Time to grow up and buy a house
Raven
Melbourne, Victoria
6477 posts
Short version: I'm looking to move out and buy a house. But property is *expensive*. To top it off, I have *no* idea what's affordable in terms of weekly/fortnightly/monthly repayment compared to salary for a single person. What's making it equally difficult is all the unstated costs of a home - eg, solicitors fees, inspections, clean-up, any additional things you need to actually live in a house but aren't included (eg carpet, light bulbs, towel rails). I'm looking to build with Henley.
That brings me to seek the help of QGL.
On an 84K salary, CBA will lend me $520k, which is an obscene amount, especially when you consider that would be something like $3500/mo repayments. NAB haven't given a figure yet.
Realistically, I'd like to borrow $235k, but that won't be enough to pay for everything. FHOG and the deposit I have aside will chop about $85k off what's needed.
Land prices are a *bitch*.
I'm looking at Craigieburn, around 26km from Melbourne. It's about as far as you can go without it taking longer to get to work than where I'm already living (39km, but we have much better freeways out East), and as far as they're developing right now.
Prices on a 12.5m front (~315-350m) block you're looking at 205-215k in the built up area, 175k-185k in the empty area.
After putting a building on that, I could be looking at anything from $359 to $390k, but the upper end of that is likely to be beyond my ability to repay.
So, I put it to you:
What's an affordable figure to afford repayments? Whether renting or repaying a mortgage, how much do you drop on housing before you start feeling like you're living on a tight budget? What's a safe figure for a single person?
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Sc00bs
Brisbane, Queensland
8606 posts
fuck me 3500 a month is buttloads for repayments :/
Ive had a few mates buy houses and they pretty much only pay 100$ more a week than they were on rent. so it wasnt too much of a change
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a commonly used definition of mortgage stress is that it occurs when a household spends more than 30%-35% of their income on home loan repayments. i would be extremely wary of deliberately putting myself in that position.
can't really comment further as i do not own property.
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Raven
Melbourne, Victoria
6478 posts
Yeah, but what was rent? :P
I currently don't pay rent. Like I said, I've got *no* idea about finances :P
A 280k loan at 7.5% over 30 years works out about 450/week or 900/ftnight (I'm paid ftnightly).
I'm clueless as to whether that's too much of my income.
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iTOM
Brisbane, Queensland
1226 posts
when i was on 60k, i was looking at spending $300k on a unit. to me, that's doable. you'll have no issues on 85k. i'm now on almost double that and went in with my partner who's on a similar wage for a home loan of $480k. nailing it
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Raven
Melbourne, Victoria
6479 posts
a commonly used definition of mortgage stress is that it occurs when a household spends more than 30%-35% of their income on home loan repayments. i would be extremely wary of deliberately putting myself in that position.
yeah - on the 280 figure that'd be 37.5%
Yet I hear others paying 40-50%, and surely that can't be right.
Thing is, prices are now growing at a rate faster than I can save, even with no costs. It's a case of if you don't do it now, you'll forever be out of the market.
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thermite
Brisbane, Queensland
8901 posts
I'm getting a mortgage right now, but it will be my third one.
The limiting factor is never the interest/income etc... it's always the fact that you can only borrow up to 80% of the value of the property, unless you pay Lender's Mortgage Insurance then you can borrow up to 95%.
For a single person I would recommend a single bedroom apartment. Just get in the game, rethink your situation in 3+ years.
Building a house is fucking stressful, and then looking after it yourself? Forget it.
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TicMan
Melbourne, Victoria
7714 posts
Jesus fuck, my mortgage is $3500/mth and I earn heaps more than $84k/yr - don't even think about taking the CBA up on their offer! On $84k/yr your take home would be $2400/fortnight and on that I'd probably be comfortable spending no more than half on the mortgage.
Do the exercise in reverse though, calculate all your expenses at the moment (car, rego, insurance, train ticket, meals, online games, PC upgrades, concerts, footy tickets, whatever) and break them down to a fortnightly amount. Once you have that, add in house insurance (call it $1000/yr), rates ($2500/yr), gas ($1000/yr), electricity ($1000/yr), etc. Add 15% to that amount, break it down to your fortnightly pay and then you can figure out how much you can afford by what is left over.
I'd also hit up a mortgage broker and run through the sums with them, after wards they'll recommend some lenders and products - take note, then go direct and see if you can get a better deal (I did and I work for a mortgage broker).
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Sc00bs
Brisbane, Queensland
8607 posts
well he was paying 380 a week rent for him and his family, so he had no issue paying another 100 for his loan and a house he owns.
I'd b getting a tiny bit more than you need aswell, much better to have a spare 10k in the bank incase shit hits the fan rather than have ur repayments at 20$ less a week or something.
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Raven
Melbourne, Victoria
6480 posts
The problem is I don't have regular costs, or even a budget. I've always been able to just go "ooh, shiny!" *buy*.
And somehow end up with enough to buy 4 bikes (~20k) 4 years ago, 3 bikes in the last 6 months (10k), 10k worth of camera gear, a new car, and still end up with 70k left over. I've bought so much crap that I've run out of things to buy. The last few months my bank account has just been staring at me going "okay, now I'm full... now what?"
Travel costs are haphazard - some weeks I ride 3 days to work, there's no pattern to how often I drive or catch the train to work.
Edit: Oh yeah, and between me and my brother we currently pay all the gas, electricity, phone and internet. But we pay bugger all rent/board ($60/wk).
Might be worth mentioning the brother will be taking a room, I've said ~$100/week plus split bills; Henley repay $350/month for the first 3 years, and if I go with the expensive area, there's no power bills for the first 3 years.
last edited by Raven at 11:54:09 09/Feb/12
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Sip
Brisbane, Queensland
482 posts
If your looking for an investment either wait a few years until house market depresses (which it's started to now) or buy into gold/silver bars. At least you won't have repayments or require financing for it.
