what to do with 1st property? --- need help!

Discussion in 'Property Investment - Other' started by 1c3m@n, 24th Sep, 2008.

  1. 1c3m@n

    1c3m@n Member

    Joined:
    19th Jun, 2008
    Messages:
    10
    Location:
    South Yarra, VIC
    my partner and i are hoping we can get some ideas from the forum around what to do with our first property. things we need opinion on are whether to make it residential or investment or both, and a few other things.

    i'll start by saying that the property is a land that we're planning to build a house on early next year. it's at point cook on a good estate and the block size is just a little under 600 sqm.

    we have saved up enough to pay off most of the property (land+house) without having to take up a huge loan which is good i guess. we also plan to get a second property eventually as investment or residential depending on what the first one is.

    from what we can tell, we have 3 options to consider on the first property:
    1. residential
    make the property residential and use up most, if not all of our funds on it. we can then use the equity it generates as the 20% of the loan for the second property.

    2. investment
    make the property investment and provide the 20% of amount needed to avoid mortgage insurance and just keep paying the minimum every month (or fortnight) on the loan.

    3. residential then investment/investment then residential
    for this option, we're leaning more towards investment then residential but all it means is that we plan to live there at some point as compared to option 2 wherein it is purely investment.

    apart from getting your thoughts on what would be your preferred option, we also have these questions in mind...
    - will investment or residential dictate the type of loan we should get? read somewhere that if we plan to make it investment, it would be best for us to apply for an 'interest only' loan.
    - does getting an 'interest only' loan then deter us from going for option 3?
    - we also don't mind going into negative gearing if it's an investment so our question is, should we consider doing that as well?

    i know some of you might wonder what we think about the location so here it goes. point cook for us is a good place and has the potential to improve even more. right now, it still lacks a bit of the infrastructure (ie transportation) for it to be considered a top suburb, but we believe it will be in 3-5 years time.

    apologies if this is long and if we're asking basic questions or ones that have been asked on this forum in the past. we're really new in the property market and we appreciate any help/info that we can get. thanks in advance!
     
  2. boomtown

    boomtown Member

    Joined:
    5th May, 2008
    Messages:
    3,022
    Location:
    Queensland
    I appreciate that you are just starting out. May I suggest (as has been previously suggested in similar circumstances) that you go down to the local bottle shop and buy yourself a nice bottle and spend a few evenings reading every thread in this forum. Then you can come back with some more focused questions as its very difficult to answer your questions as they cover a lot of ground and do not provide much information.
     
  3. 1c3m@n

    1c3m@n Member

    Joined:
    19th Jun, 2008
    Messages:
    10
    Location:
    South Yarra, VIC
    thanks boomtown! sounds like a good idea.

    in fact, we've already started reading...just haven't gone to the bottle shop:rolleyes:
     
  4. RumpledElf

    RumpledElf all fun in the big city!

    Joined:
    28th Apr, 2008
    Messages:
    5,641
    Location:
    Sydney
    One bottle? You seen how many threads are on this forum? :eek:

    And you need numbers man. Numbers! What will this place be worth when it is built? What will it rent for? What *is* this fairly small mortgage of which you speak? Do you guys earn enough to cover the outgoings with 20% deposit considering at $430k it'll probably be negatively geared to the wazoo? Compare the rent you are paying now and the interest your deposit is currently earning and you'll find spending a lot on a brand new house to live in is very much a lifestyle choice than a financial one.

    And the important question: does your wife want to get knocked up in the next 6 months and will start needling you for a Proper House instead of a mere investment property?