How to buy a 1.5 million dollar property.
news.com.au/finance/money/investing/renting-b...
news.com.auPosted Apr 13, 2021, 4:53 AM UTC
63136
news.com.auHave 1.7mil in money is a start
95
Half at a time? https://www.dailymail.co.uk/news/article-9462035/Shocked-dad-plunges-700k-Sydney-family-dream-home-left-HALF-house.html
49
That’s one of the funniest property things I’ve seen. What sort of an idiot doesn’t look at the plans when constructing a house? Poor guy but he’s only got himself to blame. Morally the building company should have really talked him out of doing it but 🤷🏼♂️
30
That is exactly why I do not understand why this happened. Did he not read anything?
14
I read another article about this guy which included the builder response. He was made aware at multiple points that he could exit the contract and that the local council had the property slated for a duplex so I don't know why he's suprised at the cost of his stupidity? Or maybe he went to the media hoping for a handout.
Goodness gracious!
13
Sounds like it to me. His mistake resulted in him owning a comical house and he's latched on to the idea of using the media to drum up sympathy and make a quick buck... Or gain him another half of a house lol
4
Lol. And he is a mortgage broker? I would not trust him dealing with the banks for me.
9
OMG, it’s the blind leading the blind
2
"i didnt read the documents, just forwarded them to the bank"
not the best advertisement for his mortgage broking ability. Actually, now that i think on it, that seems exactly what a mortgage broker does - not much, forwards it to the bank.
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Pretty sure he only deals with new immigrants who can't read English.
3
Brokers literally are a gateway to products ONLY. They have no responsibility for accuracy or understanding of documents being passed
2
How good is the media propaganda pouring napalm on the fire
39
Buy two investment properties for $750k each...with mortgages you can't afford if it weren't for rental income.. and you're nearly there!
Just need to sell those properties and ensure the tenants keep paying you rent. It's that easy!!
28
About 66,000 households out of 9,300,000 households in Australia bought a property for more than $1,000,000 in a capital city between Feb 20 and Feb 21. Do you really need to be one of those households?
18
Everyone here thinks the world ends about 15km from each cbd. It's the only prices I see here.
19
And when you point out “hey, if you can get a job out there, regional is just better to live in due to less traffic etc.” you get called a small town idiot by people who clearly have no idea what regional Aus is even like.
One dweeb on this sub was going on about how the rest of the country was “unlivable” and others talking about every place outside of SYD and MEL being shit holes.
Some people just feel like they should be allowed to live wherever they want just because that’s where their family is/was.
Like, we all understand that living in the heart of Paris, New York, LA etc. would be insanely expensive but because we’re from here feel entitled to live cheaply in the Australian equivalents simply because they weren’t worth that much in the past.
We can talk about how overpriced random houses in illogical places are but by trying to force yourself to live there you’re just giving the investors/speculators exactly what they want.
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There is no Australian equivalent to Paris and NY. LA we do have with Sydney (HUGE urban sprawl inland) with a beach front.
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You don't even have to go rural though. I paid for 570 for a 4 bed house 60km from the cbd, drive 30 minutes to work and still work with people that are upset they can't afford to buy their first house in Glen iris at 26.
-2†
570k to live 60km out of the city is an outrage.
In some countries that’d put you over the bloody border!
13
Awesome, and your kids can buy 120km from the city with a 60min commute. Grandkids can move to 180km from city, surely they'll get high speed rail, might only be a 60min commute too.
I don't see the problem, just whingers wanting to live in Glen Iris...
4
Do you mind linking to the source? This sounds awfully small given that living inside of 20km of Melbourne or Sydney is a minimum of 1m.
1
It’s a misleading statement - 9m households in total, not 9m houses bought in that period.
It looks like somewhere in the ballpark of 300k houses are sold in Australia every year, so that’s 66k out of 300k or roughly 20% are in the million plus bracket. Very rough estimates there. Likely higher in SydMel since that’s where most of those $1m+ houses will be.
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https://www.housingdata.gov.au/
Look for property sales by value
1
Echo chamber of housing bulls....... get on the never ending ladder. MAX debt. Soon as you can.... LOL Tears, this will end in.
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Wait, is it 2006 again? Because that's about when I first remember hearing about the impending crash.
In the mean time, property will rise 300%, then retrace 10% and then property bears will be the first to claim "I told you so!" while the bulls wipe their tears away with the 290% wealth increase.
