Investment Advice

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  rambutann on 13/09/2017 - 08:09

  +2

  $300k in Melbourne.

  A one bed apartment? Maybe a two bed apartment if you pick very specific areas.

  I'm a strong believer in buying in crap inner city suburbs because they can't stay crap forever - but then you end up with poor quality Tennant's for the meantime..

  If you wanted an actual house then I'd be looking out towards Melton. V-line gets you into the city fairly quickly, Its still quite close to Melbourne, metro is planned to be there in the near future, planning shows another outer ring road near Melton. There are a heap of benefits of Melton area but again you're looking at crap Tennant's at the moment.

  Alternatively there's the north side of Geelong?

  • 

    boringsuburbandad on 13/09/2017 - 10:23

    Thanks, good advice. Melton, Deer Park etc are showing good growth at the moment.
    Did not consider apartments, but will definitely look into it.

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  Rumbaar on 13/09/2017 - 09:06

  For your net income and low cost of living, you should be aiming higher an investment. You could have multiple off the plan properties in growth markets in outer Melbourne.

  • 

    boringsuburbandad on 13/09/2017 - 10:27

    Thanks for your advice. What's the benefit off purchasing off the plan? I am very new to all of this!

    • 

      Rumbaar on 13/09/2017 - 14:19

      You save on stamp duty, and only have to pay for the land stamp duty (5%). Victoria has the largest stamp duty in the country.

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  garetz on 13/09/2017 - 09:25

  Buying a property seems to be a good investment for you. However would it be more prudent to live in it, and that way you are no longer paying rent. So could be a significant saving. Do the numbers, would you save more than $350 a week if you negatively gear. Negative gearing is the way to go if you have alot of other positively geared assets, otherwise there is no point.

  If you do decide to get the property, make sure you get a 100% offset account with it, and have all your pay deposited directly to this account, that can save you a couple k a year or more on interest repayments which can then service the principal.

  • 

    boringsuburbandad on 13/09/2017 - 10:26

    Thanks for info about offset account. I guess the next step is to start searching for competitive home loans.

    I am unsure about purchasing a property in my town, although it would be a huge saving on rent. Vacancy rates here are quite high, and I think we will be here for another 2 years max. Would prefer a long term investment.

    • 

      garetz on 13/09/2017 - 10:44

      +1

      Always buy where you plan to live, so buy in your expected suburb you will move to in 2 years time, rent it out for a couple of years, and pay as much debt down as you can. The faster you pay it off, the faster you can use it as collateral for a 2nd property and so on.

      Then you can move into the first property, and have a 2nd investment property soon after the 2 year mark.

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  peterpeterpumpkin on 13/09/2017 - 12:01

  I can't recommend a financial adviser but I certainly recommend you speak to someone knowledgeable about your goals before jumping the gun. I would never trust someone that was "successful" at it. Once you go through the details you'll discover legal grey areas, lucky timing and mortgage fraud played a big part.

  I especially have no idea and one thing I've learnt is that your average tax agent won't either.

  A lot of people live in the home they buy and then move out "for work or travel" later on (as per ATO's requirement). Then they plan to move back in every 5.5-6 years before leaving for a "new job". This allows them to elect the property as a PPOR (Primary Place of Residence) and avoid paying capital gains tax. It also allows them to meet the requirements for the First Home Buyers Incentives in at least NSW (6 months) and Victoria (12 months), whether it's a lump-sum bonus or not having to pay stamp duty. Lose your job and can't afford to pay the mortgage while you're living in it? Then assuming your equity in the property is below a certain amount, you can move to a tent or more affordable place, rent the property at an amount that's negatively or neutrally geared (and even a bit over) and you'll still be eligible for Newstart allowance. They don't count capital works though (i.e. renovations), so negatively geared according to ATO vs Centrelink is a bit different.

  And then there's the fact that the home you live in is "protected" when it comes to assessing your assets so you can live in your mansion and still receive the pension.

  • 

    boringsuburbandad on 14/09/2017 - 16:06

    Thank you, very useful knowledge there.

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  TimOfEastBNE on 13/09/2017 - 13:29

  I hope the OP is taking this as general advice and not personal financial advice, which of course unless you are a qualified/certified financial adviser it would be unwise, if not even illegal to give…

  Clearly you need some serious financial advice, not forum hearsay. Negative gearing works at is best when your are on one of the top marginal tax rates. Owning your own business you would most likely be structuring your finances so you are paying tax at the lowest rate, so negative gearing may not be as effective for you. There are other ways to be in the property game without buying a property (managed property trusts for example).

  I suggest you start by speaking with your accountant, and see if they are authorised to give financial planning advice and go from there.

  In general terms, having a toe in the property market in the big cities when you live regional is a great idea. If you plan to move into it, buy the place you want to live in, not one someone tells you will be great.

  Good luck, and well done for thinking ahead at your age.

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    boringsuburbandad on 14/09/2017 - 16:06

    Thanks, sensible advice. I will have a chat with my accountant.