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orbitor
Brisbane, Queensland
8790 posts
Do a detailed annual budget. Divide between necessities and luxuries. Then you should see what kind of $$ you have available.
Would you consider renting out a room? This would subsidise your mortgage dramatically. I know a lot of people that did this to help out with the costs for a year or two at the start which is the hard part of the mortgage.
Since you're looking at building, take into account that you don't need everything right away.
Don't get landscaping done. Save up and do this at a later date, or even do some yourself.
Driveway? Maybe you could live with plain concrete and come back and do stenciling or whatever later. Or maybe a gravel driveway will do for a while.
Fencing (especially front fencing) may be able to be left until later. Ceiling fans, split systems, etc. can be left till later.
I remember when I was little my parents didn't even get floor coverings initially, we moved in with no floor coverings and my father tiled the living areas himself (bathrooms were done by builder) and organised carpets later when they had the budget and the ability to shop round for the best prices.
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Tollaz0r!
Brisbane, Queensland
12265 posts
http://www.onthehouse.com.au/
That will give you a general idea of the history of how much houses have sold at in the areas you are looking at. It also gives a fairly good indicator of a mathematical evaluation of the house.
That will give you an idea if the house you are looking at is over or undervalued.
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Yet I hear others paying 40-50%, and surely that can't be right.
it can be. that definition is a essentially a rule of thumb.
the higher your nominal household income is the easier it is to allocate higher proportions of it towards loan repayments and still be able to live relatively comfortably. also, many people don't intentionally put themselves into mortgage stress, they are forced into it by exogenous circumstances (losing a job, rates going up, etc).
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Clubby
Brisbane, Queensland
759 posts
Yeah I'm in this boat (and have been for a year or two now). Every time I look and do the sums it is better for me to rent (my rent in my share house with mates is pretty cheap).
Basically I broke it down to:
Rent - Interest from Deposits < Mortgage Repayments + insurance + rates + maintenance
Most my other bills are common to both situations with slight variations in electricity, internet, travel etc.
It is a very high level judgement but really I look at the $30k a year I save with my current lifestyle and ask if I could pay $30k off the loan a year (of cause taking into account properly value increase etc).
Just doesn't work out to own my own home yet in my mind. Hell another 5 - 7 years and I'll be able to pay cash for a cheap one (depending on market).
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Opec
Brisbane, Queensland
7502 posts
For a first home, do not even contemplate on building your own house or buying a house with land unless you really are in financially strong position. Building own home costs a lot of time and money and not something you should do if you're worry about money and time.
From what you've described it appears that you'd struggle if you borrowed to the maximum amount and it will cost more than that if you build you own home.
My advice is to dial down your expectations for your first home (more realistically unit). Get small single bedroom unit and build equity and start from there. In a few years time you'd have enough equity in your asset then you can upgrade.
In terms of loans etc, I would recommend you use a reputable broker (someone else can recommend one for you as I haven't used one when we bought ours >11 years ago). There are a lot of different products out there and a lot of fine prints, options, packages etc.
A good home loan broker will be able to save you a lot of time and hassles with all the different products etc. They would also be able to find a loan that's will suit your finances and life style quicker than you can do it youself (unless you really dedicated a lot of time to this stuff).
If you want a financial advice, get a reputable financial planner they should be able to help you out with setting up for the future though this is probably a separate issue to your home purchasing goal.
Good luck with it and whatever you do, make sure you are comfortable with the decision you've made and don't be afraid to ask questions that you're unsure about or say no to options presented to you that you're not comfortable with. And don't forget a "home" is a long game don't think you'll get that massive equity in a year or two.
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orbitor
Brisbane, Queensland
8791 posts
Rent - Interest from Deposits < Mortgage Repayments + insurance + rates + maintenance
Most my other bills are common to both situations with slight variations in electricity, internet, travel etc.
It is a very high level judgement but really I look at the $30k a year I save with my current lifestyle and ask if I could pay $30k off .
Sorry that's too simplistic to be meaningful. You have to look at how rents will increase but the mortgage repayments won't over a decent length of time (eg. 10 years +).
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thermite
Brisbane, Queensland
8902 posts
Really clubby? When I compare rent vs mortgage, it's pretty close.
Besides rent at $380 a week for 5 years is 100k. That's 100k that could go towards building equity in your own home over that time, rather than simply losing it on rent.
You will need to spend slightly more on a mortgage, but it is surely worth it, especially if you're full-time employed and not planning on changing jobs to another town.
Not to mention after 5 years you could have paid off a significant amount of the principal, and since you're still young, refinance it for another 30 years, and BAM! your repayments go down below rent levels easily.
I do think $3500 for one person is too much though. 2 people, no problem.
last edited by thermite at 12:08:39 09/Feb/12
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Raven
Melbourne, Victoria
6481 posts
From what you've described it appears that you'd struggle if you borrowed to the maximum amount and it will cost more than that if you build you own home.
Just want to point out as this has come up a couple of times now, there is no way I intend on borrowing that high/max amount. It would be looking at $285k-304k max borrow, and I'm thinking of taking the cheaper land option.
I'm also not looking to build then move/sell in a few years. I want this to be a long-term thing.
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Pinky
Melbourne, Victoria
12569 posts
I agree on point don't build first home. Buy simple and established. Especially based on the info you've provided about your confidence with managing finances.
Also, don't buy at auction first home - little bit riskier way of purchasing (no 'subject to finance' clause in the contract of sale).
Mortgage broker could be helpful to you, although personally I just went straight for an ING Direct home loan - very basic variable loan with an offset account (any money in that account is deducted from the loan before interest is calculated).
