2can on 19/04/2018 - 18:50

        For us, we decided to stayed off the main road on the idea that it will only get more busy over the next 40 years or so. That being said, there wasn't much of a price difference in our area, just helped narrow down choices.

  • pandabear on 19/04/2018 - 09:07
    +1

    We went right up to our max and stretched a bit more 5 years ago and bought a house in Bayside Melbourne. The house itself is a 1950s unrennovated California Bungalow, very liveable but not in a fantastic condition. Loved the location - 800m from beach and train station with good surrounding schools. Our house has gone up more than 60% since we bought it. Now we are planning a 200k Reno to fix it up. Had we not bit the bullet and bought 5 years ago we would never be able to afford to buy the house today based on its current market value.

    • isthisreallife22 on 19/04/2018 - 09:14

      Congratulations. I hate you ;) j/k

    • isthisreallife22 on 19/04/2018 - 09:27
      +1

      I bought my first home for in 2008. Right now it's worth ~15% more. Great condition, great floorplan, 3 bedroom house in Brisbane… just inexplicably the areas has had zero growth (increase of 15% in TEN YEARS)

      Now trying to move into a better area and realised all the houses in the areas I really want to live have doubled or more in the same time. So a less nice place in a better area that I could have picked up 100%+ more

      • pandabear on 19/04/2018 - 09:37
        +2

        Thanks! We sacrificed a lot back then too. We saved really hard for our house and didn’t go on holidays when all our friends went travelling to Europe, didn’t have a car for 3 years and went to the Vic Market to buy our food every week etc. But I do think a good strategy would be to buy in the best area you can afford, compromise on the house and then upgrade the house at a later date when you can save up a bit more money. You can’t change the location but you can change the house. Also if you bought somewhere not so ideal and later wanted to change location, you would lose money from the sale of your house and the purchase of the new house (agent commission, purchase costs like legal fees, bank fees and stamp duty etc.)

    • KLoNe on 19/04/2018 - 15:57
      +2

      I'm sure OP appreciates the humble brag.

      • pandabear on 19/04/2018 - 17:55
        +1

        I’m simply contributing to OPs post with the facts of our situation. Is it wrong to feel proud of something that we worked extremely hard to achieve? I can tell you that it did not come easily nor was it handed to us. We worked at it every single day with blood sweat and tears.

        • khomeini on 20/04/2018 - 08:55

          Good for you Lemon and well done on your hard work and perseverance in home ownership. A little pride isn't bad.

          However I'm sure most of us here would probably also say they worked hard to get where they are; and I'm pretty sure they also went through the blood, sweat and tears too.

          I know a few people who work much harder than I who because of being either uprooted from their home countries or due to lack of education levels struggle and put in much more blood, sweat and tears than most others and still are in the rent trap and may well be till their kids are able to sustain them from their benefits of education and combined income.

          We should always feel blessed and lucky to be in a position where we're at due to our opportunities.

        • pandabear on 20/04/2018 - 09:54
          +2

          @khomeini:
          I agree with you and I totally understand the struggles that some people face as I saw it first hand growing up. My parents were immigrants and moved to Australia in their early 30s with nothing to their name. They gave up their university degrees as it’s not recognized here and started working multiple jobs in the factory during the day as well as washing dishes in restaurants at night. My Dad was in a serious accident whilst riding his bike to work one day due to pure exhaustion. But fast forward to today my parents are doing extremely well with multiple properties and a substantial share portfolio to their name. I came to Australia in grade 5 and didn’t speak a word of English. My parents taught me everything I know about hard work and perseverance. I credit my money mangement skills and work ethic entirely on seeing how my parents lived growing up. This is why I truly believe that Australia is a land of opportunities and you can achieve your goals if you’re willing to make sacrifices and work hard for it every day.

        • khomeini on 20/04/2018 - 10:56

          Thank you for your excellent response and well done to your parents and yourself. Hard work does pay off…most times. I'm glad you're of that thinking as most others would not be. Adieu

  • Laninchris on 19/04/2018 - 09:19

    My Dad always said buy the worst house in the best street.
    Basically get the absolute best location you can- as long as it’s structurally sound/has good bones you can always fix it, renovate or build up as money comes to hand. As far as having kids goes, we initially believed that proximity to schools mattered but we don’t now because, our kids go to a ‘budget’ private school (it’s a suburban Christian school- not Hale or Aquila’s! We chose it for the ethics and school community as much as for the course selection) and they have specialist school buses that service about a 50km radius.
    We bought 5 acres about 10mins drive from the nearest Coles/Woolies and shopping centres.
    Unfortunately, we still only have ADSL1 (no laughing, peanut gallery!), can only use Telstra for mobiles (no other providers give us reception inside the house), can’t get mains gas or water, and there is no local public bus service within 4km of our house.
    But on the flip side the surrounding houses are owned by hard working families- no renters in sight, we have trees to climb, semi-tame magpies to feed, the kids have pet alpacas, all of the properties are connected by quiet roads or bridle trails, and we have the sweetest freshest water- our family actually comes and fills water containers up each week.
    We thought we’d be sacrificing a lot to live out here, but in the long run, taking a walk each evening with our now-4 year old and letting him ride his bike with training wheels (because there aren’t any hoons out here), or kicking the footy with our 14yr old in our front yard (half oval) outweighs our shitty internet and lack of buses.
    Besides- being further from shops means I spend less money (and Coles and Woolies deliver out here now :))

    • Euphemistic on 19/04/2018 - 10:58
      +2

      ditch the training wheels and get him a balance bike!

