Newbie looking for under $170k & a little nervous...

Hello everyone

I’ve stumbled across this forum recently and it’s been very enlightening to read. Everyone is so generous with information and comments. It’s amazing! I’m hoping to get a few pointers towards buying my first investment property, which I need to do asap. My situation is that I have a 12 month pre-approval for a $152 k loan which will be running out soon. I’m a sole parent of a 3 year old and in the wee hours are madly trying to research everything – where to buy, whether to get an oldie in an up and coming location or a newer place, whether to look at capital growth or positive cash flow ... It is really important I make a good decision here as I’m really doing this by the skin of my teeth (pension, low doc and selling stuff for a deposit etc), but I really want to do this and start to set us up for the future – even if we do it a little tough for the next while. I’ve been looking at real estate investing for years and it’s only recently a sympathetic bank manager has enabled me to make it a reality :) So, with pre approval in hand, I bravely go forward...

So, this is my strategy...

Look for something that has potential for capital growth and a reasonable cash flow. Don’t mind a bit of reno work (Have learnt a lot in my house), but with a 3 year old in tow, that is now a little tricky. I would like to buy a house rather than a unit and have been looking at Lower and Upper Hunter Valley, Lake Macquarie, Gunnedah and Orange on real estate.com - something within a few hours drive of the Blue Mountains so I can either live in it for a few months to make it my PPR and then sell it down the track at a profit? Also so I can do or project manage any modest reno’s .

So, would I be better off buying somewhere like Gunnedah or Orange where there are more places in my price range or look at old places, say around Maitland, Cessnock way that need some work?

I was looking at the Qld mining towns in the bowen basin,- wandoan, moura, blackwater but figured it was too far and all the cheaper houses looked like they needed a lot of work and money, so now I’m concentrating close to home. I am thinking of heading off in the campervan for up to a week and check some of these areas out that I mentioned above. I have had a look around Lake Macquarie, particularly Toronto area, but everything under 200k seems to have disappeared from there. So any thoughts on where to buy for up to around $170k? Any comments very much appreciated. Thanks.
 
You talk about "my house" then "live in it for a few months as a PPOR".

You can only have one PPOR at any one time. If you already own a house and it is your PPOR, then if you move into your IP for "a few months" then you will lose the CGT exemption for your first house for that time. And you will only gain CGT exemption on the IP for "the few months" you actually live there - which means there is no advantage and possible disadvantage to you.

If you already have a house then any profit on the IP will be subject to CGT. But don't let that put you off - even on the highest tax rate, so long as you own the asset for over 12 months then you will only ever pay about 25% of the profit in tax. On a lower tax rate you pay even less.

Good luck
Marg
 
I bought a place in Raymond Terrace for $160k last year, my first home. The CG has been a bit slow here but that is also a good reason to buy in a way as it is due for increases. The rental here is quite good though so whatever you buy you should be able to rent it out positively geared if you decide to move on.

There is also everything you need in the town, two supermarkets, two malls, schools, shopping for nearly everything and it's only a 20 minute drive to Newcastle on a main road. It's also a center for the area so you get plenty of people coming through from surrounding districts to do their shopping. It's a quiet and friendly town with all the conveniences you need and only a 1.5 to 2 hour drive to Sydney on a nice highway so check it out. The climate here is good to, the grass green and lush as are the gardens, not like when you head out to inner west NSW where it's dry and desert like and beaches are only 30 minutes away too.

There is a one bedroom place (5th property down for $165k) I see that was recently listed that has lot's of potential since it's on a good sized block and there are a couple of townhouses & units in your price range here: http://www.realestate.com.au/cgi-bi...&cu=fn-rea&id=raymond terrace&t=res&s=nsw&o=p

Also remember you can negotiate so even places for $200k+ might be able to be purchased if you can get the price down.
 
Hi onthebus

I'm sure others will be of much more help than I can , but I would just like to encourage you on your path.

Stories like your always gives me faith in what can be achieved by those 'who' want to achieve.

Good luck and don't let anyone put you off what you want.

I dare say you will run into a few who will have less than flatterning things to say about what your doing or from the position your doing it from, but I would like to say, keep up your good work.
Stuart
 
... something within a few hours drive of the Blue Mountains

What about somewhere closer to home? If you know the area really well bargains can be found much easier, also has its advantages for doing renos.

I noticed a lot of your mentioned towns were "Coal" related towns, any reason why Lithgow isn't mentioned. Could be a good place to start, been flat for about 5 years and is in your price range.

Some of your other towns mentioned are good too, but if it comes down to ease of reno, especially with a 3 year old, then maybe your "backyard" is a great place to start.

Sunshine
 
You talk about "my house" then "live in it for a few months as a PPOR".

You can only have one PPOR at any one time. If you already own a house and it is your PPOR, then if you move into your IP for "a few months" then you will lose the CGT exemption for your first house for that time. And you will only gain CGT exemption on the IP for "the few months" you actually live there - which means there is no advantage and possible disadvantage to you.

If you already have a house then any profit on the IP will be subject to CGT. But don't let that put you off - even on the highest tax rate, so long as you own the asset for over 12 months then you will only ever pay about 25% of the profit in tax. On a lower tax rate you pay even less.

Good luck
Marg

That's not entirely true. He has the option to change his main residence but you are right, he can only have 1 main residence which is eligible for the main residence exemption.

With regards to the CGT on his non-exempt property, if he holds the property for longer than 12 months he will be taxed on 50% of the profit. However, there may be no CGT discount (50% CGT discount) if you're seen to be in the business of renovating properties with the intention on making a profit.
 
That's not entirely true. He has the option to change his main residence but you are right, he can only have 1 main residence which is eligible for the main residence exemption.

With regards to the CGT on his non-exempt property, if he holds the property for longer than 12 months he will be taxed on 50% of the profit. However, there may be no CGT discount (50% CGT discount) if you're seen to be in the business of renovating properties with the intention on making a profit.

you can do 4 with not much implications after that you'll have to be a registered trader and pay normal tax as any other business
 
Have you reconfirmed your pre-approval?
Alot has changed in the past 12 months, and if you were somewhat borderline 12 months ago, the bank may change their mind on their preapproval. Might be worthwhile running the numbers through a mortgage broker again.
Good luck with your search... not sure where best place to buy is. But with a 3 year old, I'd be looking for a buy and forget type of place, rather than a reno.
Pen
 
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