Process to buying an established house:
1. Apply for loan
2. Find house, make offer and get the offer to include the clause 'subject to finance' which means if your loan approval doesn't come through, you are not committed to purchase. Also 'subject to builder inspection' or 'subject to termite inspection' can be done
3. Hire conveyencer (or solicitor, if you have one you like) to finalise the sale. Often a fixed price (e.g., $1500) which is handy when things drag on sometimes.
Done.
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Khel
Melbourne, Victoria
18192 posts
Yeah, I'm paying like $415 a week rent at the moment by myself on an apartment (an apartment I'm not even living in atm which is even worse), so when I get rid of that I'm toying with the idea of maybe buying. Haven't really started looking into it seriously yet though, but its like thermite said, if I'm paying that much in rent I may as well be paying it off a home loan instead and actually get something out of it.
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Opec
Brisbane, Queensland
7503 posts
The problem is I don't have regular costs, or even a budget. I've always been able to just go "ooh, shiny!" *buy*.
And somehow end up with enough to buy 4 bikes (~20k) 4 years ago, 3 bikes in the last 6 months (10k), 10k worth of camera gear, a new car, and still end up with 70k left over. I've bought so much crap that I've run out of things to buy. The last few months my bank account has just been staring at me going "okay, now I'm full... now what?"
Travel costs are haphazard - some weeks I ride 3 days to work, there's no pattern to how often I drive or catch the train to work.
Edit: Oh yeah, and between me and my brother we currently pay all the gas, electricity, phone and internet. But we pay bugger all rent/board ($60/wk).
Might be worth mentioning the brother will be taking a room, I've said ~$100/week plus split bills; Henley repay $350/month for the first 3 years, and if I go with the expensive area, there's no power bills for the first 3 years.last edited by Raven at 11:54:09 09/Feb/12
You need to keep check of your spending once you have a mortgage. You can get speadsheet from the intertubes that can do this or free online accounting thing that can do this.
Also don't count on your family "renting" your room and you then go out and bought a place you can not afford should they ever moved out and you can't find anyone to move in with you. It's better to think in terms of would you be able to afford to pay for the place if the extra room is vacant. If the answer is no then plan to buy accordingly.
It seems cold and may be even selfish but ultimately your place, your life and your money. That's what being grown up are about making that kind of informed and calculated decisions even though it's probably won't go down well with your family members.
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Raven
Melbourne, Victoria
6482 posts
Oh, I have everything in a spreadsheet, have done for four years. It's purely for recording where money is going though, not budgeting.
I'll check there's nothing too sensitive in it in a bit, and post it shortly if not.
But it's hella-detailed, and in fact probably useful for others here.
And yeah - I'm not factoring in those additional rent/promotion incomes. If that money is there, great, but I want to be able to afford it *without* that being there.
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Opec
Brisbane, Queensland
7504 posts
Just want to point out as this has come up a couple of times now, there is no way I intend on borrowing that high/max amount. It would be looking at $285k-304k max borrow, and I'm thinking of taking the cheaper land option.
I'm also not looking to build then move/sell in a few years. I want this to be a long-term thing.
Yeah building a home involves cost blow out. Believe me it happens no matter what anyone tells you. Unless you have massive cash reserve and can afford to do so, no offence but without proper budget I doubt even you'd know how much you can really afford the mortgage at this stage let alone the own home build and cost blow out - if you're lucky it'll be 20% over budget.
The "holding" on to property is not a problem (it's not an option for the most part for most people), the "paying" for the build to the finish line is your problem.
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jmr
Brisbane, Queensland
7577 posts
Good thread good timing, we are looking into options at the moment too
I hate paying rent but I think I would rather pay rent than interest only so need to do some more sums
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DeadlyDav0
Brisbane, Queensland
1547 posts
Im a noob with this shit but maybe our situation helps you:
We went from paying $200 a week rent (family discount - worth $275), to our first preowned house with mortgage payments of $450 a week. I was lucky enough to receive a substantial financial gift from parents that was approx 30% of the house's value, and our deposit and FHOG wasnt very much, only approx 10% of the house's worth. What we didnt really know anything about was rates, water and other stuff we didnt pay when renting and people we asked had really different figures. Ended up being an extra approx $150-200 per week when you average out rates, electricity, water. That DOESNT include extra stuff non house related like food, petrol etc.
Prior to making the decision, we worked out weekly wages, weekly costs (food, petrol, electricity) and figured out how much we had spare. We then went to Aussie and worked out if we borrowed X, then repayments would be Y and figured out the max house we could afford including my parent's financial gift. Found a suitable house and price and got it.
Been living here nearly 2 years and all has been well. We both dont make much money (1 student, 1 retail assistant) and still receive some help from parents with certain things (eg free old car) but we have enough left over money to live comfortably enough.
ALSO:
Really pleased we made the move from renting to buying a house.
For 2 people, we were just running out of room in the 2 bedroom unit (1 bed, 1 study). I was really uncertain about it initially as it would change the travel distance to work/uni from 5-10 mins to 30-40mins and the extra costs per week (mortgage, rates etc) but the few negatives are outweighed by the benefits of our own home. I now have my own gym in the garage and training has never been better, am slowly collecting my own shed of tools (mover, hedge trimmer etc), learning to appreciate the hard work that goes into keeping a neat house/yard, more space to live, room for all our clothes and stuff, now have 2 dogs and the list goes on.
Initially it was a shock but so was moving out together without any furniture or appliances.
