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  • Buying a Home?

    My son and his GF are looking at buying their first home.
    Any thoughts, warnings, traps, suggestions, preferences?
    What would the collective wisdom of PSB advise?

    Thanks for any input....
    Last edited by peter600; 17-12-2018, 11:05 PM.
    http://en.wikipedia.org/wiki/Pale_Blue_Dot

  • #2
    As close to the city as possible.
    As much land as possible.
    Worst house in the best street.
    If they see one they both like, buy it, even if it stretches them.
    They hung a sign up in our town "If you live it up, you won't live it down"-Tom Waits

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    • #3
      It totally depends on their situation but I would recommend 'rentvesting'. Buy where you can afford and buy as many as you can, rent where you want to live. My fiancee and I are looking to buy our 5th investment property in January, 1 per year for the past 5 years. Lots of tax breaks, use the equity in all the houses to buy the next one and so on. Years ago we did the whole buy the worst house on the best street and I quickly got over fixing the place up on the weekends as well as working 60+ hours a week and having no time to enjoy life. It might not work for everyone but that's my advice

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      • #4
        Originally posted by chew View Post
        As close to the city as possible.
        As much land as possible.
        Worst house in the best street.
        If they see one they both like, buy it, even if it stretches them.
        Suburb...?
        " Imagination is the seed of life..."

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        • #5
          When I bought my home 2 years ago people told me so many "golden rules" that were often contradicting that I disregarded most of them anyway. 2 advises I would give to anyone buying first home:

          1. Only buy it if you really like it and your heart is into it

          2. Do not, under any circumstances, trust any real estate agent!!! Treat everything they say as a possible lie. Do not use their property inspectors and always ask for anything they promise in writing.

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          • #6
            Originally posted by GsxInShed View Post
            Suburb...?
            Get a map and a compass, stick the pointy bit in the GPO set it 10km and draw a circle, if you cant afford any, set it at 15kms, rinse and repeat until you find the sweet spot.
            They hung a sign up in our town "If you live it up, you won't live it down"-Tom Waits

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            • #7
              What Chew said.
              -

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              • #8
                Buy the cheapest house they wouldn't be ashamed to call 'home'. It won't be their last purchase so why worry about buying one they 'love' when it's temporary?

                *shudders*

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                • #9
                  Originally posted by comehereoften View Post
                  It totally depends on their situation but I would recommend 'rentvesting'. Buy where you can afford and buy as many as you can, rent where you want to live. My fiancee and I are looking to buy our 5th investment property in January, 1 per year for the past 5 years. Lots of tax breaks, use the equity in all the houses to buy the next one and so on. Years ago we did the whole buy the worst house on the best street and I quickly got over fixing the place up on the weekends as well as working 60+ hours a week and having no time to enjoy life. It might not work for everyone but that's my advice
                  Unfortunately that time has passed and congratulations on doing so well when that was possible.
                  Due to the ongoing Senate review on this loan/equity security situation that kept escalating prices, banks must now work to reverse it by making loaning far harder and many are refusing equity in other houses as security. Removing negative gearing is a political prospect to help reverse it too.
                  Now, it is very difficult to get a loan for investing in property so it would pay to work out how much finance is available to them before starting. This will dictate the area they can invest in.
                  Close to work is a major bonus so if they think they have permanent employment and enjoying it, buy near there. Drive around the areas as often people get desperate trying to avoid real estate agents and have their own signs on the houses.
                  When looking at houses, be very sure the structure is sound as repairs and maintenance on a property can be very expensive and often not budgeted for. So be sure to check plumbing, heating, air conditioning, ovens, retric, etc etc is in good condition. If you have doubts and the seller promises to fix something, then be sure that is in the contract and if not fixed, the purchaser can get a quote and that amount is deducted from the final price. Basic electricity, water etc is meant to be working and must be checked on the final inspection.
                  Be sure your son has done his budget with realistic living expenses that can cover all purchase expenses, the odd bad experience, plus rates, insurance, electricity, water etc. He may not realise how expensive buying/owning a house could be. Also worth making them both think about the worst case scenario of splitting up and not being able to sell the house.
                  Before putting in an offer, hang about the area to see if there is conflict in the area also ask as many locals as possible how they like it there.
                  Never put an offer in for what is being asked, always put in a lower offer as they will counteroffer then you can raise/lower the price or refuse to sign. There are lots of houses around, so falling in love with one of the first houses they see is normal and real estate agents saying someone else is interested and may/has put in a higher offer is normal too. Touring around looking at multiple alternative options will help relieve their disappointment when their final offer is not accepted and the delay usually causes the buyer to finally agree to drop the price. Tell them not to bother going to home opens unless they are very happy with what they see but it is an experience for them to see and pick some of the tricks used by real estate agents.
                  Watch carefully the political aspect to see if Senate will relax the demand on banks and/or negative gearing plus ignore media trying to ramp up house prices in the meantime.
                  Wish them luck from us all.
                  Last edited by Wahoo; 19-12-2018, 03:34 AM.
                  Life is NOT a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming: "Wahoo!! What a ride!"

