Are we crazy?

OK, so our finance will be sorted one way or another. Now we have a choice of buying in Adelaide and renting it out or, buying a PPOR in Port Augusta. At the moment our rent in Port Augusta in highly subsidised due to hubby's employment. If we were to buy here we have to live in it - you can't have nice cheap rent and own an IP within 40km - government rules!
So the obvious answer is to buy an IP in Adelaide and try to do basic reno and then rent it out whilst taking advantage of the cheap rent here in Port Augusta.
BUT... as this is our first purchase, and as we are reno novices, we'd love to buy here, live in the proeprty and take our time with the reno. We will then turn it into an IP when we move back to the city - probably 12 months away.
Would we be crazy to do this? I think it would be less stress for our first purchase...we could take our time and not have to worry about managing an IP and tenants so soon.
I know you should only look at the figures and not get emotionally involved. When we look at the figures, cash flow for us is best with an Adelaide IP purchase...plus capital appreciation should be better in a capital city. But the learning curve will not be as steep if we buy a PPOR here in Port Augusta and we will be able to take out time with the reno (only paint, floor, maybe new kitchen etc.. but we are novices remember).
What do you think we should do? My head says Adelaide but my heart says Port Augusta.
 
Always invest with your head, not your heart.
You can buy a nice PPOR one day. But in the meantime, you can make great CG and live in a subsidised home by buying an IP in Adelaide.
 
Cash flow for us is best with an Adelaide IP purchase...plus capital appreciation should be better in a capital city.

Ladies and gentlemen we have a winner.

But the learning curve will not be as steep if we buy a PPOR here in Port Augusta and we will be able to take out time with the reno

Do the smart thing financially, increase the spread of the learning curve by only doing superficial things like painting first. Then in 12 months time once you're happy with the concept of being a landlord, and back in Adelaide, kick them out and do the rest of the renovation. I imagine the loss in rent from the IP not being completely renovated will be more than covered by your sweet living situation now.

Of course, if doing this means you won't be eligible for the First Home Buyers Grant, then perhaps your heart's view is actually correct. Have you done the math on this? Or are you not eligible for FHBG for one reason or another?

Cheers
Greg
 
Thanks guys... I know you are right. But it just seems like less stress for our first purchase to buy in Port Augusta. But I guess if we can't take the heat, get out of the kitchen right!
I have to admit... shopping around for finance and trying to get all this investing stuff locked into our brains, has us sometimes thinking that planning a big holiday would be much more fun! I guess we have to keep the end goal in mind and try to stay focussed on the bigger picture - retiring early on a fat income!
By the way, we are not eligible for the FHOG....my hubby has owned a property before with an ex, so we don't need to consider this.
Thanks again for your input. Any more votes for Adelaide?
 
I know you are right. But it just seems like less stress for our first purchase to buy in Port Augusta.

We can only offer opinion, it's your choice whether to take it. :)

I have to admit... shopping around for finance and trying to get all this investing stuff locked into our brains, has us sometimes thinking that planning a big holiday would be much more fun!

Yup. How do you feel about working 'till you're 85 though? :)

I guess we have to keep the end goal in mind and try to stay focussed on the bigger picture - retiring early on a fat income!

Now you're thinking!

By the way, we are not eligible for the FHOG....my hubby has owned a property before with an ex, so we don't need to consider this.

Roger. Definitely Adelaide then in my book.

Cheers
Greg
 
I knew about that Rob... I guess we already know what we have to do... but we're scared!!!
Seriously, this is the biggest thing we've ever done and we don't want to make a mistake.
We're stressed!!! BUT we've wanted to do this for years and we keep putting it off.
OK, so we will be landlords for the first time - and we want to manage our own property - not keen on giving away 10% to a useless property manager. And from my experience as a renter, most are. They will not treat our investment as good as we can.
I know there is heaps of info available on here and elsewhere, but what would you recommend we do, learn etc before taking the plunge into becoming landlords?
I can think of the tenancy act. Anything else?
 
Personally I'd go with the capital city. More security of tenant market, cap growth etc.

Also, whilst you want a property that you can do a reno on - doesn't mean it has to be one that is falling apart and needs it done immediately. Get one that is still liveable for tenants now, and when you move back down to Adelaide you can do the big stuff.
 
I knew about that Rob... I guess we already know what we have to do... but we're scared!!!
Seriously, this is the biggest thing we've ever done and we don't want to make a mistake.
We're stressed!!! BUT we've wanted to do this for years and we keep putting it off.
OK, so we will be landlords for the first time - and we want to manage our own property - not keen on giving away 10% to a useless property manager. And from my experience as a renter, most are. They will not treat our investment as good as we can.
I know there is heaps of info available on here and elsewhere, but what would you recommend we do, learn etc before taking the plunge into becoming landlords?
I can think of the tenancy act. Anything else?

I was scared once, too. Scared of heaps of things that I thought could go wrong. Now, when I sign a contract on an IP, my greatest fear is that my lucky pen will run out of ink.
The best way to learn is to get started!
 
You guys have been great. I really appreciate your input. And because it's unbiased, by people who have done it before, I value your comments all the more.

Thanks again!
 
I'm going to vote for Pt Augusta just to offset everyone else :p

I like the place. It groweth lots between every one of my visits to it - about thrice yearly (I visit Adelaide about 8 times a year and Pirie every now and again when I don't want to drive so far). Quite impressive.

Don't like Pirie much though, but there's plenty of really cheap stuff there if you try and block out all the adverts for the lead dust they have on TV 100 times a day ...
 
hi happy,

You have the right attitude and sound like you are on the right track.:D

Here is my little twist on the subject.

Port Augusta is classified as a Regional Town by some Insurers and may restrict you when it comes to lending. Actually I say may....but in reality and in my experience lately, it almost definately will.

Not only now, but later on down the track you may find that your borrowing capability will be restricted to a certain amount.

Insurer's are a bit "touchy" atm, and if you can tick all the boxes and buy in a Metro suburb, you will have a better chance of getting that loan.:)

I hope I have helped.

My view is not biased, just professional.

Regards, JO
 
I found that if the population is over about 1000 there's no issues with the lender and they are complete tighta$ses if the town is smaller and won't go over 60%. Port Augusta is one of the biggest towns in SA.
 
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