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Opec
Brisbane, Queensland
7505 posts
Im a noob with this shit but maybe our situation helps you:
We went from paying $200 a week rent (family discount - worth $275), to our first preowned house with mortgage payments of $450 a week. I was lucky enough to receive a substantial financial gift from parents that was approx 30% of the house's value, and our deposit and FHOG wasnt very much, only approx 10% of the house's worth. What we didnt really know anything about was rates, water and other stuff we didnt pay when renting and people we asked had really different figures. Ended up being an extra approx $200-250 per week when you average out rates, electricity, water. That DOESNT include extra stuff non house related like food, petrol etc.
Prior to making the decision, we worked out weekly wages, weekly costs (food, petrol, electricity) and figured out how much we had spare. We then went to Aussie and worked out if we borrowed X, then repayments would be Y and figured out the max house we could afford including my parent's financial gift. Found a suitable house and price and got it.
Been living here nearly 2 years and all has been well. We both dont make much money (1 student, 1 retail assistant) and still receive some help from parents with certain things (eg free old car) but we have enough left over money to live comfortably enough.
Excellent example of well planned and making an informed decision, well done to you sir.
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sLaps_Forehead
Brisbane, Queensland
5774 posts
Fuck me some of you guys are well paid.
And here am I thinking that IT jobs were poorly paid and being outsourced to Mumbai.
Back to housing I suggest that:
a) You get a wifey. The Property Market is setup for dual incomes (unless you are a lucky highly paid pleb)
b) Buy a house and get a boarders in to help with the repayments.
c) Stay at home or go rent with some mates and then buy an Investment Property. Reason being that our government favours Property Speculation over hard-work and saving, that's why the tax system along with your tenant will help pay off your Investment Property. Meanwhile people who save for a deposit and take out a mortgage on the home they live in get fucked over by the tax system.
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IVY_MiKe
Canberra, Australian Capital Territory
730 posts
I do think $3500 for one person is too much though. 2 people, no problem.
This is where I'd be stuck if I was looking to buy in Canberra.
The housing market here is completely artificially inflated and counter-intuitive when compared to any other part of Australia.
ATM I pay $560pw in rent and then I need a $200pm storage block to keep larger items in (works out at roughly $610pw).
I'd love to be paying a mortgage (if not my own, a family members maybe... coz 'pissing it away' (admittedly into someone else's future wealth) doesn't better your own, or your family's financial stability.)
I am almost positive that I'll never be able to buy a house in the ACT... certainly not my first anyway...
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TiT
Brisbane, Queensland
4704 posts
haha nice thread, i am doing this right now too. As having 1 wage as being single is very hard to get a place i am going 1./2 with my brother we are looking at 2 bedroom apartment around new farm...
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Pinky
Melbourne, Victoria
12570 posts
Just had a browse of ACT properties. I think your idea of "artificially inflated" might be all in your head.
You're better off getting into the market. Just accept that your first home will not be your dream home. That seems to be half the battle from what I've seen with new buyers.
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Sc00bs
Brisbane, Queensland
8610 posts
fuck me you must earn shitloads to wax 610/w on rent
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Alize`
Brisbane, Queensland
1631 posts
I just bought an apartment at Biggera waters. It's in the Gold Coast which is shit but it's right on the water. I'm hoping that the Gold Coast will become a nice place again.
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defi
Wynnum, Queensland
2787 posts
I purchased my property for 400k. I had 50K deposit and got FHBG as well as my solicitor fees for free. I ended up with a $360k loan and $15k in a mortgage offset account for renos / repayments.
My repayments are $600 / weekk (I pay more than needed) and my girlfriend rents off me for $120 / week. My salary is around $78k.
I do this quite comfortably, and besides my major renos taking my offset account total down, it usually slowly climbs.
Hope that helps.
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skythra
Brisbane, Queensland
5185 posts
Out of some deep psychological trauma caused by financial distress of owning a horse, i was about to say "No dude, Don't buy a horse" then i read the title better.
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spidz
Brisbane, Queensland
11008 posts
don't agree with the 'don't build' suggestions.
~50% of new homes are built by first home buyers...
if you buy at a new development with a project builder, it couldn't be much simpler and you will likely get good value for money in comparison to existing property in the immediate vicinity
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orbitor
Brisbane, Queensland
8792 posts
Yeah, I'm paying like $415 a week rent at the moment by myself on an apartment (an apartment I'm not even living in atm which is even worse), so when I get rid of that I'm toying with the idea of maybe buying. Haven't really started looking into it seriously yet though, but its like thermite said, if I'm paying that much in rent I may as well be paying it off a home loan instead and actually get something out of it.
Why don't you break lease if you're not using the apartment? All you'll have to do is pay rent till they find a new tenant. Beats paying for it until your lease expires.
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Crusher
Sydney, New South Wales
1049 posts
Out of some deep psychological trauma caused by financial distress of owning a horse
the lady in horsegag.avi sued you for a lung reconstruction?
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Khel
Melbourne, Victoria
18194 posts
Why don't you break lease if you're not using the apartment?
Yeah, I am in the process of doing that now, but it wasn't till recently that I knew for sure whether I'd be staying in Brisbane or going back to Melbourne, so I was hanging onto it till then.
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orbitor
Brisbane, Queensland
8793 posts
don't agree with the 'don't build' suggestions.
~50% of new homes are built by first home buyers...
if you buy at a new development with a project builder, it couldn't be much simpler and you will likely get good value for money in comparison to existing property in the immediate vicinity
Building is stressful and fraught with possible cost overruns. But at least you end up with something new with 7 years of builder's warranty.
Buying existing, well you might be buying problems that will cost you $$$, who knows. Your average building inspection is hardly worth the paper it's printed on.
