First Purchase - IP

Hi All,

I'm new here and would like some helpful tips on buying an apartment as an investment.

Had a few inspection today at blacktown, liverpool and merrylands apartments both with and without existing tenants living in it.

first question, do you think these suburbs are a good buy, both rent and/or capital growth?
atm i'm only looking for rental return, simply because of my affordability to go into high capitla growth area. from my point of view, they are a good suburb to buy especially blacktown, but i need a second opinion/advice to prepare me mentally for the worse to come ><.

second question, i'm a first property buyer, so am i exempt from stamp duty eventhough i will buy as an investment? if not, do i need to come up with the stamp duty cost in cash or can i add that cost to my loan? .... i know i should probably ask my broker about this but i am too excited to wait till monday and have been doing my heading all day, and i cant enjoy watching the world cup:p

Third question, NSW market especially western, north west and south west area, do you think now is the right timing to buy?
just curious to know, any respond won't change my mind to buy in the next few weeks, just want to know the general market performance.

thats all for now, will post again when i got more questions..:)

Thanks in advance for any replies and nice to meet all of you :D
 
First time buyers must occupy the premises for a continual period of six months in order to qualify for the stamp duty exemption. You can read more here :
http://www.osr.nsw.gov.au/benefits/first_home/general/fhplus/

Stamp duty, solicitor's fees, etc., qualify as "purchasing costs". While not a tax deduction they are taken into account whenever you come to sell. As a first time buyer you might find it hard to convince a bank to lend you the money for all these extra fees. Lending conditions have tightened since the GFC.

Having a tenant already in the property is great, it saves having a void period when you first move in, however, if you want the stamp duty exemption maybe you should consider living in your unit for the required six months first, then letting it out.

Have a look at sold prices in the areas, including in the buildings you are thinking about buying in. Look at sites such as : www.onthehouse.com.au for sold prices. It's free. Also, consider purchasing reports from rpdata, australian property monitors, etc.. www.domain.com.au and www.realestate.com.au provide links to limited free data provided by both these companies. Find out what the property last sold for and when, what is the growth in that time?

Have a look at magazines like Australian Property Investor and Your Investment Property. These magazines provide statistics for suburbs around Australia. You can see quickly what the 12 month change in yield, capital growth, etc., is. These sort of magazines also have articles highlighting specific suburbs.

Work out the rental return or potential yield you will get and what you would have to pay in mortgage costs each month. How much will come out of your own pocket and can you afford that? Talk to your accountant about a variation of your taxable income so you can receive any potential negative gain in your weekly/fortnightly/monthly income to help meet any shortfall.

What are the holding costs of each of the units you looked at? Council rates, strata levies, etc.. Are there lifts to consider or a pool? What sort of condition were the common areas in? How close was the nearest train station, supermarket and kebab shop?

Do any of the units needs work before being let out again? Or will work be required between an existing tenancy finishing and the next starting? Do you have the cash to fund this? Don't forget to get a quantity surveyor in to look at whatever property you do purchase (after settlement).

Although you are excited and very motivated - don't get me wrong, property investing is really exciting! - make sure you do your due diligence. A bit of time spent researching each area will help your confidence with a purchase.

Good luck with your investing.
 
@James_Packer:Thanks for the advice and adding on any considerations that i might have missed.I was only thinking that the stamp duty exemption might be a potential saving for me, i can still afford it but was just wondering whether i can save on few thousands. I was kinda expecting this and am prepared, just needed another opinion. Thanks

I did buy a suburb report from residex to study the prices of that area and it helped me alot. It mainly show properties sold and bought in each street and for how much and a rough indication/prediction for future growth. Reason i asked the performance of NSW market in general was because this report does not give me that information and my interpretation may differ from the experts in here :). www.onthehouse.com.au is new to me did not know that site exist so again thanks :),

Defnitely going to have a look at the magazines you recomended.I have considered the associated costs with maintaining the property eg, strata, levies and any repairs that might be needed so yes, i have some extra fund for that.

Also still can afford the cost of obtaining the property eg, solicitors, valuers, and surveyors but are there anything else i'm missing? I have prepared 5k budget exclusively for this area. Is that enough?





@Jigglypuff: budget is $45k, $30k for deposit and the rest is for the associated costs like stamp duty, solicitors, etc. Property valued at $285,000
 
First home buyers are exempt from paying stamp duty. Stamp duty is generally not just a few thousand, it it generally over $10,000 for a relatively modest purchase.
 
if your holding longterm just about anywhere and anytime is the right time to buy with the right research as long as it pays for itself from day 1:D
 
First home buyers are exempt from paying stamp duty. Stamp duty is generally not just a few thousand, it it generally over $10,000 for a relatively modest purchase.

Yes, i realised that. Calculated it and it was about $9k which is why i leave about $15k to cover the costs.
 
if your holding longterm just about anywhere and anytime is the right time to buy with the right research as long as it pays for itself from day 1:D

yea, simply what i thought when i research and drive around the area for the last few weeeks. So long as it pays itself, i should not be worried plus, not intending to sell it in the next 5 years or so (unless there is a huge economic change happening).

Have been holding off my first property purchase since 2008, regretted big time for not entering during that year ><. that's why i don't wanna wait any longer to enter the market. Better late than never. :p
 
Finally decided to go through with the sale and i have asked the REA what was the lowest price they are willing to sell at, and was actually happy with the price he offered.

The property was put on at 285k and REA said the lowest price the vendor would accept is 280k, which i was about the mark that i was prepared to pay for and asked REA to send the contract for my solicitor to look at.

Just wondering if anyone can give me advice on how to negotiate a lower price than 280k? how should i approach this?
Was it wrong for me to say yes at his given price?
Basically, i did not make any offer and kept on haggling on the price to be cheaper than 280k?
Is this the correct way? or should i just offered a lower price from the start?
I felt that the price could be lower but unfortunately, i dont know how to haggle on property :(, as everytime i asked for a lower price, he simply said no ><.

This is going to be my first property and i need help on how to get the best out of it. At the moment, i am actually willing and happy to pay 280k but a saving of a few thousands would be great.

The avg price for the area is around 285k.

Please help :)
 
Sorry to say HCL, that you cannot become a skilled negotiator overnight or from a few tips you pick up on a forum here. You need to read some good books on the subject, practice lots of times, pick up some tips to incorporate into your skillset, practice with those etc.

At this point in the (non)negotiations, if the property is worth $280K, just go ahead and buy it. It is unlikely that you'll be skilled enough to get much more off now - unless you get a bad building / pest report.

If you practice, and are dilligent, you get better over time. Also you will blow some deals altogether. This is also adding to your skillset - on what not to do which IMO is just as important.
 
So long as it pays itself, i should not be worried

Hi. I do hope you don't think this property is going to pay for itself.
Have you done the figures to work out what it will cost you each week?

Assuming 80% lend you will need around $380 a week rent to be cf neutral. A little less if you self manage.

Don't forget it's not stamp duty exempt if you are not going to live in it.
 
Yea, going ahead with 280k, will exchange contracts tonight, hopefully everything will go well for my first purchase. :D

Now i need some suggestions on property acct in syd, might need some help with tax reporting, especially depreciation.

Thanks in advance :)
 
Top