Preston or Reservoir

Hi guys

My name is Luke. I am a newbie here.

Just wondering if anyone could give me some advice about the better option for my first home. I'm a single professional and my budget is around $400K.
I have two affordable options,
1) OTP apartment in Preston (100m from Preston station)
2) Brand new townhouse in Reservoir ( Close to Plenty road)

I will convert it to IP in 7,8 years when I build up enough equity.
 
Hi guys

My name is Luke. I am a newbie here.

Just wondering if anyone could give me some advice about the better option for my first home. I'm a single professional and my budget is around $400K.
I have two affordable options,
1) OTP apartment in Preston (100m from Preston station)
2) Brand new townhouse in Reservoir ( Close to Plenty road)

I will convert it to IP in 7,8 years when I build up enough equity.

Neither are probably the best options if you're aiming to build equity quickly.

There are other affordable choices in the area that may be better. Plenty Rd is good for uni students but too slow into the CBD. You're better off being near a train.

There are numerous established properties starting from around $300k or less. Something with its own courtyard and good parking might be OK eg
http://www.realestate.com.au/property-unit-vic-reservoir-117135567

At the cheaper end of the market but closer in is http://www.realestate.com.au/property-apartment-vic-preston-117213571 for under $300k or http://www.realestate.com.au/property-unit-vic-preston-117268923 for a bit more

7-8 years is too slow to be considering a second property when it should be doable in 2 or 3 assuming purchase of a good value first property with reasonable growth prospects. It may be better for the first property to be interest only if the intention is for it to be an IP and you want to furiously save up a big deposit for the PPOR. With a big deposit on the PPOR the non-deductible interest payments will be minimised and it may be possible to buy a 3rd property within the original 7-8 year time-frame.

Although if you wanted to speed things up you would probably not be buying a PPOR at all unless it was a cheapie that you could add value to, and just concentrate on buying IPs while renting a PPOR.
 
Neither are probably the best options if you're aiming to build equity quickly.

There are other affordable choices in the area that may be better. Plenty Rd is good for uni students but too slow into the CBD. You're better off being near a train.

There are numerous established properties starting from around $300k or less. Something with its own courtyard and good parking might be OK eg
http://www.realestate.com.au/property-unit-vic-reservoir-117135567

At the cheaper end of the market but closer in is http://www.realestate.com.au/property-apartment-vic-preston-117213571 for under $300k or http://www.realestate.com.au/property-unit-vic-preston-117268923 for a bit more

7-8 years is too slow to be considering a second property when it should be doable in 2 or 3 assuming purchase of a good value first property with reasonable growth prospects. It may be better for the first property to be interest only if the intention is for it to be an IP and you want to furiously save up a big deposit for the PPOR. With a big deposit on the PPOR the non-deductible interest payments will be minimised and it may be possible to buy a 3rd property within the original 7-8 year time-frame.

Although if you wanted to speed things up you would probably not be buying a PPOR at all unless it was a cheapie that you could add value to, and just concentrate on buying IPs while renting a PPOR.

Thank you for your advice, much appreciated. It's very good action plan but I am way too risk averse at this stage. I would like to buy a property to live in for a while. Reservoir can be my first choice as Preston becomes pricey.

I heard Reservoir has a broad mix of good and bad bits. Does anyone know the suburb? Is it possible to get a townhouse (2 bedr) with good location under 420K which is the maximum of my borrowing power + deposit.
 
I heard Reservoir has a broad mix of good and bad bits. Does anyone know the suburb? Is it possible to get a townhouse (2 bedr) with good location under 420K which is the maximum of my borrowing power + deposit.

IMHO, the nicer bits are on the Bundoora/Latrobe Uni side

http://www.realestate.com.au/property-unit-vic-reservoir-113455391
http://www.realestate.com.au/property-house-vic-reservoir-115131679
http://www.realestate.com.au/property-unit-vic-reservoir-116727415
http://www.realestate.com.au/property-unit-vic-reservoir-117059367
http://www.realestate.com.au/property-unit-vic-reservoir-116836995

Personally, I'd pay maybe $100k less and look at Lalor, Epping, Mill Park.

The Y-man
 
Thank you for your advice, much appreciated. It's very good action plan but I am way too risk averse at this stage.

People have a funny attitude to risk, not all of it rational.

Consider what's more financially risky:

Plan 1: Buy own home, pay maybe $2000 per month mortgage with money from your job.

Plan 2: Keep renting but buy same property above as IP. Collect rent. Insure appropriately. Pay mortgage from rent money. Pay several hundred per month for other holding expenses.


Plan 1, of living in your own home and getting a mortgage to do so, is thought conventional and safe. But if you lose your job you're stuffed. Whereas with Plan 2 there's additional income in rent which you wouldn't have with Plan 1. So I reckon it's safer. Even though fewer people do it and 'conventional wisdom' may ward you off it.

You could even argue that doing Plan 2 twice (ie 2 IPs) is safer than Plan 1 once (ie PPOR only). While there is greater sensitivity to interest rate rises at least you're not on your own in paying them as is the case for Plan 1.
 
Personally, I'd pay maybe $100k less and look at Lalor, Epping, Mill Park.
The Y-man

And don't overlook Thomastown, closer in than those.

It's ugly. It's possibly underquoted ($230 - 250k). But you get 2 bedrooms, a courtyard and a handy location, walking distance to shops and train.

http://www.realestate.com.au/property-house-vic-thomastown-117180323

Since the Thomastown shops aren't much the handiest location is on the east side of the line between the Lalor shops (which are bigger) and stations at either Lalor or Thomastown. Being near Bus 570 is nice as it goes to RMIT.
 
But you get 2 bedrooms, a courtyard and a handy location, walking distance to shops and train.
.

Had a look at a few of these - they're tiny.

They are actually a 1 bedroom plus.... not sure what you call it - the 2nd "Bedroom" actually doesn't fit a bed in most cases.... :eek:

The Y-man
 
You could buy a new or near new two bedroom townhouse is Reservoir. Most likely in a good spot too.

I would choose Reservoir over Lalor Thomastown and Epping if you can afford $400k or so.
 
Great thread!
But don't forget spiderman, if someone loses their job they're much less likely to turfed out of an affordable ppor these days. Banks don't really want us to fail anymore.
Plus, it feels good to live in your own place and pay it down a bit.
 
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