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Clubby
Brisbane, Queensland
760 posts
My rent is $140 a week in a large 5 bedroom in Paddington near Rosalie living with good mates. And yeah my calculation is simple and I like it that way :P ... I did a huge value of money depreciation, value of land percentage increase etc one and it still showed after 5 years I was better off saving the money than buying atm (and by me I mean my accountant housemate did).
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CHUB
Brisbane, Queensland
8525 posts
i am going 1./2 with my brother One thing I've learnt in life is to never get involved with family or friends with houses/businesses.
Lets hope you're not part of the group that fails, I've never seen a successful sibling partnership.
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Raven
Melbourne, Victoria
6483 posts
Raven
Melbourne, Victoria
6484 posts
Building is stressful and fraught with possible cost overruns. But at least you end up with something new with 7 years of builder's warranty.
Yeah, it's $20k grant if you build, but only $7k if you buy existing.
Henley are slapping a 50 year guarantee on their builds, and a few promotions in upgrades, cashback etc.
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mission
Brisbane, Queensland
8332 posts
Henley are slapping a 50 year guarantee on their builds
I'd be wary of that, I bet it has a gazillion clauses.
New houses, in general, are built to pretty low standards, especially the house and land package type deals.
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paveway
Brisbane, Queensland
16258 posts
New houses, in general, are built to pretty low standards, especially the house and land package type deals.
signing in to say i worked as a tradey in that area for a couple of years and can confirm the above statement
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Dan
Special Text
Brisbane, Queensland
12728 posts
Thing is, prices are now growing at a rate faster than I can save, even with no costs. It's a case of if you don't do it now, you'll forever be out of the market. Can't believe nobody else took issue with this factually incorrect statement yet.
This may have been the case over the last decade, but it is far from a certainty right now. Especially in Melbourne, which is currently seeing a large oversupply of MDU developments.
Median Aus capital city house prices have fallen over the past year and there are more reasons to predict this continuing than there are for prices to increase. The biggest potential for price increases would be another round of government stimulus and with both major parties so fixated on returning to surplus, another FHOG boost doesn't seem possible, let alone likely anymore.
It's my opinion that it is not a good time to be buying a house in Australia, and if you simply have to, only do it if you're getting an amazingly good deal and have deposit of at least 30% of the purchase price.
Rent money isn't any more 'dead money' than mortgage interest right now,
It's a good time to be saving for a deposit though imo. Look into the governments First Home Saver Account initiative as a good way to start there.
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Opec
Brisbane, Queensland
7506 posts
Yeah, it's $20k grant if you build, but only $7k if you buy existing.
Henley are slapping a 50 year guarantee on their builds, and a few promotions in upgrades, cashback etc.
That 20k will burn away very quickly in legal costs and various other duties etc before you know it especially for a new build. When we bought ours FHOG of 7k barely cover all the legals and duties etc and that was a newly built house (back in 2001). With own build well, I can imagine there'll be a crap load more stuff that you'll need to spend to even get started.
Then you get to deal with the builders coming back to you for more $ for *insert various issues here*. Sometimes it's not their fault and unavoidable i.e. you just never know what's underground before you dig it up). So if you're lucky it'll blow out by 20% and if you don't pay it well, you'll just end up with half build place and you can't do anything with.
Now if bought house and land you may avoid a lot of these problems but it's not a guarantee (duh). So if you're already tight on your budget you're going sweat bullets. Of course if you're experienced and have loads of cash then build away but then if you're in the situation this thread would've been different :).
With existing build you (theoretically) won't have cost over runs. Unless you bought a dud with problems and were not discovered from the inspection report.
Don't build a new one would be my advice.
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LOL @ building for your first home
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Raven
Melbourne, Victoria
6485 posts
Thread seems to have gone way OT :(
Don't concern yourself with the building costs, legals etc. The concern is the repayment amounts, rent, whatever.
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spidz
Brisbane, Queensland
11009 posts
Building is stressful and fraught with possible cost overruns.
Now if bought house and land you may avoid a lot of these problems but it's not a guarantee (duh)
These sorts of problems are standard if building a home on a random block with a building contractor, archtect and council etc.
Building at a new development, with a project builder is about as simple as it gets. All the good ones have standard maintenance teams to service you for 3-5 years as well as build guarantees enforceable by regulatory authority, not to mention they will all be fixed price contracts with clear inclusions etc.
So not really much risk at all compared to buying older existing homes, in fact most likely less risk.
*Disclaimer: I am a director at a small developer of house & land packages in Brisbane and have also worked at some of the largest builders and developers in the country, so I am a bit biased.
I hyave also purchased existing property and had disasters occur, so further bias may be present as a result
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spidz
Brisbane, Queensland
11010 posts
Raven: I previously worked in the Victorian Market.
Have a look at Devine, Henley, Metricon, Porter Davis and Burbank packages. Hard to go wrong.
Consider buying in a smaller boutique estate that is close to the large masterplanned communities pumped out by Stockland, Lend Lease etc. This way you get the benefit of all the new infrastructure & amenity, but pay a little less in most cases.
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Raven
Melbourne, Victoria
6487 posts
I originally started by looking at Metricon, and then by accident visited a Henley display village and absolutely loved what I saw.
Don't get me wrong, I understand what you see there is like $125k of optional extras, but even still - just the build quality and the style of the facades was leagues ahead.
Metricon seem to have a lot of extras that aren't stated; Henley right now have pretty much everything fitted out (hell, you even get lights, which is unusual), the only thing I can see that I actually need is towel rails, toilet roll holders, wardrobe fittings, carpet and blinds. Literally everything else is included - including (for $10k extra) driveway, fences, letterbox, flyscreens, clothesline, landscaping... I'm struggling to see what's missing, so I *think* costs are pretty controlled.
