Budget <$200K - Suggestions?

tiger

tiger

Ok I've posted in a few threads here but I want to start my own to ask for advice on my specific situation.

Still living with parents in sydney, 25 years old, self employed for 1.5 years, only one tax return so far, income around 30k before tax.
Partner started a new job this year, only 40k salary.

Want to purchase our first PPOR interstate to live in for a few years before hopefully moving back to Sydney whilst keeping the first home as an IP, then picking up other IP's later.

My earnings will be increasing each year (hard to prove to the banks though) and other half will have to find a job wherever we move.

With all that considered, I cant see our lending capacity being very high (I'll get this checked soon).

I'd love to have 20% saved but since we want to buy within the next year, that is unlikely. It will be more like a 10% deposit leaving us to have to pay LMI unfortunately..

I dont want to over stretch on our first home. In fact, I want something pretty cheap.. 200k or less.

We need/want 3 bedrooms and decent sized yard. Prefer newer brick homes but obviously with our budget we cant be overly picky there.

My partner generally has no trouble finding work, he is very employable and would be happy in a variety of jobs, no need to travel to the city for work so that is not a huge factor in buying a home, besides for CG (though would be happy to have this first home as an income earner once we move out).

I'm open to moving to Vic, SA or even to a lesser extent Tas or QLD.

Vic is our priority and I've looked at these areas with houses in our range:

North Geelong (Corio) - I've read the comments on this area here and i know its undesirable but can it be that bad? Can anyone with knowledge of Sydney compare it to one of our suburbs?

Cranbourne (perhaps slightly over 200k here)

Gippsland/Latrobe Valley - nowhere near Melb i know. Will this place ever grow or will it always remain small town? I was looking at Moe and Sale areas.
The turn off here are the coal power plants and flooding?

Im yet to really look at the other states though couldnt find much in this price range in Tas or Bris and not alot in SA either.

We dont want a unit as we have pets. Townhouse could probably be acceptable but since it will become an IP eventually, a house may be preferable?

I'd love some ideas from anyone here about areas with potential which currently have houses in this price range.

Thanks all
 
Why not buy an ip for its CG potential and then rent where you would prefer to live? This would make buying an apartment or unit in a better area possible. Have you done the numbers on PPOR versus ip?
 
Not really as our borrowing capacity is unknown at this point. Im actually nervous about it because I know with only one tax return, most banks wont look at me for a loan other than low doc and Im not keen on that.

Where we want to live, rent is $400/week.. just seems unaffordable along with having another property.
 
Tiger, I can share my knowledge on Gippsland with you having lived in Traralgon for 10 years.
I would look at Traralgon or Morwell ahead of Moe,Sale they have far better facilities & options for employment.
There is various streams for work from Trades to office/admin. What type of work are you looking for?

You will be still in touch with the big smoke from down Gippsland having anywhere from 1Hr to 1.5Hr drive down the hwy to Melb.

Don't be concerned with the Power station as it has no effect when living in town or the surrounding areas. As for the floods the recent events in East Gippsland were very hard on the locals but also very rare!!! I never seen such occurrence living in Traralgon in my time nor here of any property damage.

There is a great deal of new housing estates popping up in Traralgon over recent years, this has resulted in the est housing market producing some good buys as people move to flash new homes. You will get something very respectable for $200K

I have no facts or figures on CG or rent yields (when the time comes) for this area I would suggest as always to do your DD.

Good luck with the decision making

Al:)
 
Tiger, do you expect to want the same type of property now as you will in 5 years? In any case, who knows how your plans will change? You might find your dream job in another city, another country.

If you want to buy property, stick to IPs for now. What I want now at 30 is very different to what I wanted at 25.
Alex
 
We definitely want a house to live in together now, we've been waiting a long time :)
Really dont want to rent although I am very aware of the buy IP and rent your PPOR option, but renting in Sydney really is a waste of money in my opinion.

