Where to buy Sydney?or another state

[blessme]

Hi Guys,

I'm a newbie and i just joined this forum. Apologize me in advance if my question sounds too silly or too general. I would like to buy a house/apartment/or townhouse or anything. The initial goal that i have on my mind is to have my monthly repayment is paid through rental(self repayment). I have budget from 200K-300K and i only have up to 30K for down payment. I would like to hear suggestion from you guys which must be having better experience than i am.

Well i was thinking to buy a house/town house for living in northern west (Dundas) but then i started to think about the interest that i need to pay. I feel quite frustrated when i realize that our interest rate is close to 10% and what i have on my mind is paying the loan for the rest of my life

 

[twobobsworth]

May i suggest picking up some of the jan somers books. I don't ever intend to pay back my loans during my life.

 

[alexlee]

Hi Guys,

I'm a newbie and i just joined this forum. Apologize me in advance if my question sounds too silly or too general. I would like to buy a house/apartment/or townhouse or anything. The initial goal that i have on my mind is to have my monthly repayment is paid through rental(self repayment). I have budget from 200K-300K and i only have up to 30K for down payment. I would like to hear suggestion from you guys which must be having better experience than i am.

Well i was thinking to buy a house/town house for living in northern west (Dundas) but then i started to think about the interest that i need to pay. I feel quite frustrated when i realize that our interest rate is close to 10% and what i have on my mind is paying the loan for the rest of my life

Hi, Fransiscus,
It sounds like you have quite a few ideas you need to sort out. A few property investment books will hel pyou there.

e.g. why is your interest rate close to 10%? The current mortgage rate is around 7.7%. You have to understand that property investment is about CONTROL and not just OWNERSHIP. You need to understand that having debt can be a good thing because it allows you to control more property and get the gains.

Right now, I think for you it's a matter of 'you don't know what you don't know'. It's extremely unlikely that you'll find anything in Sydney where you can borrow 90% (or more, since you have to factor in costs) and have the net rent pay for all your interest payments.

Read a few books, read this forum, put together a plan for property investment, and do the usual things like analyse your spending to see how much you can save, etc.
Alex

 

[blessme]

May i suggest picking up some of the jan somers books. I don't ever intend to pay back my loans during my life.

if u never intend to pay back ur loans then what will u do?just rent it out?and sell it when u need the money?

 

[blessme]

Hi, Fransiscus,
It sounds like you have quite a few ideas you need to sort out. A few property investment books will hel pyou there.

e.g. why is your interest rate close to 10%? The current mortgage rate is around 7.7%. You have to understand that property investment is about CONTROL and not just OWNERSHIP. You need to understand that having debt can be a good thing because it allows you to control more property and get the gains.

Right now, I think for you it's a matter of 'you don't know what you don't know'. It's extremely unlikely that you'll find anything in Sydney where you can borrow 90% (or more, since you have to factor in costs) and have the net rent pay for all your interest payments.

Read a few books, read this forum, put together a plan for property investment, and do the usual things like analyse your spending to see how much you can save, etc.
Alex

Hi Alex, what do u mean by CONTROL?Sometimes i think about fulfilling basic needs before marriage such as having our own home, well i know you might say owning a property doesn't always mean that u need to stay there. I'm still confused between these options though

I would like to know ur opinion further more. Well i don't mind to pay up to 1000 extra on the top of the rental just to pay the interest. But what i heard is if you buy a apartment then the price of the apartment will be going down(depreciation) (plus you need to pay strata fee which is not that cheap) from year to year instead of a house where the land price is raising. Well by having apartment close to city, we can benefit from the rental cost itself.

 

[The Y-man]

Franciscus,

Which are you wanting? A property to live in, or a property to rent out?

There can be different parameters depending on this...

Cheers,

The Y-man

 

[skater]

if u never intend to pay back ur loans then what will u do?just rent it out?and sell it when u need the money?

I'd be betting he's not planning on selling either. The beautiful thing about property is that as the value increases you can borrow more of the equity from it. This you can invest again into either more property or shares, or you can live on equity if you want.

Read some books & especially the forum & you will gain an understanding.

 

[The Y-man]

Hi Alex, what do u mean by CONTROL?

You don't have to own something to have control over it. Investment Propoerties are a good example of this - banks own it, but you control it, as you can (within reason) do what you want with it - you have the choice of tenants, you can renovate it etc. It's almost as if you own it.... so if it's the same thing, why pay the bank back (as long as you can pay the interest?) unless you sell it?


