Sydney: North of the Bridge, circa 400k. Bad Idea?

Hi guys,

Wondering what your thoughts are: Sydney, North of the bridge, around Crows Nest, Greenwich, Wollstonecraft is convenient for myself for work. They are very desireable areas, so what I can afford (circa 400k) is very limited. However, I would be able to use it as a PPOR initially (to get my FHOG), with the intention of eventually purchasing a larger PPOR, further out of the city (maybe Central Coast) and holding onto the north shore apartment. This would, of course, depend on my equity in the apartment.

While these north shore suburbs aren't going to provide huge short-term CG, I guess they are fairly low risk areas??

Am I focussing way too much on my own personal convenience? Any reason why some of these suburbs may provide better buys than others? Or is it just a bad idea all together?
 
Yeah, 2 bedroom would be my preference, perhaps nearby suburbs? Just trying to find a balance between a sound investment and a suitable PPOR. Maybe I should reconsider a longer commute (I was also considering petersham, summer hill).
 
The LNS and the Inner West are considered very low risk areas to invest in.

I mean they are within 5 - 10 minutes of the largest Australian city with over 4 million people living there!

The issue for you will be finding something around $400K (which can be done). Summer Hill is also one of the most expensive places you could pick - but I like your attitude. :)
 
Hi Jaz

I think it comes down to your definition of "circa" :D
$400Kish will realistically only get you a 1 bedder in these areas, and even then it won't be a classic old art deco in a quiet street with parking but I guess you know that already :) I like the NS but then again so do lots of buyers!

More chance with the Inner West- perhaps consider suburbs such as Croydon and Ashfield if you're especially keen on 2 bedders. For the same space on the northside I'd also look at Lane Cove (that link to the $250K+ one looks interesting though without knowing more I wouldn't like to comment too much, suffice to say that I'm sure it should fetch a lot more than this come auction day if it is what it appears to be...) as there's more stock here. Further afield you will find something in the Ryde area, which isn't too far from the cbd and has good bus links. Best of luck in your quest.
 
Agree - the Lane Cove one looks under quoted even if it is missing a kitchen.....

Yes! The other "catch" in trying to buy any property without a kitchen or a bathroom for that matter, is that lenders will often not lend on it, or if they do, at a very much reduced LVR. Just be careful.

IMO, a price guide over $250K for a 2brm unit, even if it is on Mowbray Rd, is either underquoting or representative of the kitchen missing issue or the BC has a serious deficiency in its sinking or admin funds - take care ;)
 
My preference of 2-bedroom is as a resident, not as an investor (it would best suit my needs when living their). Again, trying to balance sound investment with suitability to owner/occupy.

So now I'm back to either a lower North shore shoebox or an inner west shoebox (or a 3bed house on the central coast). Man, this is difficult!
 
My preference of 2-bedroom is as a resident, not as an investor (it would best suit my needs when living their). Again, trying to balance sound investment with suitability to owner/occupy.

So now I'm back to either a lower North shore shoebox or an inner west shoebox. Man, this is difficult!


Speaking of shoes, it appears to me you are trying to do what many people do, try and combine 2 totally separate things and botching both.

It's like walking into a high fashion stilletto shoe store and asking a couple of the salespeople what they thought would provide the look and comfort to run a marathon in.

You are hopelessly compromised in trying to combine the two.
 
You are hopelessly compromised in trying to combine the two.

^ ^ agree 100%. Our most difficult property searches for clients always are the ones where it has to perform as an IP now but to live in later on as a PPOR (or the other way around). :(

It can be done (and we do it), but geez it is an effort - and ultimately a compromise.
 
Speaking of shoes, it appears to me you are trying to do what many people do, try and combine 2 totally separate things and botching both.

It's like walking into a high fashion stilletto shoe store and asking a couple of the salespeople what they thought would provide the look and comfort to run a marathon in.

You are hopelessly compromised in trying to combine the two.

So Dazz do you suggest buying a PPOR from the heart or from the pocket? We have always tried to buy well to maximize CG even if it is a PPOR. I am genuinely interested in hearing your thoughts.
 
