Discussion in 'Real Estate' started by Zman, 14th Jan, 2008.
I know there are pros and cons but can anyone say which one is better than the other?
I'm only a newbie to this web-site, but I think you might need to provide a bit more info so that the clever people here can give you some points to consider.
Are you buying to invest or to live in?
What price range are you considering - deposit amount?
Im buying to live in so i can get the first home buyers grant. Once i have achieved that i might turn it into a IP and buy another PPOR. I was looking arround the 400-500 mark and can afford about 150k for the deposit.
With stamp duty in NSW i believe that any property under 500k is stamp duty exempt and any above you pay the stamp duty on the amount above 500k. Does that sound correct?
I think you are correct with your stamp duty assumptions. This web-site has a good stamp duty calculator:
Calculators: Stamp duty - moneymanager.com.au
Crazy 22.49% stamp duty above the $500k lol
yup - just a lazy $18K if you are not a first home buyer on a $500K property. When I bought my house in Canberra, they introduced Stamp Duty Concessions 6 weeks later, which meant that I would have saved nearly $10K in these fees - but you can't control those kind of things.
Ouch that would have hurt the hip pocket
yeah well it was already factored into my costs, and you can't predict everything. I heard similar stories of people that missed out on the First Home Owners Grant by a couple of weeks when it was first introduced - at least I got that assistance.
I hope you get some good feedback on your original question. I will keep an eye on the replies. Cheers.
Between $500k and $600k it scales in, over $600k you pay standard rates.
Have a look on the second page for the rate...
That's if you only buy a $600K property and have to pay the same stamp duty as the rest of us
You are correct- concessions apply up to $500K and you also get the benefit of the $7K grant. Back in my days of first home ownership (geez now I'm sounding like an oldie!!) there were $0 concessions or grants... then again properties were also comparatively cheaper than today as well.
As far as units vs houses go, the answer is.... it depends
Where are you looking?
Looking in the St George area. Primarily Kogarah/Rockdale/Hurstville.
Hey again Zman
I don't know southside at all but I'm sure others on here do. I do have a colleague who recently purchased there late last year for around the $220K mark for a 2bed unit so they're in your price range.
Current medians for units in these suburbs and cg rates for last 10 yrs:
Rockdale $325K 7.19%
Hurstville $357K 7.14%
Kogarah $303K 6.99%
Best of luck with it all
Ive just bought a brand new apartment in rockdale on a 5.5% yield... There is two tears though, the old 30 yr buildings (mainly on the west/bexley side) and the newish apartments (and houses) are on the east side
The stock at the moment isnt really high and things (espically in rockdale) are really just sitting there with not much movement. I didnt look as far south as Hurstville but there seems to be more stock (particularly units)
I don't know your area well but my general philosophy is buy something with as much land value as possible. This doesn't necessarily negate units because if you have a 6-pack of units sitting on a $million dollar block of dirt then each unit has one-sixth of the land value. Of course the downside with these for investment is possibly the lack of depreciation benefits etc which are better with the newer smaller units in massive developments, but with the lesser land value.
A house with land is great if you can afford it but if you're thinking of investment income you might get 2 units for the price of 1 house ?
If you intend to move out of it and turn it into an IP borrow as much as possible and put the cash in an offset account - so when you move out you still have a large loan against which to claim interest deductions
Just my thoughts (after moving out of 2 properties that became rentals and mucking up my loan structuring !)
Cheers and good luck
If your intention is to convert it to an IP I would go for a house.
On the other hand, even when you take into account the strata fees your out of pocket component will be smaller for a unit and you are likely to have less maintenance issues.
One thing to check before you get too attached to a unit - is finance.
Depending on the location and size of the unit, you may not be able to get good LVRs from the banks ... in some high density areas with a lot of units (eg inner city), and for very small units (less than 50m2), banks are often unwilling to lend much.
Larger units in less dense areas should be okay - but always check your finance options with your broker/lender first!
I can probably only need to borrow at most 50% for a unit as i have about 150k and my parents might gift me 50k for my first home.
Why would you do that ?
Are you planning on buying any more property in the future ? Are you anticipating this property may ever become an IP ?
I would suggest you get the largest IO loan possible (need to balance LMI costs against higher LVR) ... and make sure it has a 100% offset account. Then deposit any surplus cash you have into that account to minimise your interest costs.
If you then subsequently move out of the property and turn it into an IP, the entire loan amount becomes deductible (well, the interest does anyway).
Alternatively, if you want to buy other investments while still living there - rather than using the cash from the offset account, you could set up a split loan facility (basically just split your home loan into two separate accounts - most banks will do this) ... pay one facility off completely with the cash from the offset account, then redraw the money from the loan for investment purposes - the interest on that part of the loan is now deductible. It is important to keep the two loans separate though!
Just some suggestions!
Finance is probably the most important part of investing in my opinion ... it is worth spending the time to explore all your options and learn how to get the most out of what you have. Get a good mortgage broker too!
Yes after 6-12 months i will probably turn it into a IP. As you can see i have to do alot more reading before buying one i think
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