Help me make life decisions ;)

[Compleks]

Evening all.
I seem to return here whenever I can't make up my mind. There's a wealth of information and experience on this board, and I like to tap into that when faced with a dilemma.

Background info.
Bought my first IP a little over a year ago for about $275k in Bendigo.
Have about $40k equity in that property
Saved another $50k for next property
Still living at home
Time to move out

Dilemma.
Not really, but having a hard time making up my mind.
Initially I thought I would buy a place for myself. I want to live in St Kilda, so I was looking at small (tiny) 1br apartments.
I've spent nearly 6 months searching for something I like, but haven't had much luck. I was looking at older apartments in smaller blocks, with car space and preferably a courtyard, internal of 40sqm+, with a budget of $350k MAX.
Probably not the most realistic goal, but I was happy to buy something a little run down and add value, keeping available the option to rent it back out in the future.

6 months passed and I'm re-evaluating my plan.

Plan A -
Stick to the plan above.
This is the only property lately that has interested me:
http://www.realestate.com.au/property-apartment-vic-st+kilda-115956067
It's not ideal, but with some work it has potential to make a nice little (temporary) 'home'. Or I could add some value and rent it back out for $300+ p/w.

Plan B -
Bite the bullet and rent in St Kilda (which would be in a share house). Then look at buying a property a little further out from St kilda, maybe where I could afford a 2br apartment or even a town house. I haven't done the research yet into other areas as I have been pretty determined to buy in st kilda, but I'm looking at all options now.

Summary
So. From an investment point of view I imagine plan B is the better option. However owning my own place and being able to work on it and make it my own home also has strong appeal. However this will mean I won't be able to purchase another IP for a while either. But with my budget and desired location I might be out of my league anyway.

Goals?
Buy and hold. Capital Gains. No long term exit strategy? as yet.
Something affordable that won't cost me much each week, as my weekly budget would be fairly tight.

Thanks.
Sorry for the long rant, but I find it helps putting things down in writing.
As always I would absolutely love to hear any advice, comments, criticism. I know you can't make decisions for me, but I do gain a lot of perspective hearing from everyone here.

Peace

 

[Singo]

You want to buy a 40sqm place and live there? How long you reckon it will be your PPOR? What happens if you want a bigger place or get married? In my opinion, a 40sqm place is not an investment.

 

[mikezen]

and being able to work on it and make it my own home also has strong appeal. However this will mean I won't be able to purchase another IP for a while either.

Peace

Is this the main driver? Buying more ips? If it is then just bite the bullet and buy in a suburb further out, w land content and greater value add potential, I lived in st kilda for years, all you will do there is go out and get plastered every night spend all ur money, pick up a Backpacker, like I did haha woooo it's was so much fun lol

 

[citystar]

If you absolutely have to live in St Kilda I'd recommend you rent there for a while and wait until you can negotiate a good deal on an apartment over 50sqm. 50sqm seems to be the golden number when it comes to dealing with the banks who can make life more difficult asking for a lower LVR amount which in turn means you need to put more money into the deal. The reason is under 50sqm can take much longer to sell which increases the risk to the bank. I'd focus on apartments over 65sqm if possible because they are much easier to rent being more spacious. This is essential if you want to buy, hold and rent for the long term.

 

[Compleks]

You want to buy a 40sqm place and live there? How long you reckon it will be your PPOR? What happens if you want a bigger place or get married? In my opinion, a 40sqm place is not an investment.

Sorry, 50sqm would be ideal. I haven't been able to find anything this big within my budget, hence why I'm now looking at other options.
Living in anything sub 50sqm would be a temporary arrangement. Maybe 5 years max before renting it back out.
However the issues with these smaller places is making me reconsider.

Is this the main driver? Buying more ips? If it is then just bite the bullet and buy in a suburb further out, w land content and greater value add potential, I lived in st kilda for years, all you will do there is go out and get plastered every night spend all ur money, pick up a Backpacker, like I did haha woooo it's was so much fun lol

Haha. Buying IP's is not my main driver, however I would like to make a few good decisions now that will hopefully put me in a decent/comfortable/secure position further down the track.
I don't drink, but do dabble in backpackers

If you absolutely have to live in St Kilda I'd recommend you rent there for a while and wait until you can negotiate a good deal on an apartment over 50sqm...

Thanks Citystar.
If I rent, my ability to save will be cut significantly. Which would make buying anything 50sqm+ in st kilda next to impossible. Which is fine, because then I would be looking strictly at an investment and St Kilda would be less of a priority.

 

[speary]

Renting may not affect your ability to save. For example, without knowing rents in Melbourne etc

If you borrow $350k at 5.5% - the interest is $19,250
plus you own the property so you have council rates strata etc

If you rent at $350 per week (x52) = $18,200

So, renting could actually be a better option in terms of saving in the future.

 

[Aaron_C]

Living in a share house while investing sounds like a good idea

 

[Compleks]

Living in a share house while investing sounds like a good idea

It's looking that way, thanks.

 

[JacM]

It can be tricky to get finance on a place that is less than 50sqm.

Another option is live with your parents a little longer and save save save. If you could stump up the deposit on a 2 bedder (ie in St Kilda), you could rent out the spare bedroom until such time that you could afford to boot your lodger out and live there by yourself.