FHOG vs First Home Saver ???

[Sharpstone888]

Hey all,

I have been inspecting properties over the last 2 weekends (7 properties in total) and I have found one which I would be happy to put an offer on. My partners dad has been very helpful to date. Today he presented me with a newspaper article. http://www.smh.com.au/news/home/bus...rite-home-about/2009/02/28/1235237994241.html

This article talks about the FHOG over inflating prices and prices may stagnate/fall for a few years.
It goes on to talk about how you could use the first home saver and be able to buy in mid 2011 with both partners getting a total of ~$7000 extra from the government (practically giving the higher FHOG in 2 years time).

The FHOG will be taken away (if not june 30, then a bit later). This will drop demand. I've been reading about how unemployment will shake the market and how all the low income earners getting in on the low interest rates will struggle when the rates go back up (this will cause forced sales and prices slump further).

What should I do????? I'm so confused, buy now live in for 6 months (do a reno on it) then rent it out or save for a few years and buy then.

I will be keeping the property long term, no matter what happens over the next few years time will straighten that out, but am I getting into the market a few years early to deal with no growth (probably negative) for years before any good comes of it.....

??????

Cheers,
Chris

 

[Propertunity]

You did not take my last advice - and of course that is your perogative

At the risk of repeating myself:
If you quit reading the newspapers and listening to media stories and the other noise and just:
1. Buy when you can afford to
2. In an area that you like after doing your DD
3. Add value with a cosmetic reno
4. with a view to holding forever
5. refi deposits out of it when the value has increased, with a lender you are OK with and a good IR to buy another IP
6. keep repeating this process

You will end up wealthy.

If you keep looking at what is around you:
GFC, recession, FHBs pushing up the lower quartile, govts extending or not extending grants, unemployment rising, IRs falling, rents increasing, fixed rates rising...............there is so much conflicting evidence you could never make a decision.

Steady as she goes, keep a level head, pounce on opportunities......

(add) stop listening to your partner's 'helpful' Dad.
You don't do what your Mummy says anymore I presume? Time to stand up and be a man. Take responsibility for your own actions - stop being so indecisive - do or do not!

 

[JamesGG]

I really don't like the first home saver accounts. The idea was noble, sure, but damn. That roll-over into super if your circumstances change just kills the deal, IMO.

 

[Sharpstone888]

Ahh, its so hard to not pay attention to all the D&G and the hype in the media. My young mind is being swayed.

Did you read the article what did you think? More hype, more figures, more deception ????

I feel like a child at school who didn't do their homework and now my teacher propertunity is putting me on detention

Ok, buy the house, live in for 6 months (while doing cosmetic value add reno), move out, rent out, draw down equity to fund further purchases.... I need to stay focused

Chris

 

[Sharpstone888]

I really don't like the first home saver accounts. The idea was noble, sure, but damn. That roll-over into super if your circumstances change just kills the deal, IMO.

Thats true, Say the unexpected happens and we both lose our jobs and we can't get finance and then the dam money gets transferred into our super, we don't want that, that would be a disaster!!!!!!!!

Keep going guys, I need the reinforcement to stay focused...

Chris

 

[Propertunity]

Ahh, its so hard to not pay attention to all the D&G and the hype in the media. My young mind is being swayed.

I see your mind is in a state of readiness (Simpsons)

Did you read the article what did you think? More hype, more figures, more deception ????

Yes, mmmm, yes, yes, maybe

I feel like a child at school who didn't do their homework and now my teacher propertunity is putting me on detention

Only do what you feel comfortable with unless you need to get out of your comfort zone and do something even if doing something is deciding to wait.

Cheers Chris.

 

[Sharpstone888]

Ok back onto the helpful Dad again, he keeps talking about townhouses. "you guys can afford a better quality property (building) in a better suburb for the same price and you wont have to do a renovation, just buy a townhouse"

I have always had an aversion to townhouses. I have never looked into them and I don't know the pros or the cons. Please explain the downfalls of buying a newer townhouse in a better suburb than a house (on ~600sqm) prob brick but in need of a reno??? I need some points to counter his townhouse obsession

Chris

 

[Propertunity]

Townhouses work for Rixter - see his posts. I don't do 'em. Others do.

There is no right answer here.

 

[Sharpstone888]

Townhouses work for Rixter - see his posts. I don't do 'em. Others do.

There is no right answer here.

Oh ok, hmm.