Cheers,

The Y-man

 

[alexlee]

Hi Alex, what do u mean by CONTROL?Sometimes i think about fulfilling basic needs before marriage such as having our own home, well i know you might say owning a property doesn't always mean that u need to stay there. I'm still confused between these options though

I would like to know ur opinion further more. Well i don't mind to pay up to 1000 extra on the top of the rental just to pay the interest. But what i heard is if you buy a apartment then the price of the apartment will be going down(depreciation) (plus you need to pay strata fee which is not that cheap) from year to year instead of a house where the land price is raising. Well by having apartment close to city, we can benefit from the rental cost itself.

I think you need to spend a bit more time on the overall strategy. What do you want? Can you see yourself owning multiple properties? Are you looking to buy an investment property, or to live in yourself?

When you buy any property generally the BUILDING goes down. But that is the case for a house as well. I mean, obviously apartment prices go up too, so what's appreciating? The land underneath. You may not own the whole block, but you do own a piece of it.

A bit about how I've been doing it: I own a few investment properties, and am only now buying my own home. I've never lived in those properties, and have always rented them out.

Control, to me, means getting the benefits of price appreciation, rent, etc. HOWEVER, it doesn't mean I have to OWN 100% of it. For example, say you buy a $300k property and have a loan of $270k against it. So you 'own' 10% but you 'control' (with some limitations) 100% of it. That is, if the property goes up by 30k, that $30k is yours. But you've only used $30k (plus costs) to get that $30k. It's a simplistic example but that's what we mean when we say control is better (and different) from ownership.
Alex

 

[blessme]

I think you need to spend a bit more time on the overall strategy. What do you want? Can you see yourself owning multiple properties? Are you looking to buy an investment property, or to live in yourself?

When you buy any property generally the BUILDING goes down. But that is the case for a house as well. I mean, obviously apartment prices go up too, so what's appreciating? The land underneath. You may not own the whole block, but you do own a piece of it.

A bit about how I've been doing it: I own a few investment properties, and am only now buying my own home. I've never lived in those properties, and have always rented them out.

Control, to me, means getting the benefits of price appreciation, rent, etc. HOWEVER, it doesn't mean I have to OWN 100% of it. For example, say you buy a $300k property and have a loan of $270k against it. So you 'own' 10% but you 'control' (with some limitations) 100% of it. That is, if the property goes up by 30k, that $30k is yours. But you've only used $30k (plus costs) to get that $30k. It's a simplistic example but that's what we mean when we say control is better (and different) from ownership.
Alex

now I do understand with what are u saying. Is it a good time to buy a property at the moment with high interest rate?How much u start ur portfolio with?30K?Which is more than what i have at the moment . Now i've decided to buy a property for investment, if i have 25K-30K where is good place to start?do u mind to spot some example for me please?so i can have better understanding.

I heard there are some people buying a house in a very bad condition and they renovate it and then sell it with higher price?Do you think that this scheme is easy to work out?Thank you for ur advise alex so far, i still need to learn from u and everyone in this forum

 

[blessme]

You don't have to own something to have control over it. Investment Propoerties are a good example of this - banks own it, but you control it, as you can (within reason) do what you want with it - you have the choice of tenants, you can renovate it etc. It's almost as if you own it.... so if it's the same thing, why pay the bank back (as long as you can pay the interest?) unless you sell it?


Cheers,

The Y-man

you've got the point in here but what i don't understand sometimes is "as long as you can pay the interest" which is quite hard at this time since we need to consider the high interest rate which is positively raising from year to year. i think i need to change my mindset where i want to free up from loan as soon as possible which is not a good mindset

 

[alexlee]

Fransiscus, read a few property investment books first. That should make things clearer.

Re interest if you're concerned get a fixed rate loan.
Alex

 

[blessme]

any book title that you recommend to me?Do you think is there any place to spot in Sydney inner city surrounding to invest?With down payment from 25-30K?Do you mind of giving me some suburb name?or you can spot me an example if you don't mind. Sorry to ask u many questions

 

[alexlee]

any book title that you recommend to me?Do you think is there any place to spot in Sydney inner city surrounding to invest?With down payment from 25-30K?Do you mind of giving me some suburb name?or you can spot me an example if you don't mind. Sorry to ask u many questions

Problem is, you have a lot of questions, but you don't have enough basic knowledge to absorb the answers. It's like trying to pour water into a sieve: it's leaking out all over the place. For example, you're not clear on basic concepts such as how interest only is viable (and beneficial) for the long term, control v ownership, etc. Other concepts you need to understand: positive/negative gearing vs after tax cashflow and how depreciation works.