And since I only want a simple home - I don't have a wife that's going to want flash marble benchtops and the nice chrome faucets and nice sinks etc, I am *hoping* I can get away without the typical $30k of extras most end up with. My estimate is carpet is about $12,400, BUT, it seems their current deal also gives floorboards throughout. It's unusually complete.
The other uncertain costs are clean-up, solicitors, inspectors, LMI, stamp duty, land transfer, mortgage rego. I'm trying to figure out what else I've missed.
Henley also have some *verrry* nice looking facades, but most importantly rather unique floor layouts, which is why it's hard to even shift focus to other developers.
Porter Davis just don't seem to be able to compete on price; Burbank are significantly smaller for the same price.
Devine didn't have too many great designs.
Is it even worth meeting with Henley, getting a full quote (which I'm doing on Saturday), and then going to Porter, Metricon, whoever, and say "here's what your competitor's given me. What can you offer?"
Or is it "This is our price, take it or leave it".
The two land areas I'm looking at are Highlands (Stockland) and Aston (Peet). Lend Lease won't have any new releases until late next month. Highlands is available for titles now, Aston Stage 4 won't have titled until August/September.
Stockland are trying to insist that the fact that they've spent millions in shopping centers etc etc etc justifies their land being $35k more. I don't see it that way. I would rather be in the market with a cheaper home than priced out of the market and completely unable to afford to buy.
last edited by Raven at 15:44:36 09/Feb/12
last edited by Raven at 15:45:25 09/Feb/12
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tspec
Melbourne, Victoria
3361 posts
The way I got into the housing market was to start small and affordable, in 2003 I bought a freestanding unit for $230k and over 5yrs that doubled in value which allowed me to offset it and buy a proper house. I never sold the unit and largely live off it's rental income whilst my work pay goes into the mortgage for both places (as they're set up as a split loan). Obviously you have to be prepared for situations with rental properties like general maintenance costs and potential to not have tenant for x amount of time but we've been pretty lucky in those terms.
In terms of my unit rental, and even my house, my criteria was pretty simple, had to be close to shops and a train line, (being near a school is also a good for future rental potential). So when I say close, for me, within 10mins walk and no major road crossings. The condition of the place wasn't a massive concern but at the end of the day it's all about location, you can change a house but you can't change it's location. So the house I bought is a 60yr old dump but it's in an awesome spot and eventually i may be able to afford to renovate but for now, it'll do.
I've lived on the eastern side of Melbourne my whole life, could never see myself going west, it'd be like sleeping on the wrong side of the bed for me :)
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spidz
Brisbane, Queensland
11011 posts
Peet are a good developer, so no issue there.
It's definitely worth shopping them against each other.
Also, work on a fixed price house & land package from one of these builders at one of the locations. That way you can pick up the promo offers from both developer and builder.
Tell them you want a fixed price turn-key package with basic inclusions.
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infi
Brisbane, Queensland
18383 posts
I'm paying $5,000 a month interest only.... so yeah...
For first house, don't go beyond your means - think small. Another thing to keep in mind is that we are moving into a stagnant and possibly deflationary period for real estate.
Don't expect the price of your house to increase at all for at least 10 years. It may even continue to slide in value for the next couples of years until the GFC II winds through. So consider the place you live in as a long term investment.
Save a substantial deposit. This saves on mortgage insurance which can be a real scam.
Then you enjoy having your own pad and answering to nobody.
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TicMan
Melbourne, Victoria
7715 posts
On a side note, come buy in Olinda so we can become neighbourinos!
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hardware
Brisbane, Queensland
10012 posts
when i first got my house in 2007 my repayments were 49% of my net income. Since then, with payrises, CPI increases, interest rate drops and me paying off more, my repayments sit at 38%. This change has happened in less than 5 years. And that's just based on my wage, let alone the 3 other sources of household income i have.
OP i would suggest getting a bigger block of land even if it means spending more. Remember with property, land appreciates, houses depreciate.
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Scooter
Brisbane, Queensland
5476 posts
I don't really think anyone else could have all the information you need to sort out your own personal budget.
My repayments are slightly under 30% of my current Take Home pay, started just over when I first bought the house.
Never felt stress about payments and still have more than enough for my Dive Trips, camping and fixing up the Jeep when it breaks.
I probably could live comfortable with higher repayments, but at the end of the day there are currently things I would rather spend the money on... even if it's considered 'wasted' money by others.
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tspec
Melbourne, Victoria
3362 posts
On a side note, come buy in Olinda so we can become neighbourinos!
My inlaws live out that way, nice area.
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Raven
Melbourne, Victoria
6488 posts
I'm in Ferntree Gully, that's as close to Olinda/Fires as I'm going.
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Denominator
Brisbane, Queensland
923 posts
Raven
5 years ago we bought a devine home package. Everything turned out good but to buy new you have to pay for everything. If you buy an established home it is much cheaper but you may have to wait for nbn for fast internet.
I am Kicking myself I didn't just buy a home with an established garden.
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sleepy
Sunshine Coast, Queensland
2234 posts
It comes down to your personal situation and finances.
If you are a:
smoker, drinker, partier, shiny new thing junkie then take all those habits into consideration.
Do an experiment over the next month or so.
Pull out your whole wage in cash after you have allowed for any direct debits etc etc.
Go about our business as per usual pay cash for everything.
See how much cash you are left with for that period (make sure you put it out of site and out of mind.) That will be basically how much you can afford. Allow for 20% more expenses and you will be well covered with rates, utilities etc etc. Might be a different way to work it out if you are strugglng to put the figures down theoretically.
Failing that you could do a budget like most people. Get professional advice. If you dont have an accountant. Get one. Usually they will offer a 'free' financial planner to talk to you if they arent well versed in projectional wealth accumulation. Take them up on the offer. If not ask your bank if you can talk to one.