3†
Oh god not this again. It hasn’t happened so it won’t? I pity that way of thinking. Just evaluate EACH time. Stop thinking the same thing will happen forever. Ask questions: Have Interest rates have never been this low? Have people ever had more debt vs income?
Sure property could go up, but there are A LOT of reasons it won’t with less levers for the gov and reserve bank to pull.
It’s a new situation. Just don’t be simple.
6
Lets revisit this conversation again in 10 years time.
-7
Why, in that time I may have reevaluated the new situation? That’s my point. Don’t assume I am a bear always. I’ve owned houses, just have no intention of owning one now whilst people are gambling bank’s cheap money against each other. I’m trying to educate you but you seem to be of the ‘housing always goes up’ religion. Just be careful.
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It's not smart to treat property like a team sport. People can be bullish or bearish depending on circumstances - picking a side and sticking to it no matter what is a good way to risk losing money. If you think prices are going to double again in ten years you need to have really strong reasons to think so, especially when rates can't go any lower.
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In 2002 I was warned off buying property by all the “smart people”
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... and every year since.
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You made your decision, don’t blame others.
0†
Pft. I can't afford a 250K home.
11
More garbage being pushed upon us by the mainstream media. I gave up the idea of ever owning a home long ago. I'm not going to be a slave for 40+ years just to pay for a box to live in. I know there are many others who feel the same way as me and just about ready to quit their job and start living their lives, because fuck this government and what this country has become.
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100%. I think a lot of people get the idea of having their first home be their forever home stuck in there head. My first home was a 3bd 2 bath on a small block. Didn't love it, but it was only 270k. Spent 5 years there smashing down the mortgage. After that we could've spent 800k on something we liked (or spent months on the internet whining that I can't buy a 1.2million dollar house at 30), but instead we found a slightly smaller (but suitable) 4bd 2bath on a block twice the size of the last house, which for the price of $570,000 meant we could afford to keep both.
Now in 5 years time we WILL be able to buy that dream house, that was well beyond our means at 23.
6
I think the concern with buying a “starter” property (eg a small unit) is that if you want a family you are likely to grow out of it in a short period (eg. five years) and it may not have experienced any capital growth by then, so you might be better off saving longer for a bigger property in the first place
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Exactly and congrats! You’ve done great.
It’s something that is lost on a lot of people. Some however can’t come up with the first deposit which is admittedly hard. But there are lots of incentives at the moment to make that first purchase. Unfortunately we bought at a time there were no incentives (except for new builds) so we didn’t get any help. I am able to borrow at 90% without LMI so that made it easier for the first purchase.
2
We paid LMI and borrowed 95% for our first. It made sense because LMI was only equivalent to 3 months of rent and it would've taken at least another year to save enough to avoid it. And I'd rather pay a bit (it was about $2200 a year) of extra interest than continue to pay 15k a year in rent.
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Yeah, I would have happily paid LMI to get into the market. In a rising market it pays to get in now. In a stagnant / declining market you can afford to wait.
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Really good way to look at the LMI!
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For example, if your ultimate goal of buying a $1.5m property is out of reach today, if you were to buy an investment property for $750k, you’re now halfway toward the total value of your dream home. Then, through buying another $750k investment property in a few years you should be close to the ability to sell both properties and afford the home you really want.
Errrrrrr. They really sped that process up. "Few years" ¿¿¿¿???? Yeah, you can buy a 750k property. Doesn't mean you have a 750k asset. You still have to dodge, duck, and dive through years of economical changes to pay it off. On day 1 you only own about 150-200k of it. And that's after 5-10 years of saving for that deposit and hefty stamp duty. Idk what they mean by you getting another 750k one a few years later. Like you're going to be able to save another 200k in just a few years? And it would probably a bit early to use equity from the 1st place.
Pretty sure it's a lot longer than just a few years. And they aren't talking equity because they talk about selling them. So now you're holding what, 400-500k cash and you burnt 100k in stamp duty? But do you really sell both to put yourself in a 1.5m home where you owe a million and live in it? Now you're a slave to the system for even longer, without any investment properties to give you a passive income, and your salary still sucks because it's Australia.