Yes we will want the same type of property in 5 years - a large semi rural property in far south west sydney. I have no desire to live near the city or even the beach (not in sydney anyway). Would prefer a huge block of land with a big house, thats def the aim. Right now looking at 600k for something like that, so those plans have to wait, hence the goal of buying cheap now and enjoying some time living together.

Big Al - why do you say that about the power plants? I've done my research and its quite proven that living in the vicinity of coal power plants is a major health hazard, many studies showing that life expectancy is shorter.
http://www.ornl.gov/info/ornlreview/rev26-34/text/colmain.html
http://www.greenpeace.org/international/photosvideos/photos/pollutioncoalplantthailand
http://www.truthout.org/cgi-bin/artman/exec/view.cgi/67/24498

My guess is thats one of the reasons houses are still so cheap in Morwell.
I'll have to look into it more though as that area will definitely be a goer otherwise.

Any comments on Bendigo?

Looking in a magazine this month, Broken Hill, NSW is experiencing major growth and median price is still under 90k. Anyone with experience there?
 
G'day Tiger, have some historical growth patterns for some of the areas mentioned...you may find interesting.

Corio: Median House Price 1994: $75,500..........2004 MHP: $155,250........Change of: 106%

Geelong: MHP 1994: $110,000.............2004: $305,500.........175%

Geelong East: 1994: $85,750..............2004: $235,000..........174%

Geelong North: 1994: $77,000.............2004: $215,000.......179%

Geelong South: 1994: $89,000.....................2004: $255,000......187%

Geelong West: 1994: $81,000.............2004: $243,750......201%

Cranbourne: 1994: $92,500...............2004: $203,000.........119%

Moe: 1994: $65,000.........................2004: $110,000.........69%

Sale: 1994: $80,500.........................2004: $182,000........126%

Traralgon: 1994: $79,000.................2004: $170,000........115%

Morwell: 1994: $56,000...................2004: $109,250........95%

Bendigo: 1994: $84,000...................2004: $200,000.......138%

Ballarat: 1994: $75,000....................2004: $190,000........153%

Some areas around Bendigo:

Axedale: 1994 (Less than 10 sales this year) $78,500.......2004: $195,000.........148%

Heathcote: (Not really Bendigo) 1994: $75,000................2004: $157,000.........109%

Harcourt: (Not really Bendigo) 1994: $75,500...................2004: $190,000.........152%

Golden Square: 1994: $85,000............2004: $190,000........124%

Epsom: 1994: $97,000......................2004: $213,000.........120%

Eaglehawk: 1994: $80,000.................2004: $170,000.......112%

Kangaroo Flat: 1994: $95,000...........2004: $205,000.....116%

NB: We have a couple of IP's in Kangaroo Flat, the land of the properties has almost trebled since 2002 and the leverage it has provided has got us 4 more..rental wise; no problems, always quick to rent (6.6% return on townhouse), 7.1% return on house, both due to have rent increases).

Was it you asking about Keilor? Doesn't matter, here they are:

Keilor: 1994: $170,000...................2004: $335,000.........97%

Continue on with another Bendigo area:

Strathfieldsaye: 1994: $115,000............2004: $246,500........114%

Just for fun:

Port Welshpool: (Less than 10 sales) 1994: $62,500......2004: $140,000............124%

Horsham: 1994: $82,500................2004: $155,000.........88%

Camperdown: 1994: $58,000...........2004: $140,000.......141%

Broadford: 1994: $72,000...............2004: $172,500.......140%

Maldon: 1994: $71,200...................2004: $192,500......170%

Portland: 1994: $78,500.................2004: $166,000.......111%

Anything else you fancy, just holler....don't be apprehensive with your finances, borrowing capacity etc....if you were able to sit down and have a good talk with a great Mortgage Broker (the kind that hang around this forum)...likely to be very beneficial and full of interesting information of your possibilities for the future...talking, discussing is good :)
 
Thats what I need, someone trustworthy to talk to. Anyone in Sydney you can recommend?

Thanks for those stats, very interesting and some new areas for me to check out.