It will be free. The only problem with referral financial advice in my opinion is it will be bias to commisions and institutional interests.
Defs buy something you can live in and be happy enough to do so for a few years. Dont over-extend yourself because you like the 'games room/pool/landscaping/paintjob' or anything like that.
Be critical, be cheap, be firm with negotiating. Be prepared to walk away if the price isnt right or you are having second thoughts.
Disclaimer: Based on my good and bad decisions and things I have observed. None of this is based on me making millions in real estate by any stretch.
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Mordecai
Victoria
1238 posts
Deno has the right idea. No matter what else you decide (and we can't make the decision for you) make sure you pick an area with decent internet or you may just wind up stuck with adsl1 on a crappy line for the foreseeable future.
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Pinky
Melbourne, Victoria
12576 posts
So pinky does that buyer get the doubt to? So he won a $630,000 home for $99,000 ($1,000+$98,000debt) ?
Thats crazy. How can a bank do an auction on a reclaimed debt asset without reserve? and how come there was a highest bid of only $1,000?
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Pinky
Melbourne, Victoria
12577 posts
I have no idea what happens to the debt. Surely only the amount the property was sold for can go to the creditors, so I guess they only get $1000 :-/
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Tiny
Brisbane, Queensland
3111 posts
Make sure you buy a house close to a bike track now.
I don't know much about Melbourne but for a first home buyer in Brisbane it's all about living out in the burbs and putting up with a big commute. Only way to afford a home up here :(.
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Raven
Melbourne, Victoria
6496 posts
Ugh, yesterday was exhausting!
Went and sat with Henley, and quickly watched as their base price blew out to a gazillion dollars.
Sat down with Metricon and got a much more realistic quote, but we wanted the next size of the particular model we spoke about. Was given the quote for that but the sales guy didn't realise the next version would be too big for that block.
So then had to go find another block of land that was bigger, which meant another $13,000...
Ugh.
It's all so frustrating!
Looks like I'm up for a $290k loan at the moment.
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XandraX
Brisbane, Queensland
1101 posts
Raven I was in your situation 12 months ago:
Salary was 85k
Had about 100k deposit
Borrowed 288k
Repayments are $968 per fortnight
I easily cope with the repayments, although my fiancee pays for all food and random expenses. However In 12 months I've saved LOTS of money, so I never would have struggled if I was on my own anyway.
Don't forget to put aside enough money for furniture, appliances and kitchen gear.
If you're secure in your job, I'd say you could do it. However (at least in Brisbane) house prices are coming down, so you could wait a bit longer and get a mega deposit and more for your money in 6 months or a year. Don't wait forever though - I waited for house prices to come down and they went up 20% until I got sick of living at home and bought at the top of the market...
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Raven
Melbourne, Victoria
6497 posts
That's kinda what's happened here.
When I had just got out of uni, so had no real savings, I saw prices and said to myself "yeah, I could afford that", so started saving.
But then in that time house prices grew greatly exceeding my savings, so it's barely helped.
While heaps of people say "house prices are going to come down", that's a gamble - a gamble I'm not willing to take. If they don't, and they keep going up, it's going to make the situation worse.
I'll have my brother in with me, but I'm not counting that in the budget. He's been told he'll have to pay $125/week plus half bills.
I know when I move in I'll have to buy a fridge, washing machine, queen bed and matress... but I'm hard pressed to think of what else. I've already been given a toaster, cutlery and crockery as gifts over the years, and have a decent TV etc etc that'll come with me.
last edited by Raven at 10:43:30 12/Feb/12
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59fifty
Brisbane, Queensland
936 posts
Just signed the contract on our first house last night - put in an offer friday and then had a counter offer saturday which we accepted!
We have been looking for about 3 months and this place ticked almost every box.
Only downfall is 1hr via public transport to the city... (Carseldine)
Such a big decision.. was feeling a little ill afterwards but gotta do it :)
Now to replace the horrible carpet.. bamboo flooring? tiles? polished concrete? Eeek.
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sLaps_Forehead
Brisbane, Queensland
5781 posts
Are u sure Carseldine is 1hr from the city? More like 30-40 mins on the train.
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Crusher
Sydney, New South Wales
1052 posts
Long term whether house prices go up or down, you still win as once paid off, you drastically cut one of your main expense items. With a bit of effort, you can pay off a standard mortgage in 10 years.
I currently have 6 mortgages, soon to be 7. When I buy, the rent covers the mortgage. Costs me little to hold them, and if prices come down somewhat, then its all good as I can buy more cheaper and my money goes further.
Am exchanging on a place tomorrow, $185k 2br villa, rented for $300pw.
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Zen Apathy
Brisbane, Queensland
3569 posts
Just wait for your parents to die an take their house.
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59fifty
Brisbane, Queensland
937 posts
slaps_forehead - true however my figure is based on bus times.
The train station is a little to far to walk!
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sLaps_Forehead
Brisbane, Queensland
5783 posts
Where is that 2brm villa?
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Raven
Melbourne, Victoria
6515 posts
Ugh. So in the last week costs have gone up by $20k.
Faaaantastic :(
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hardware
Brisbane, Queensland
10053 posts
Yeah i've heard that brisbane's property market is starting to pick up again - there's now 20 people at open houses, not just 2.
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59fifty
Brisbane, Queensland
940 posts
lucky I just snagged my joint! whew...
Building and pest all good - though little garden shed has some asbestos in it. Apart from that all ok.
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Raven
Melbourne, Victoria
6516 posts
Not cos of prices going up. Cos of site costs! :(
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3dee
Brisbane, Queensland
6955 posts
I keep reading this as "TIme to grow up and buy a horse."
