Opinions on home buy location

[Zos]

Basically just going through a home loan approval which looks like we should be able to spend around 650k on a home we will live in. Don't want to spend any more than this.

1 dilema I am having is if to buy a larger property in Frankston South, land around 2000sqm. Or buy, in locations like Mentone, Aspendale, Parkdale, Mordialloc or l even Carrum or Patterson lakes.

The big difference is that places like parkdale for thar price you would be looking at townhouses or really small homes.

I like the idea of having big land for the kids to run around on, they love the outdoors. But it is further out and not the best location compared to the other choices.

The main question mark is that there is a possibility we would need to sell in 5 years so if that was the case a little capital gain would be nice. Just not sure which of these home options/locations would perform the best.

Just wondering what people think will rise more in value the larger property in Frankston South or the smaller one closer to CBD.

Can't seem to make up our mind should we chose the nicer property or the nicer location. So the possible capital gain outcome might be the decider.

 

[BayView]

Basically just going through a home loan approval which looks like we should be able to spend around 650k on a home we will live in. Don't want to spend any more than this.

1 dilema I am having is if to buy a larger property in Frankston South, land around 2000sqm. Or buy, in locations like Mentone, Aspendale, Parkdale, Mordialloc or l even Carrum or Patterson lakes.

The big difference is that places like parkdale for thar price you would be looking at townhouses or really small homes.

I like the idea of having big land for the kids to run around on, they love the outdoors. But it is further out and not the best location compared to the other choices.

The main question mark is that there is a possibility we would need to sell in 5 years so if that was the case a little capital gain would be nice. Just not sure which of these home options/locations would perform the best.

Just wondering what people think will rise more in value the larger property in Frankston South or the smaller one closer to CBD.

Can't seem to make up our mind should we chose the nicer property or the nicer location. So the possible capital gain outcome might be the decider.

Mentone and Parkdale are historically more the "blue-chip" picks there.

Our first IP was in Mentone, 200m from the beach. We bought it for the CG, the depreciation and of course rent, but the rent return turned out to be terrible so we had to sell after about 18 months. I'd doubt that townhouse has doubled in value in 10 years by the way, so the CG is not guaranteed - even with "blue-chip".

I like Frangers South, but my reasons are different to most of the universe...I like less people, less/no traffic, more privacy, nice area, but near-ish to stuff.

Also; you get a decent chunk of property for your dollars in Frangers South (in the "North Mt.Eliza" section off Overport rd, nearer the Humphries rd end) compared to the others, so there is a trade-off between potential CG in the future, and value for money today.

You still get the shops, the schools, the beach etc...it is a more sought after area by the folks with higher incomes (especially for school proximity), so I doubt you'd ever go too far wrong in that area over the longer term..

Don't care to be near the City or anything of that attraction...I can see it from my balcony, and it's only an hour up Citylink if I need to go, so that's enough.

 

[Chris B]

Basically just going through a home loan approval which looks like we should be able to spend around 650k on a home we will live in. Don't want to spend any more than this.

1 dilema I am having is if to buy a larger property in Frankston South, land around 2000sqm. Or buy, in locations like Mentone, Aspendale, Parkdale, Mordialloc or l even Carrum or Patterson lakes.

The big difference is that places like parkdale for thar price you would be looking at townhouses or really small homes.

I like the idea of having big land for the kids to run around on, they love the outdoors. But it is further out and not the best location compared to the other choices.

The main question mark is that there is a possibility we would need to sell in 5 years so if that was the case a little capital gain would be nice. Just not sure which of these home options/locations would perform the best.

Just wondering what people think will rise more in value the larger property in Frankston South or the smaller one closer to CBD.

Can't seem to make up our mind should we chose the nicer property or the nicer location. So the possible capital gain outcome might be the decider.

Hi Zos,

Just wondering but why you might need to sell in 5 years? Or more importantly, how likely is this to occur? Would you have any other options if your property price has dropped?

If it is quite likely you will need to sell, you might find you are better off renting (and potentially buying an IP that you won't need to sell or invest in shares which are more liquid and don't have the same purchasing/selling costs).

Purchasing property should be a long term strategy and if you need to sell in 5 years, there is a chance you will have to sell at a loss (or not get much CG).

As an example, if you buy for $650k and need to sell in about 5 years, it will have cost you at least $179k (stamp duty, interest, real estate fees) and there is no guarantee this will be offset by capital gains. This assumes you are starting with $166k to cover a 20% deposit and purchasing costs.

Purchasing costs $36k (unless you are a first home buyer)
Holding costs (conservative estimate of $530k loan at 5%) $130k I/O
Selling costs (conservative estimate of 2% of $650k) $13k

Alternatively, by renting something like this
http://www.realestate.com.au/property-house-vic-frankston+south-413548043 for $600/wk, you would spend $31k on rent p.a. but have the flexibility to move out if your circumstances changed.

If you are going to buy, my priority would be to focus on buying something that you are happy to live in, based on size, location, amenities, etc. With your budget, you probably need to be looking around Bonbeach, Carrum, Seaford for a decent family home and I think that you would probably regret buying a smaller place in Mentone/Parkdale as it will be too small for your family.

 

[Zos]

Well the only reason we would sell is if we had to move OS again but that might not happen. I also don't want to rent and then 5 years later be kicking myself we should have gotten in earlier.

I can understand the holding costs but we should also deduct the rent amount from the holding cost. So 25k pa over 5 years is 125k. So between 125 and 180 we have 55k gap. So over the 5 years you hope a capital gain of 10k per year. I know you have then got costs associated with a home but at least you owe it.

I should also correct myself and say if we did end up moving we could look at renting it out and not selling.

As mentioned do you go with bigger bang for buck now or do you go where potentialy the capital gain might be higher.

I personally like the bigger land option.

 

[mikezen]

Well the only reason we would sell is if we had to move OS again but that might not happen. I also don't want to rent and then 5 years later be kicking myself we should have gotten in earlier.

I can understand the holding costs but we should also deduct the rent amount from the holding cost. So 25k pa over 5 years is 125k. So between 125 and 180 we have 55k gap. So over the 5 years you hope a capital gain of 10k per year. I know you have then got costs associated with a home but at least you owe it.

I should also correct myself and say if we did end up moving we could look at renting it out and not selling.

As mentioned do you go with bigger bang for buck now or do you go where potentialy the capital gain might be higher.

I personally like the bigger land option.

I would stop thinking about it and just buy, not many people these days buy a house and then regret it in 5 years

Also
Maybe a option is to rent it out if circumstances change in the future and benefit from tax dedications and recognise cg from long term hold

 

[Zos]

I would stop thinking about it and just buy, not many people these days buy a house and then regret it in 5 years

Also
Maybe a option is to rent it out if circumstances change in the future and benefit from tax dedications and recognise cg from long term hold

I think so. Spoke with my mortgage broker and all looks good. So the search begins!