Where to look - neutrally geared house with land in Sydney

[scientist]

Hi all

I'm about to make my first property purchase under my SMSF and it's always been my personal preference to buy house with land. I understand that high yields only come with units / apartments so herein lies the difficulty - because it's a SMSF I want to keep things neutrally geared at the very least.

My numbers:

Budget of 450k, loan amount of 350k and deposit of 100k (just over 80%LVR)

I want to stay neutrally geared after all landlord costs (council, insurance, water etc) even if interest rates go back to 6% (I know it's possible rates may go beyond that but I'm willing to be out of pocket at rates beyond 6%)

House with land within Sydney suburbs - hopefully I don't have to go as west out to 2770

Areas I've been looking at:

Granville (6 months ago this was achievable, now unlikely)
Guildford
Fairfield

Any other areas I should be looking at with my criteria?
Any tips from people who have done what I am doing? I lack experience and may have not considered some pitfalls, so I appreciate all input.

Thank you!

 

[beachgurl]

I think at the moment it would be tough to find a neutrally geared property - house prices are going crazy in those parts yet rental vacancies are rapidly increasing and rent increases are generally discouraged by PMs. That said, you may find one that works but in this market it may just be that little bit harder.

 

[twodogs]

Why house and land? For a super fund where you can't develop the property while financed, why not a unit or townhouse? Less hassle, more choice in that price range and a larger market of easy to rent places near transport, shops etc.

Also, 80% LVR is ambitious. I think my maximum will be about 70%. Don't forget to budget purchase costs such as stamp duty, with that LVR you may not be able to add to the loan.

Other Campbelltown, Blue Mountains, Wollondilly and Wollongong areas will work with that budget. Even if 2770 was an option, you are lowering your area to meet a budget, which is why I decided not to buy with my super in that area (and I have property in my name there already)

 

[mikezen]

and rent increases are generally discouraged by PMs. .

Why is this? I always battle to get raises even when there is only one other house to rent in one of my suburbs

 

[beachgurl]

Less people renting, more buying. My agents are normally telling me to increase the rent but not in this current western Sydney market - my properties are in guildford and Colyton so may be different in other areas of WS.

 

[Propertunity]

... my first property purchase under my SMSF and it's always been my personal preference to buy house with land. I understand that high yields only come with units / apartments so herein lies the difficulty - because it's a SMSF I want to keep things neutrally geared at the very least.

Many SMSF's are buying a house on land with a granny flat already constructed. Yield is often 7.5%+

So don't just limit your thinking to high yields only coming with units

 

[scientist]

Many SMSF's are buying a house on land with a granny flat already constructed. Yield is often 7.5%+

So don't just limit your thinking to high yields only coming with units

This would be great except if a house is selling with a granny flat, the price often reflects this and the yield is lowered to around 5.5% in my experience - can you show me a 7% example?

 

[scientist]

Thanks for the replies so far - I want to ask more questions

1) all else equal, would yield % generally increase or decrease if I buy a house on a main road? (e.g. woodville rd or clyde street)

2) would a house near the station in fairfield yield better than a house in granville further from the station?

3) how does the market price a house that's right next to a school (yard touching the school field)? if its a bad thing (noise and nuisance) how much of a discount is this worth?