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Mephz
Brisbane, Queensland
990 posts
.though little garden shed has some asbestos in it. Apart from that all o Asbestos is fine, just don't start knocking it down and keep the wall/ceiling in good condition.
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Timmeh
Brisbane, Queensland
1913 posts
1. Buy a block of land in the middle of bumfucknowhere.
2. Place a shed on the land
3.Build a solar farm
4.??????????????
5. Profit
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m3nt4l
Brisbane, Queensland
2429 posts
Yeah I was going to suggest a rural property with a shed house for a single owner first time buyer. Get the land, build a shedhouse and pay the two off as quick as you can and then build the house you want. At the end of it you will have the house you want, a proper mans garage and a guest house in the shed, paying it off in stages also gives you an out and the repayments should be lower than land and house. Except doesn't look like he wants too far from the city.
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Outlaw
Gold Coast, Queensland
1511 posts
Whats the point of a shed in the middle of nowhere? Good luck selling it before you die, Its hard enough to sell a house in the middle of a town/suburb
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hardware
Brisbane, Queensland
10054 posts
that's great advice mental, except if you know, if the OP actually wants to have a life.
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thermite
Brisbane, Queensland
8986 posts
It might not be easy building a shed on a property with no dwelling. Depends on the council/covenants I guess. But I had the same plan, buy a rural-residential property, live in a shed while I build the house. But instead I'm renting while building and probably won't have a shed for a very long time. Guess I never really pushed for the shed thing that much though.
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m3nt4l
Brisbane, Queensland
2430 posts
I said rural, not the middle of nowhere, there are heaps of semi rural area's in Brisbane not too far away.
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hardware
Brisbane, Queensland
10055 posts
yes mental but the problem is is you're still paying 200k for a block of land like that.
Anywhere cheap enough to do what you suggest will be too far away to get to any sort of meaningful employment.
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m3nt4l
Brisbane, Queensland
2436 posts
Depends on the job, would work awesome in the Hervey Bay area, haven't really explored it, just thought it might be an idea.
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hardware
Brisbane, Queensland
10058 posts
for a level block of land that is serviced by water, power (so you can feed back into the grid), telephone and sewerage you're still looking at 100k+ in the sunshine coast hinterland
thats not even thinking about cable (foxtel/net) or gas. you probably have no gutters or garbage collection either. you're probably on a dirt road too that will flood out when it rains so you'll need a 4wd. etc etc etc. there's a reason no-one but crazy people do it mental, it just doesn't make sense unless you really, really love that lifestyle.
you can buy a whole liveable house and land in maryborough for $200k. and if you're gonna do that you may as well just pay 300k for one in slacks creek or durack or birkdale or petrie or clontarf or wherever.
aaaand that's why everyone should just stop being nay-sayers, grow up and buy a house.
last edited by hardware at 22:05:19 18/Feb/12
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m3nt4l
Brisbane, Queensland
2442 posts
Hold up, I'm not talking out in the bush living off the land.
I mean getting an ok sized lot, building a shed house as in a large normal shed but with a loft area with sleeping, bathroom and kitchen. Living in that and paying it off quickly before building your house on that land.
There was a guy around the corner in Jimboomba that purchased his land, built a huge shed house and then he got his swimming pool sorted before building the house to go with it.
Another way I could try to explain is, where I was living before moving back to Brisbane was Burrum Heads, there are a fair few people who buy land there, then they build a shed on the land which has living quarters and storage for boats and other fun holiday things and use it as a holiday house. When they decide to sell up down here and move there their land and shed is paid for, they then build their dream retirement house next to the shed and live happily ever after.
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hardware
Brisbane, Queensland
10059 posts
m3nt4l
Brisbane, Queensland
2445 posts
My brother lives in Howard, are you stalking me? :P
There are jobs outside of capital cities you know.
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hardware
Brisbane, Queensland
10060 posts
yes, but they're few and far between. And career prospects are severely limited. I've worked on the sunny coast before.
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m3nt4l
Brisbane, Queensland
2448 posts
Yeah I'm not saying its for everyone, it wouldn't suit you and it wouldn't suit the op which is why I waited until the fifth page, was just throwing out an idea that may work for some people who wouldn't of otherwise considered it.
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Fade2Black
Brisbane, Queensland
4906 posts
Yeah i've heard that brisbane's property market is starting to pick up again - there's now 20 people at open houses, not just 2.
My wife and I decided to move into a bigger house in late 2010. At the time we had a young fella all of 3-4 months old and we realised that our 3 bedroom town house in Wishart just wasn't cutting it for room.
We knew the market was pretty bad but decided it was in our best interest to get something bigger. We put it on the market and had 3 offers within two weeks, so we sold the town house we had had for about 2.5 years (only made a 30K profit on it) and started looking in Ormeau on the northern gold coast. We knew we wanted to move into this area because it was closer to family (Tweet/Coolangatta) my sister and our best friends all lived in the suburb. Plus travel wise it only added 10 minutes to my commute on public transport to South Brisbane.
Anyway the first weekend we looked was the first weekend in December, we looked at 13 properties in one day and only saw one other couple the entire day looking in the area.
Last house we looked at we loved. Market was so bad for buyers and the owners wanted the place sold before Christmas so badly that we managed to buy the place for less than they had bought it brand new. House was 2.5 years old.
Effectively we moved from a 3 bed, 1 bath, 1 garage townhouse to a 4 bed, 2 bath, 2 living, 2 dining, 2 garage house for only 40K more than we sold the townhouse.
Long winded way of saying a bad market isn't always a bad thing. We bought in a sellers market and I think it hurt us, we probably over paid for the townhouse by 10K but we had had so little success in our search that we had decided to over pay to finally get ourselves into the market in an area we wanted to be in.
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