Read Jan Somer's books (the White Book and the Blue Book, as we call them). Probably 'Story by Story' as well. That would be a good start.

With $25k-30k, you're looking at maybe a $250k property. You're not going to find much in the inner city. If I had to suggest an area (and I'm not taking legal responsibility for this) I'd say a 2 bed unit in Parramatta.
Alex

 

[skater]

now I do understand with what are u saying. Is it a good time to buy a property at the moment with high interest rate?This could depend on your own income levels, what the yeild is on the property, how good a purchase you make, etc. How much u start ur portfolio with?30K?Which is more than what i have at the moment . Now i've decided to buy a property for investment, if i have 25K-30K where is good place to start?You need to first identify what you are wanting to buy. Using a 10% deposit, you could get a unit with that, or you could go further out & buy a house. What do you want? do u mind to spot some example for me please?so i can have better understanding.

I heard there are some people buying a house in a very bad condition and they renovate it and then sell it with higher price?Do you think that this scheme is easy to work out?Again, it depends. Do you have the skills to do the reno's, do you have the time, there are many questions you need to work out before you start.Thank you for ur advise alex so far, i still need to learn from u and everyone in this forum

I'll give you an example. My 18yo daughter wishes to purchase a property, but she doesn't have the income to service it yet. She has $13k saved & wants a house, not a unit or townhouse. She has the deposit to purchase a cheap property, but can only purchase something out West using her 5% deposit. She is happy with that, but needs to find a job to service the loan. If she can get something for less than market, but needs work, all the better as her father & I are willing to help her bring it up to scratch. We have the skills to be able to do this & have done it a number of times on our own properties. She is unconcerned with high interest rates, as she is aware that properties go up in value, so long as she can service the debt, with room for rates to go up further, she will be happy. Even though she would prefer to have the property as a PPOR, she knows that it will be easier to service as an IP. She is also aware that tenants can sometimes be a pain & will need to keep funds available for things that may need fixing etc. She knows all this because she has been talking about properties for several years now.

 

[skater]

any book title that you recommend to me?Do you think is there any place to spot in Sydney inner city surrounding to invest?With down payment from 25-30K?Do you mind of giving me some suburb name?or you can spot me an example if you don't mind. Sorry to ask u many questions

If you wake up one day & decide "Oh, I think I'll buy a property" you need to look at a lot of basics before you purchase. One of them is obviously where you want to buy. It is not our job to tell you the best place to buy, but we will help in the process. For example if you decided that you were going to look at, say Blacktown, Liverpool, Campbelltown etc areas (pick one) & you asked some general questions about the pro's & cons of purchasing in this area you will get many answers. But it is unlikely that someone will come out & say directly "Best area to buy in is Liverpool" You need to make that decision yourself.

 

[skater]

Obviously you have made a decision that you are interested in property. First thing you should do is find out how much you can borrow. It's no good wanting to buy something that costs $500k, if you can only afford $250k. So, go to your bank, call a broker etc & see if you can get a loan & how much for.

OK, now you have a start. You know what you can borrow, next you need to decide what & where you want to purchase. Maybe go to a couple of Real Estate agencies & bring home the Realtor books & go through them, to give you an idea of what is available, in what areas & the kind of prices you will need to pay. Look at the Real Estate searchs on the net. Again, if you have $500k available & you want to buy a house you need to pick a suburb where you can purchase a house for that price as you can look until you are blue in the face, but you won't find a house for that price at Vaucluse.

Now we're getting closer, you have an idea of the areas you can purchase in. You need to decide if you want a house, townhouse or unit. If you want something new, or a little older.

Do the first two things first, & read some books & the forum, then come back & ask more questions. By that time you will have a much greater understanding of what you can get & how the whole process works & you should be ready then to purchase.

 

[BoatBoy]

Fransiscus, read a few property investment books first. That should make things clearer.

Re interest if you're concerned get a fixed rate loan.Alex

Just be aware with this that you will be fixing your loan for 5 years at 7.66% for example, but MAY come off that rate into an even higher rate (or lower).

It's something you should be aware of.

Read the books, they can be borrowed from libraries, but the few mentioned to date are definetly worth adding to the collection.

Dave