The dad knows that its the land that appreicates and that the building depreciates. With that logic wouldn't you buy large land (house 600sqm) and not buy a newer house (more depreciation, like buying a NEW car is not smart financially).

Hmm, sometimes we will just have to agree to disagree

I'll do a search on Rixter aswell

Chris

 

[belleran]

FHSAs seem a great way to force people to save for a deposit. The fact that you can't access the funds is great. The interests rate from the govt and banks are great. I am encouraging my 18 year old to start a FHSA before the end of June as he has about $4,000 he can lock in and from then work towards contributing up to $5000 by the end of the next financial year. He has not yet sorted out what career path he wants to take so in the meantime he is doing something positive towards saving for his first home even if he turns it into an IP after living in it for 6 mths.

 

[Strannik]

FHOG is not going to be removed, if anything it will be reverted back to 7k as it was before

 

[stumunro]

The dad knows that its the land that appreicates and that the building depreciates. With that logic wouldn't you buy large land (house 600sqm) and not buy a newer house (more depreciation, like buying a NEW car is not smart financially).

Instead of listening to 'helpful' dad why don't you buy 'rich dad, poor dad' by richard kyosaki, and if you are that serious about investing - spend some money on your education before your investment.

There are many many different ways of skinning a cat, what you need to decide is what matches your core values as an investor and implement your strategy with everything you do. This way you become specialised and where you will make mistakes on your first purchases (everyone always does) you will get better and better.

Yes land appreciates and buildings depreciate, a townhouse with land content in a good location is almost the best of both worlds, i know I hold one.

There are many pro's and con's. Search for CGA strategy by rixter and this will give you some clue.

If you don't hold much land and your open to development / renovations i'd recommend a house and land in an area where you can afford - as you can create some equity down the track.

 

[stumunro]

I will be keeping the property long term, no matter what happens over the next few years time will straighten that out, but am I getting into the market a few years early to deal with no growth (probably negative) for years before any good comes of it.....

??????

Cheers,
Chris

Here is the risk of being an investor. And you need to fully comprehend what risk is, as there is always an upside and downside.

Yes you do risk low growth in the short term, and by not buying you also risk growth in the short term and buying opportunities at present.

What is the answer? No one can tell you, the experts can't even predict what the affect of low interest rates will have, and within how long.

Your the one that has to sleep with your investment so don't rely on someone else telling you.

 

[Witzl]

Hey Sharpstone,

Like the last few posters have mentioned - the choice between house and land vs Townhouse really comes down to personal preference.
Me personally - i prefer house and land, but do like newer townhouses for their typically higher yeild, lower purchase price and depreciation benefits (as an IP). Really it comes down to you.

In your situation, you need to work out what you are going to do in the future?
Live in this house for a while, or just the minimum 6 months then rent elsewhere and keep building your portfolio?

Stop listening to the excessively helpful dad so much, and make up your own opinion with your partner, based on your future goals, values, plans and accomodation choices (do you want to rent or own)?

FWIW - we currently have 2 IPs, one townhouse and one house + land. Just bought a 2yo townhouse as our PPOR, which will eventually become another IP. We chose a townhouse as a PPOR because it fit our requirements and our budget, in the area we desired. The other important factor is we saw good potential for future CG, and the rental yield is 5% (not bad for a $500K townhouse).
So a townhouse fit our requirements. It might not fit yours however.

Out of interest, what areas have you been looking at, and what sort of budget? (if you dont mind sharing)

 

[Sharpstone888]

.
Out of interest, what areas have you been looking at, and what sort of budget? (if you dont mind sharing)

Sydney's Western Suburbs.
House and land - Blacktown/Marayong
Townhouse - Quakers Hill

Our purchase price would be up to 320K max.
We can't afford house and land in Quakers Hill but can afford a townhouse.

Chris

 

[sparky23]

Please don't wait long things really are getting frantic out there now as you will have been reading on here in posts by people who are 'on the ground', even the media is catching up to it now which means things will become more frantic. If you get stuck in too much analysis paralysis prices will be heading back up and you will be getting less bang for your buck!

 

[Sharpstone888]

I'm trying to move as fast as possible.

My partner is due for a big payrise (like last week), she needs a letter from her boss to sort of tell the bank that this is her new pay. But the boss is fiddle diddling around and taking ages (idiot). We can only afford the lower prices because I am at uni. But with her payrise we can do it comfortably

Chris