So Dazz do you suggest buying a PPOR from the heart or from the pocket? We have always tried to buy well to maximize CG even if it is a PPOR. I am genuinely interested in hearing your thoughts.

Hi moyjos,

Our philosophy has been to totally separate our PPoR from our IPs. They are totally different in just about every respect, serving different purposes. It wasn't always the case, we couldn't afford that luxury in the first 7 or so years of our investment journey.

One produces a comfortable lifestyle, in a pleasant setting with all of the amenities one would expect to enjoy. The others are ugly rusty tired old sheds and ugly concrete blocks that you wouldn't let your dog live in.....but boy do they fling off some CG and cashflows.

Due to what we choose to invest in, we've never really had to confuse the two. It's only when one chooses to invest in residential real estate that the confusion arises.

Of course, your question moyjos needs to be tempered by the size of your available capital. The vast majority of the population are hopelessly compromised in their decision making on this point, because their PPoR constitutes the bulk of their funds.....usually around the 80 to 85% of their wealth when starting out. Naturally they wish to combine both - good lifestyle and good CG. A tough ask indeed....but absolutely necessary when you have that large a %age of your wealth tied to it. Beggars can't be choosers.

After say 10 or 15 years, a large proportion of folk have dutifully chipped away at their mortgage and perhaps started to invest elsewhere, but still, the bulk of their wealth, say 50 or 60% is tied up in the equity of their PPoR.

It's not until you grow your capital base to the point where the value of your PPoR represents less than 5% of your wealth that you can really take the nicer decision of concentrating on the "heart" option as you put it.....rather than compromising on both.

It's this scale of operations that the vast majority of investors never achieve that allows an investor to truly have the flexibility to separate the criteria between choosing a PPoR for the lifestyle benefits and ignoring the crucial CG imperative....because that is adequately taken up by the other 95% of the property portfolio.

This would be one area where I liken say a Level 7 or 8 investor having options which are unavailable to a Level 2 or 3 investor. Life is not equal or equitable.....despite the socialists best efforts.

Make sense ??
 
Hi guys,

Wondering what your thoughts are: Sydney, North of the bridge, around Crows Nest, Greenwich, Wollstonecraft is convenient for myself for work. They are very desireable areas, so what I can afford (circa 400k) is very limited. However, I would be able to use it as a PPOR initially (to get my FHOG), with the intention of eventually purchasing a larger PPOR, further out of the city (maybe Central Coast) and holding onto the north shore apartment. This would, of course, depend on my equity in the apartment.

While these north shore suburbs aren't going to provide huge short-term CG, I guess they are fairly low risk areas??

Am I focussing way too much on my own personal convenience? Any reason why some of these suburbs may provide better buys than others? Or is it just a bad idea all together?

I think its a decent strategy because its what I have done since 2007.(not lower north shore, but inner west)

Buy a low strata, older 1 bedroom apartment with parking. Ideally in a small block. Do some basic renovations and live in it.

I have done that and its earnt me about 60-80K in equity so far in about 5 years.(on latest bank valuation).

recent sales in my area indicate I would probably net about 150K after commission for selling up.(thinking about moving out to a bigger place, but that may just be to a rental until i get enough equity to refinance into said bigger place).

Do not blow your 400K in a brand new studio with no parking in a big block of units. You will get bugger all capital gain(IMO).

Some others may beg to differ.

cheers

Barney.
 
I am also looking for 2-bed IP at similar area at LNS. Our budget is about 550K including stamp duty. I already have PPOR at Cherrybrook and am happy with it ATM.

Maybe I should do better with that amount of budget and buy a house instead? But then I am worried about land tax and also lower rent for houses. Interstate (and outside Sydney) is a no no for my wife as she is risk adverse.

But I have to say that it seems LNS is very low in the list in capital gains, as their base is pretty large anyway. So I am wondering whether I should look elsewhere.

I had a look at Macquarie Apartments yesterday and was initially interested but the price seems quite expensive even for 1-bedroom + study for about $550K, and it won't finish until Jan 2015. Sure the depeciation is good but surely I am better off getting better location and forgoing stamp duty consession and depreciation deductions?
 
