First IP, need advice - Western sydney

[Kokee]

Details :

• Age 28 and single
• salary around 100k
• deposit 120k
• Loan for up to 500K PROP and 700k IP (I got this pre-approval when i had a deposit of 87k - i think if i go for pre-approval again, my loan amount should increase)
• I am single, i'm happy renting a single room near my workplace for a while and don't need a PROR. Thus i wan't to buy an IP.

Preferences for IP :

• Buy a house with enough land, renovate and keep it for long
• build a granny flat and rent out both
• suburb, where it's easy to find tenants (most important)

Need your advise on which suburbs to target : so far i've been looking at Black town, Mt Druit, Rooty Hills etc.

Can you suggest any other suburbs on western side or anywhere else which can meet my preference criteria?

Do you know of any good buyers agent dealing in western suburbs ?

Looking forwards to your ideas

 

[gach2]

pretty much what ive been through over Past few months.

i think its a good idea and can be done (although im not too sure about financing of granny flat)

blacktown seems to be quiet high at the moment (prob wont get too much change from 600k for an average 3/1/1) which has enough room to put a granny flat. Also i think yeild there is a bit lower (due to higher property value)

2770 suburbs (not including mt druitt) seems to have property for just under 400, most of the rent seems to be around 350pw and if you put a new granny flat should be able to get another 300pw. Not a fan as i think the prices in the area are slightly inflated.

st marys area seems to have properties from 350-500k+. some of the 350k are a little undesirable (run down houses on/next to main roads). Though it would give potential to do reno + build granny flat and rental seems to be slightly higher than 2770 suburbs

also may want to look towards penrith (werrington, kingswood etc)

also if you want to stay near blacktown maybe dean park (near marsden park. colebee)
have some good properties which seem to be around the 500k mark

 

[Kokee]

Thanks Gach2 for sharing some figures

Currently looking into these suburbs you've suggested.

Anyone know of a BA who deals into these suburbs as i am delaying the buying process for no reason He/she can help me shortlist the properties meeting my criteria (enough land + Granny flat built + good tenancy)

 

[Shahin_Afarin]

Consider CGT. That is, do you live in it from day one and be automatically up for CGT for do you live in it and then convert into an IP?

Also don't shop around for multiple pre-approval - all you are doing burning your credit file.

 

[Propertunity]

Anyone know of a BA who deals into these suburbs as i am delaying the buying process for no reason He/she can help me shortlist the properties meeting my criteria (enough land + Granny flat built + good tenancy)

I have a BA based in W Sydney precisely for these types of searches. The competition from other intending purchasers is quite strong and you'd need to move quickly or find something pre-market to be in with a chance.

 

[Kokee]

Consider CGT. That is, do you live in it from day one and be automatically up for CGT for do you live in it and then convert into an IP?

what do you reckon ? For the time being i am happy renting a place because :

• single, don't need 3/2 bedder for living
• cheap to rent a single room near workplace
• i hate commute for long hours (travelling to work)

P.S i've heard that if you keep an IP for 1year+, CGT drops to half.
BTW if i make it PROR at later stage and then sell it, will CGT apply to the duration during which it was kept as an IP ?

Also don't shop around for multiple pre-approval - all you are doing burning your credit file.

Got it. BTW i meant, i might ask the same lender to do a pre-approval again considering a higher deposit.

 

[Kokee]

I have a BA based in W Sydney precisely for these types of searches. The competition from other intending purchasers is quite strong and you'd need to move quickly or find something pre-market to be in with a chance.

Can you please share his/her contact details ? Thanks !

 

[knightm]

Can you please share his/her contact details ? Thanks !

Kokee Allan Fox (Aka propertunity) is a very respected, highly successful buyers agent who has some other buyers agents working for(or in partnership with) him.

Every single story I have heard of clients using Propertunity's service has been positive. If you want to buy in Sydney and use a BA you could do far worse than contacting Allan.

 

[Rolf Latham]

Another pre approval with the same lender will still mark your file and in general isn't positive, especially where you are looking at loans with lmi

Ta
Rolf

 

[vaughan]

Kokee Allan Fox (Aka propertunity)...

When I first read this I though you were inferring Allan was a bit, well, Kookee.

 

[Kokee]

Another pre approval with the same lender will still mark your file and in general isn't positive, especially where you are looking at loans with lmi

Ta
Rolf

Thanks Rolf - i better place the money in offset account then ?

 

[Kokee]

Kokee Allan Fox (Aka propertunity) is a very respected, highly successful buyers agent who has some other buyers agents working for(or in partnership with) him.

Every single story I have heard of clients using Propertunity's service has been positive. If you want to buy in Sydney and use a BA you could do far worse than contacting Allan.

Thanks Knight - I'll contact Alan Have heard a lot about him on this forum.