What are your thoughts on us waiting to save 20% (could be 2 years+) or just going with a 10% deposit and paying LMI? This would mean we'd be buying mid next year.
If in VIC, we'd be stuck with stamp duty but FHOG is slightly larger but i imagine hardly beneficial due to the stamp duty cost.
 
Lots and lots of good feedback here, all the people throwing in thoughts, questions ideas and questions:) for you...pat yourself on the back for just being here and wanting to do something financially...and thinking and asking at such a tender age when it's oh so easy to have other priorities...

We have done both the no LMI and also paid it, we have built IP's and bought established...it kinda just unravelled (nicely) for us...but everyone is different; you are brainstorming (good!!!:) ) about all kinds of things...you are crossing into relationship, shifting states, finance, routes of finance, structure....just a heap of stuff...my head is spinning for you:)

Pop over to the finance section of Somersoft....I am pretty sure all our Mortgage Brokers hang out there and they have the occasional thread for people searching for MB's in each State (and don't forget sometimes you can do stuff with interstate people too)...hope that doesn't too rude :p

We got started buying IP's with way less $$ wages than you...but we did have saved the 20%...but that doesn't necessarily mean you need that....everyone is different...keep in mind we rent a lovely old farmhouse for $20 per week...so we rent, have no PPOR.

Again our choice, our lifestyle...have a couple more places too:

Mildura: 1994: $95,000...............2004: $184,000...........94% (I can fly to Sydney from Mildura for around $100-120 one way at times-about the same to Melbourne)

Swan Hill: 1994: $85,000............2004: $173,250...........104%

This is all really exciting for you both...you have so many options.
 
Tiger, with a 10% deposit I imagine the LMI is going to be quite small (have a read through the finance section, or ask the question there). If you are expecting prices to go up even just 1-2% per year, then capital gain over 2 years is likely to outweigh the LMI expense.

tiger said:
Thats what I need, someone trustworthy to talk to. Anyone in Sydney you can recommend?

Thanks for those stats, very interesting and some new areas for me to check out.

What are your thoughts on us waiting to save 20% (could be 2 years+) or just going with a 10% deposit and paying LMI? This would mean we'd be buying mid next year.
If in VIC, we'd be stuck with stamp duty but FHOG is slightly larger but i imagine hardly beneficial due to the stamp duty cost.
Click to expand...
 
Thanks s_t and our-obsession. Yes Im VERY grateful for all the advice here, wish I had found this forum earlier! I only started getting really serious about property about a month ago but I've learnt so much in that time, with so much more to go.

Where the heck do you rent a farm house for $20? Does it have internet access?? If so, are there any others like it? :D

Forgot to mention that I work online, run my own business over the internet so all i need to survive is a net connection. The man will need a job, but doesnt have a career so to speak so would settle for an office job, factory work or whatever. Our plan is to get rich (or at least comfortable to start with) from property, so he is happy to get by for now with a "bum" as he calls them :p

I'll have to look up where Mildura and Swan Hill are, not familiar with them.

My head is spinning too. I'm scared to start. Scared to ask about our lending capacity due to my somewhat up and down income and his intention of finding work interstate/out of sydney AFTER we buy the house. I know I could afford a mortgage on my own even with repayments at $1200 or less a month, but the bank wouldn't think that..

Thats what I was thinking s_t - waiting to save 20% might not be wise. Prices could go up considerably before then, then i'd be kicking myself. Might be best just to pay the LMI and get started with all this as soon as possible.
 
Cranbourne has a lot of factories and offices nearby (Dandenong area) - so getting work might be easier (without a long daily haul)?

Has a large shopping centre and station.

Cheers,

The Y-man
 
Tiger, you tell the broker/bank your financial situation as it stands now (or as it will stand at loan application (and possibly settlement) time).

There is no need to tell them what the situation will be after you buy the house (the moving, partner having to get new job, etc). That is info they have no need to know - anyone who has a mortgage can change plans/jobs or move at any time without bank permission!