    • h4zey on 19/04/2018 - 11:33

      which suburb?

      • Laninchris on 26/04/2018 - 10:24

        Oakford, WA :)
        Sorry about the late reply- I’m new and only just noticed the notification LOL!

    • Blitzfx on 19/04/2018 - 16:11
      +1

      I think I can agree with this. Materials and labour cost to upgrade your home aren't going to go up in price as fast as the land the house is sitting on will.

  • Seraphin7 on 19/04/2018 - 11:25
    +1

    I've got to say I don't necessarily agree with the assumption in your post … namely that everyone who was "fortunate to have had an existing property double in price" didn't have to make compromises on their original purchase.

    I'm one of the people in that boat and when I purchased my place 12 years ago, I can assure you that compromises were necessary in that purchase.

    No place is ever going to be "perfect" even in a definition of that word that is reasonable in one's own personal circumstances. Maybe one place has a better kitchen than the other, but then again the other one has bigger bedrooms, etc., etc.

    You can only determine what will give you best bang for your buck considering your own preferences (mine was proximity and access to the CBD) and go from there. In a practical sense, determine maybe the three things that are most important to you and then find the best place you can buy against those three things with the budget you have and accept that there will be other things that you will need to forego.

    • isthisreallife22 on 19/04/2018 - 11:43

      Thanks for advice. Certainly didnt intend to suggest that people did not make compromise when they bought (it doesnt read that way to me actually), more that, the only people who now seem to be able to buy into a normal house in this market are those who've already had a place that doubled in price.

      I made plenty of compromise in my purchase 10 years ago (mainly location), and those compromises sadly have led to a house that only increased in value 15% in 10 years so if I felt out of the market for the better locations 10 years ago, I'm actually now even further away than I was 10 years ago.

      Consider this… imagine you were buying your current house right now (i.e. the one you compromised to buy 12 years ago), but you were in the position you were in 12 years ago (i.e. you didnt already have a house that had doubled in price). Would you be able to buy this compromised house today, or would you find the compromises you now need to make completely untenable?

      • Seraphin7 on 19/04/2018 - 15:41

        No worries. I must say I just get a bit sensitive on the notion (I'll accept this was not your intention) that those who have managed to purchase their own place somehow "had it easier" than those looking to purchase now.

        I'll just say that both my parents ("first home purchasers" from the mid-70's) and myself had to make compromises to buy our places and had to struggle for periods to meet the financial requirements.

        From a purely mathematical perspective the rates of growth I've enjoyed have been less than the rates of growth my parents have enjoyed.

        Our properties are comparable and have been of roughly the same value over the time I've owned mine.

        I'll therefore put the differential down to the very high growth in property prices that occurred through the '90s primarily due to banking deregulation and the associated increase in the availability of credit.

        Would I be able to fund my place today if I was 12 years younger? I'll never know. But what I do know is that property prices in our major cities have be rising for a long time and that they've always required compromises for all but the wealthiest.

        • stirlo on 19/04/2018 - 17:03
          +3

          “that those who have managed to purchase their own place somehow "had it easier" than those looking to purchase now.”

          By definition you did. Wage growth over the last 12 years has been at record lows and house prices have doubled. If you were 12 years younger and buying today you’d find you were earning about the same but had to spend twice as much for the house and pay more for basically everything except for consumer electronics and maybe flights.

  • MetaphorOZB on 19/04/2018 - 12:22

    Personally, I compromised just a little in all three areas and bought a house that was affordable and that I could live in for 20+ years. This way I can pay my mortgage off sooner and then wind back my working hours - that is more important to me than having the nicest possible house I can afford.

  • TheOtherLeft on 19/04/2018 - 12:48

    When we were looking a few years ago, we ended up becoming "economic refugees" in Sydney. We had a small unit in the Sydney Eastern Suburbs but needed a bigger place due to our toddler tearing up the place and needing something with a backyard. Over the months we had to look further west to find something in our price range as the property prices were going ballistic. We still had the requirements of house/duplex, minimum 3 bedrooms, garage, walking distance (<1km) to a train station and a relatively safe suburb. We ended up finding a suitable duplex in between my family and my wife's family so can't really complain. We still miss living 10min from the beach though. It will be our long term home (15-20 yrs or so) until we win lotto.

    • KLoNe on 19/04/2018 - 15:59

      You should start a blog about train stations.