 

[Kokee]

BTW - you guys are into the market for decades and have enormous experience - can you foresee a price drop for properties in near future? I've been hearing these stories or better say myths that market is gonna crash sometime soon - how true that could be ?

 

[Redom]

BTW - you guys are into the market for decades and have enormous experience - can you foresee a price drop for properties in near future? I've been hearing these stories or better say myths that market is gonna crash sometime soon - how true that could be ?

People have been saying that for years! SWS may be in for a slower growth period than the previous few years - but any great 'crash' is unlikely.

 

[Redom]

Thanks Rolf - i better place the money in offset account then ?

The pre-approval is about protecting your 'character' in the eyes of the lenders.

If you apply for multiple pre-approvals, it looks like you've been really active in searching for finance. This generally looks bad and can really hurt your chances of approval.

Best to only get it when used.

The issue of where you park your savings is unrelated to your pre-approval process.

Cheers,
Redom

 

[miss green eyes]

If you apply for multiple pre-approvals, it looks like you've been really active in searching for finance. This generally looks bad and can really hurt your chances of approval.

Best to only get it when used.

Cheers,
Redom

I have heard about this.
So, let's say I need a loan of 265k to get my targeted dream property. I have 2 or 3 credit approvals ranging from 235-250k. And I really need to get the 265k badly or else I won't be able to afford that property. So I go get another 2 or 3 credit approvals. Unfortunately the maximum I can get is 255k.
So I give up on the dream property and go find another property which I can afford for a loan of 255k.
So, when it comes to settlement, do you think the bank which offered the 255k will still give me that, given that I have applied for around 6 pre-approvals?
Or will they pull out?
Or could offers for loans still come in from some, if not all of the 6 banks, but perhaps at a bit less say 200-230k?
Worst of all, could all 6 banks pull out, leaving me unable to get finance full stop?

So, what's the best way to maximise my loan amount then?

TIA

 

[miss green eyes]

To the OP - If it were me, I might consider suburbs closer to the city and centres of employment than Mount Druitt and Rooty Hill.
Parramatta, Auburn, Lidcombe.
Or perhaps invest in an apartment within 10kms of the city.
It seems to me that these areas have had much higher CG than far-flung suburbs.
Disclaimer: I am not an expert or finance whiz. Only saying what I'd do if I were in your position.
Disclaimer 2: Owning an apartment has brought alot of strata headaches, for not much CG (I chose the wrong area). The bitter battles of strata would have been ameliorated if I had gained in substantial CG (which I have not). On hindsight I should have chosen a better suburb for CG or bought a house instead. Easy to say now isn't it.

 

[vaughan]

BTW - you guys are into the market for decades and have enormous experience - can you foresee a price drop for properties in near future? I've been hearing these stories or better say myths that market is gonna crash sometime soon - how true that could be ?

Prices don't necessarily drop. Often they "sag" a bit, then stay flat for several years. Then they start moving again, often suddenly and by a lot: it can get crazy. This is the property cycle that many people talk about.

Western Sydney has been in the "crazy" stage for a while, to the point that people are thinking it'll end soon. Then, if history repeats, prices will sag a little bit then remain flat for a few years, possibly several. If you were hoping to buy, hold a few years and sell for a tidy profit; it might be too late, you're at the top of the cycle.

 

[gach2]

what do you reckon ? For the time being i am happy renting a place because :

• single, don't need 3/2 bedder for living
• cheap to rent a single room near workplace
• i hate commute for long hours (travelling to work)

P.S i've heard that if you keep an IP for 1year+, CGT drops to half.
BTW if i make it PROR at later stage and then sell it, will CGT apply to the duration during which it was kept as an IP ?




Got it. BTW i meant, i might ask the same lender to do a pre-approval again considering a higher deposit.

if you buy and live in it for 6 months (and make it your main residence) you can rent it out for the next 6 yrs, you have it as your main residence so no cgt applies for that period. You may be able to have 2 residences (6 months of no rent may work out a lot better than paying cgt)

yes if you own it for over 12 months as an individual you have 50% off cgt

if you make it your ppor you would only have to pay cgt on the percentage of time it was you ip (and if over 12 mths would recieve 50% off)

 

[Kokee]

if you buy and live in it for 6 months (and make it your main residence) you can rent it out for the next 6 yrs, you have it as your main residence so no cgt applies for that period. You may be able to have 2 residences (6 months of no rent may work out a lot better than paying cgt)

yes if you own it for over 12 months as an individual you have 50% off cgt

if you make it your ppor you would only have to pay cgt on the percentage of time it was you ip (and if over 12 mths would recieve 50% off)

Thanks gach2 - very informative post.
Quick question : while it's your main residence during the 6 years, can one apply for tax benefits via negative gearing ?