                  Comment


                  • #10
                    Originally posted by chew View Post
                    If they see one they both like, buy it, even if it stretches them.
                    Originally posted by INTJ View Post
                    Buy the cheapest house they wouldn't be ashamed to call 'home'. It won't be their last purchase so why worry about buying one they 'love' when it's temporary?

                    *shudders*
                    If they both like it may not be temporary. Some people make good decisions the first time.
                    They hung a sign up in our town "If you live it up, you won't live it down"-Tom Waits

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                    • #11
                      A few of GT's thoughts,
                      1 Location, location, location. This is subjective so draw those compass circles around Perth, Joondalup, work places, what ever.
                      2 Joint tenancy vs tenants in common. This a legal thing and it will become relevant in the case of a death or a split up.
                      3 The debt bomb, this is relative to Govco crap and the Royal Commission on banking, this may well push prices down so don't rush into anything.
                      4 Wahoo made some very astute observations, so did others here.

                      - - - Updated - - -

                      Originally posted by chew View Post
                      If they both like it may not be temporary. Some people make good decisions the first time.
                      If this turns out to be the case then additions, alterations and even a full rebuild could be long term options.
                      The only thing wrong with a perfect ride to work is that you end up at work.
                      G T

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                      • #12
                        Originally posted by Wahoo View Post
                        Due to the ongoing Senate review on this situation that kept escalating prices, banks must now work to reverse it by making loaning far harder and many are refusing equity in other houses as security.
                        Re you blaming increasing house prices on the senate inquiry? I think one of the causes for the reckless lending was Kevin Rudds guarantee that no major bank would go bankrupt.

                        IF someone gave me such a guarantee, I too would start placing money in high risk/ high reward returns. Another rason for the increase in prices (as others alluded to in other posts) was diy super which allowed investors to buy homes.

                        As for tips : factor in an increase in interest rates. Probably assume worse case scenario. Get ahead of the repayments to give you a buffer. Its alot easier sleeping at night if you are a year or 2 ahead on your repayments.

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                        • #13
                          There used to be a time when building was cheaper than buying, but it seems that buying is cheaper at the moment, unless you get a project home miles from nowhere.

                          The advantage with building is that you can get something that is close to exactly what you want, whereas if you buy, you end up buying other people's comromises, and you will end up doing just as much work renovating or redecorating or whatever to make it yours, and without the warranties on all the appliances, nor structural guarantee on the construction.

                          If they do decide to build, choose a decent builder, not a cheapy that might go bankrupt next month.

                          I've built 3 and all have been great projects that I was proud to own

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                          • #14
                            Negative gearing will never disappear. Most politicians have negative geared property’s and the housing market would be flooded with homes that would be unable to be sold as so many homes are negatively geared.

                            As a few others have said. Make sure you get an independent building inspection from a reputable building inspector. This will save thousands of dollars of unforeseen and hidden problems that most people don’t know about. And definitely do not believe the real estate agent, they are worse than second hand car salesman.

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                            • #15
                              Don't buy to impress anyone. Buy something where the repayments are less than 25% of your household after tax income so the mortgage doesn't control your life and then make extra repayments.

                              You get a nice comfy buffer in your redraw, which makes life much easier.

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