However, having said that, you need to be satisified that you will be able to service the loan.

If you find and go see a good broker, they will be able to tell you what the LMI would be, how much you'd be able to borrow (current income/employment info) etc. They aren't going to demand you sign up on the spot! ;)


tiger said:
..................
My head is spinning too. I'm scared to start. Scared to ask about our lending capacity due to my somewhat up and down income and his intention of finding work interstate/out of sydney AFTER we buy the house. I know I could afford a mortgage on my own even with repayments at $1200 or less a month, but the bank wouldn't think that..
.................
Click to expand...
 
s_t said:
Tiger, you tell the broker/bank your financial situation as it stands now (or as it will stand at loan application (and possibly settlement) time).

There is no need to tell them what the situation will be after you buy the house (the moving, partner having to get new job, etc). That is info they have no need to know - anyone who has a mortgage can change plans/jobs or move at any time without bank permission!

However, having said that, you need to be satisified that you will be able to service the loan.

If you find and go see a good broker, they will be able to tell you what the LMI would be, how much you'd be able to borrow (current income/employment info) etc. They aren't going to demand you sign up on the spot! ;)
Click to expand...

Yeah I know, I just dont want to be let down.

As for the job thing - I think they'd definitely ask what the employment plans are if we are moving interstate.. seems rather important in terms of being able to pay the mortgage :eek:
Ah well these questions are for the finance forum anyway :D
 
Tiger:
Where the heck do you rent a farm house for $20? Does it have internet access?? If so, are there any others like it?
Click to expand...

We are no doubt at the cheaper end of the spectrum...housing (and there is some, kind of gets snapped up) on farms and in the smaller towns would be between $20 to $150 ish....damn fine houses too, some of them, heating/cooling, plenty of bedrooms, wiiiide open spaces, even the water is coming (house dam to be filled here) so we probably have better water access than most of the town.

We are a little in the black hole for techno...we, personally, are dial up internet...(few of the families around us have put up satellite?) for internet, they recommend it, but most other farmhouses and towns have access to either broadband or the satellite...our mobile phones don't crank up too well here either, but efforts are being made to make services better...and it's only small patches, the majority is good service.

We have good schools, sport, health facilities...(our Doctor just finished a five year contract and have another one moving in in three weeks), plenty of interesting (and determined to survive small towns around), regional cities such as Swan Hill, Horsham, Mildura, Bendigo, Ballarat...plenty of nature to go ga ga at, National Parks...lakes are a little dry :eek: but not all.

Beautiful part of Australia, shall treasure the memories forever.
 
I really really like bendigo. I often work there and have IP's there. But I live in the big smoke of Melbourne. For what you want tiger, there are affordable options in bendigo, reliable internet access..........not much water though.

However one of the reasons I really like Bendigo is that it has trendy things to do and see, you can hang out at Cafe's in View St and go to Art Galleries.......loads of great restaurants and good pubs.........plus it's 1.5 hours drive / 2 hours on the train if you want to go down and get your city fix or go to the footy. The train only costs around $25 return, which for the distance travelled is pretty cheap. New trains are on the line now as well. I take them regularly and it's a nice trip, I can whip out the laptop and get a stack of work done in 2 hours.

Bendigo also has a few great wineries, Balgownie / Waterwheel and the emerging heathcote wine region is nearby.

Here are some that RE.com.au turned up

http://www.realestate.com.au/cgi-bi...eader=&c=52387306&s=vic&snf=rbs&tm=1189162474
http://www.realestate.com.au/cgi-bi...eader=&c=52387306&s=vic&snf=rbs&tm=1189162474


This one is around 3 - 4 km's from the town centre
http://www.realestate.com.au/cgi-bi...eader=&c=52387306&s=vic&snf=rbs&tm=1189162474

This one is also in a good spot, although who knows how much longer the lake will have water in it.
http://www.realestate.com.au/cgi-bi...eader=&c=52387306&s=vic&snf=rbs&tm=1189162474
 
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