Hi edison,

I think its a higher risk for you and your wife not to explore areas interstate so you don't get substandard yields and growth rates.

And no land tax at all if you buy interstate.
 
Why not use the 400k to buy on the Central Coast right now? The prices are somewhat depressed here. You will face a long commute but you will be able to buy a decent PPOR that you will be happy to live in for a long time whilst awaiting CG. For 400k, you will be able to buy a house with land, close to major shops, amenities and beaches/waterways. If the commute gets to you, then work on the coast - there are plenty of high paying jobs.
 
I am also looking for 2-bed IP at similar area at LNS. Our budget is about 550K including stamp duty. I already have PPOR at Cherrybrook and am happy with it ATM.

Maybe I should do better with that amount of budget and buy a house instead? But then I am worried about land tax and also lower rent for houses. Interstate (and outside Sydney) is a no no for my wife as she is risk adverse.

But I have to say that it seems LNS is very low in the list in capital gains, as their base is pretty large anyway. So I am wondering whether I should look elsewhere.

I had a look at Macquarie Apartments yesterday and was initially interested but the price seems quite expensive even for 1-bedroom + study for about $550K, and it won't finish until Jan 2015. Sure the depeciation is good but surely I am better off getting better location and forgoing stamp duty consession and depreciation deductions?

If The Macquaire Apartments are on Herring road ,check them out
Friday,Saturday night late / early mornings for the drunken students
heading back to there accommodation, smashed glass bus shelters
every few weekends and beer bottles littering the footpaths.
Then there is the unit complexes across the road still owned by the
uni which seem to feature all weekend parties.
Don't expect to much sleep if you buy facing herring road.
Good luck getting out the driveways during peak hours on week days
when the uni and macquarie shopping centre are opening and closing.
graffiti now seems to be hitting the area but the bill posters plastered up
everywhere seem to hid it for a few weeks.
There are some nicer area's close by than Herring road.
I like the area but not Herring road.
I can't imagine how anyone will negotiate the extra traffic this development
will add to Herring road.
 
Why not use the 400k to buy on the Central Coast right now? The prices are somewhat depressed here. You will face a long commute but you will be able to buy a decent PPOR that you will be happy to live in for a long time whilst awaiting CG. For 400k, you will be able to buy a house with land, close to major shops, amenities and beaches/waterways. If the commute gets to you, then work on the coast - there are plenty of high paying jobs.

What are the chances of getting good CG in the next 2-5 years? Would you expect CG to be slower on the Central Coast? I have looked at Wamberal, North Avoca, Terrigal, Erina Heights, East Gosford...

Not sure how CG in these suburbs would compare to LNS and Inner West. I could certainly find a PPOR for 400-450k which ticks a lot of boxes. It's the equity I would have in 5 years time which I'm not sure of. 3 bedroom cottage near the beach or 1 bed flat on LNS or Inner West?
 
What are the chances of getting good CG in the next 2-5 years? Would you expect CG to be slower on the Central Coast? I have looked at Wamberal, North Avoca, Terrigal, Erina Heights, East Gosford...

Not sure how CG in these suburbs would compare to LNS and Inner West. I could certainly find a PPOR for 400-450k which ticks a lot of boxes. It's the equity I would have in 5 years time which I'm not sure of. 3 bedroom cottage near the beach or 1 bed flat on LNS or Inner West?

Generally, the CG on the Central Coast is less than that in LNS/inner west. However, if you do intend to stay on the Central Coast, then that should not be an issue as you are buying, then selling and upgrading in the same market. It is harder if you are depending on central coast CG to get you into the Sydney market. The suburbs you have mentioned are all good suburbs wherein a house on its own land and preferably views of water, will give you far greater enjoyment and quality of life than any 1 bedroom flat in LNS / inner west. Just get used to commuting.

The time frame of in terms of CG increase will parallel that of Sydney. Once the general real estate market picks up, the coast will follow suit.
 
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