I bought my first home about a year ago when I was 23 in a Perth suburb situated 22km north from the CBD.
This home is relatively new having been built in 2012 and is situated on a 375 square metre lot. The suburb I live in is 'mildly' distant away from the train station and getting to work involves a 30min bus ride from the nearest bus stop just to get to the train station alone.
It's not the worst suburb to live in but the longevity of the daily commute to work has made me think about what options I have to move closer to the city (or train station). There are already plans to build a new train line with a train station relatively close to me (about 6km away) which may increase the property value but it is planned to be finished around 2024.
I assume it would be financially sensible to live in the house for a few more years, but after that, I want to explore some rational options which would take me closer to the City.
I feel like my main options are:
- Make my home an investment property and 'rentvest' elsewhere closer to the city.
- Try to stay in the house as my primary residence and try to pump as much money into the mortgage or offset account. Then when the new train station and train line is expected to be completed in 2024, hope that the value of the property increases. Following this, sell the house and buy somewhere else.
My primary concern about Option 1 is that it may not be an easy area to attract renters and the quality of renters in the area may not be the best. In relation to Option 2, my main concern is the small size of the block means it does not have any development opportunity in future, so any increase in property value may not be that large anyway.
I am on a moderate income of 89K a year and my brother has a graduate job lined up next year which he is yet to start at 60K a year (albeit he pays rent of $100 a week). The house was purchased at 480K and mortgage repayments are just over $1800 a month which is manageable with my current income.
Any advice or recommendations on what I should do would be greatly appreciated!
I was thinking about seeing a financial planner/accountant about this but I figured the Ozbargain community is pretty much a collection of financial gurus anyway :)
Perth real estate market is a bit funny, prices aren't really in sync with the east coast. I'd say you need to tell us about your future plans. Do you ever want to come back there to live? Do you have any other issues with living there apart from the long commute? Do you have any other job opportunities closer to where you live?
Also, I actually mean that last point seriously (even though it sounds like I'm being snide). Something that I've learned once getting older is that people spend so, so much to move a bit closer to the city that sometimes (if you do the math), it makes sense to take a bit of a pay cut if that means you can work out in the suburbs.
Just as an example, I used to work in the city, my commute would be around 1.5 hours per day, costing around $4,000 per year. I could have spent $500k more to move closer to the city, but instead, I got a job 15 mins away. I now spend 30 mins per day commuting, costing less than $1,000 per year. No traffic, no headaches, I park at my work. I wake up at 8.15am to get to work at 9am and my pay only got cut by $20k p.a. I have more time and I'm happier.
The increased interest payments from borrowing $500k more to move would have actually made me worse off in terms of my income and I would have still had to travel further than I do now (I would have moved maybe 20 - 30 mins from the city).