    • kev98 on 19/04/2018 - 16:20

      What suburb

  • Allan Thomas on 19/04/2018 - 14:47

    A large percentage of the value of residential real estate is the land value. An old saying was to buy the worst house in the street and, conversely, never buy the best house in the street.You can improve the house!

  • idonotknowwhy on 19/04/2018 - 15:46
    +2

    Just rent in an area you like man. Land title is not going to be useful when the zombies arrive!

  • MessyG on 19/04/2018 - 19:55

    I think a lot of people forget these days that your first house is your first house, and not your last house. Expecting it to be the size you want, in the suburb you want, with all the fittings you want, as a first home, is setting your expectations way too high. If you can't afford in the suburb you want, go over it's boundary road, if you can't afford there, go over the next boundary road and keep doing it until you can afford what you want, or, drop the size of the house you want, or both. Of course you have to compromise for your first home, it's your first home! I highly recommend listening to The Property Couch podcast, it will help you place your expectations in a way that is affordable. I'm in my first home, it's a bit too small, it's over a couple of boundary roads, but I have a backyard and the median price of the suburb has jumped a hundred k in the year and a half since we've been here. Take the emotion out of this as much as you can, compromise until you can afford - don't get suckered into beautiful fittings, think about your land value and what that's likely to do over a decade. Try to remove your east/west/north/south bias as well, that really helps.

    • mlcn on 20/04/2018 - 11:06

      So, spend ten years in a dirty, small, old house, paying out the mortgage, and thank everyone for such wonderful opportunity, because "I own my house with my own back yard"? I wouldn't do this

      • MessyG on 20/04/2018 - 12:31

        You don't have to thank anyone, and you can renovate the house in that time, and at the end of that time, decide whether to sell and have more freedom of choice, or stay in the place you worked so hard on. This idea of your first home being everything you want in one go is foreign to me.

  • Ceilingcat on 20/04/2018 - 01:12

    i think i'm just going to end up renting for the rest of my life =(

  • Tejas57 on 20/04/2018 - 05:49
    +1

    When I first got onto the property ladder I got on at the bottom - I brought in Logan in Brisbane. Not Ideal for me given where I was working at the time (CBD) but through sacrifices and multiple moves i'm now living in a pretty good suburb (Centenary area).

    Too many people want the big house straight off the bat forgetting it's a property ladder - you start at the bottom and work up to your ideal house.

  • MoonlapseVertigo on 20/04/2018 - 08:01
    -1

    we purchased our first place in a gentrified area of south western sydney (we both work in Sydney CBD) and our commute is 1.5 hours each way (3 hrs per day). It's a duplex with tiny rooms but this is the sacrifice. 5 years on and we are looking at a larger home in the hills after making 48% capital growth in that time.

    Buy a small house in an OK area first……then upgrade. That's the game!

  • jamball on 20/04/2018 - 08:24

    I am lucky that my migrant parents bought into Indooroopilly when a 3 bedroom and 2 bathroom house on it's on piece of land was $295k in 2002. I can't afford to ever buy property but I can afford to build a granny flat on their piece of land, which can be subdivided too.

  • giventofly on 20/04/2018 - 10:24

    We did this, moved from a 2 bedroom unit to a 3 bedroom house with 2 on a block. Ugly home needing a renovation but the structure is solid.

    It's much bigger, although not big enough, but we are comfortable there. It sold cheap in a good spot and needs work but if I ever lost my job it wouldn't be an issue because our mortgage is small.

    We've made it our own, painted myself and did the floorboards which saved a ton of money. So we compromised on having everything finished and not having to renovate but we have our own place.

    When we are up to it we'll renovate the kitchen and bathrooms and it'll be like new.

  • GuessHowMuch on 20/04/2018 - 13:24

    Suburb and proximity to transport is most important.

    Bought a home I had no feelings for and on a smaller plot than desired. It was plain and boring, but met the basic requirements of 3 bedroom, small backyard. Being so plain, it was easy to turn it into something we love.

    We are a short walk from trains, 5 min drive from shopping and lifestyle hubs, and not overstretched.

    Good luck!

  • Levathian on 20/04/2018 - 15:44

    Absolutely for me it's access. I will refuse to buy into a place which is only accessible by car.

  • Trying2SaveABuck on 20/04/2018 - 18:30
    +1

    I'd take the worst house in the best suburb over the best house in the worst suburb any day (assuming land size is the same)

  • [Deactivated] on 20/04/2018 - 18:38
    +1

    Buy a house in Bali, marry a local chick and live like a King.

  • nowindex on 20/04/2018 - 22:56

    We were in a similar situation as you. Apartment living was too cramped for growing kids, so we started looking for a house.

    We were pretty set on which suburbs as determined by agreeable work commuting time and secondly, school catchment.

    I would compromise on the size/layout of the house as well as the age of last Reno/stylishness to maximize on desirable location and lot size. The lot size and location should be a large factor in future value increase.

    Buy at the top of your price range, but realize that houses are money pits. Inspections can't find everything, so expect to have to spend a bit more correcting any minor problems.

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