I think I'd put all my efforts into getting those two properties (let's be real, it's one, because who can save 200k for another in a few years?) to a comfortable place where they easily pay for themselves, and I can pocket some profits. Then use the equity and the pocketed-profits to find a 1.5m home (if we really must find a 1.5m home so we can go on living). Or maybe get that 1.5m home for 500k a few hours out of the city and let the 2 x 750k places pay the mortgage for me. 1.5m buys you nothing in the metro areas. Could pay off the 500k place in no time and have all this extra cashflow for boats n hoes.
I could be way off with my thinking. I was just surprised at a lot of the article.
7
How high can it go? Even bullish friends are suprised by the current rises. Who can afford these prices? Like, the median income cap ratio to houses has to be reached at some point. Additionally, there just isn't a lot of stock on the market.
7
Houses with median prices aren’t bought by people with median incomes.
3
There's also foreign and local investors, they seem to have endless pools of money.
1
The property pictured just sold for $3.25!! 😳 so better keep saving I guess
https://www.domain.com.au/98a-swanson-street-erskineville-nsw-2043-2016804640
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Man it is really crazy in Sydney. I bet that 1.5m house is crumbling too.
As a young, late twenties couple earning 320k HH income, you would think that housing wouldn't be too big of an issue. But everything we look at is way out of our budget.
I can't imagine what it is like for others. Have half a mind to move to Melbourne or Brisbane.
-15
320k and you can’t afford anything...? Our combined is 130k and the banks want to give us $900,000....
28
I have no idea how people get these loans. We're on ~$165k combined, one $1,000 credit card and are being GRILLED to have $660k loan approved. How is this single father of 3 (mentioned in the article) getting a loan for $700+?
10
Not sure man. We’ve got no kids and no debt (except HECS). My partner is currently waiting on PR before it will actually tick over to accepting us but that’s what a few different places have told us.
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Couple lenders will look at you, so long as you're earning than your partner on the spousal visa
4
I think it’s a combination of some lenders with fairly lax standards, and some mortgage brokers willing to push the boundaries. We’re a couple earning around 300k, and felt like we had to push to borrow $1m at 70% LVR. Yet we keep hearing stories of people seemingly offered $900k loans at 90% on half our income. Difference being I guess that out mortgage broker is quite conservative (and so are we).
3
Crazy and yes I had the thought that our broker is keeping everything honest. Others not so much I'd say just like with most things
3
We were looking for <30 min to the CBD, 3BR, most have been upper $2M. Granted these are nice to haves instead of must haves. But given we are somewhere in the top 30% of earners, I wouldn't have expected this to be so far out of reach.
We have had a stupid amount of luck in both our careers, so I can't imagine what it would be like for others who didn't have the same luck or started off severely disadvantaged.
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320k = top 30% of household earners? I reckon you’re higher than that mate — even if assuming 160k per person. Only serves to highlight the incredibly high property prices relative to income.
18
On a household level, you're actually in the top 2.8% of earners in Greater Sydney.
On an individual level assuming 160k per person, you're in the top 4.5% of earners in Greater Sydney.
https://profile.id.com.au/sydney/household-income
https://profile.id.com.au/sydney/individual-income
(Note that in the above stats, there's a category of "not stated" of ~10%. Excluding this category would up those percentages a bit.)
12
Or as the wise philosopher Dr. Biggiest Smallerio said, “mo’ money, mo’ problems’.
Alternatively stop eating avocado toast?
5
This. Every piece of toast could be a brick towards your future home. Well, maybe 1/100,000th of a brick. So I guess I'm saying that if you skip on these types of luxuries, you'll save enough for a home in 1000-2000 years.
4
Similar situation
4
Yeah that's an expectation problem
We're in Melbourne, on the good side of town spent a million dollars less and earn a fair chunk more - but waited until late 30s and a couple of ppor upgrades before doing that.
Houses aren't just bought with income.
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It is very funny how off base the ~30% estimate is
3
Probably cause they hang out with very wealthy people and just think it’s the norm.
2
P.S apply for jobs that would end you up at say $250,000 combined and move out of Sydney. You’ll have a way better standard of living and be able to buy a very nice 3 bedder.
1
Wow downvote the poor person for being a high earner and still not being able to afford something in Sydney (or maybe just not wanting to risk it).
Talk about misplaced blame. It's all the morons who have been maxing themselves out and lying to the banks that you need to be angry at not the victims.
5†
I think your miss placing the blame. Someone on that combined income should be able to save for a house very quickly. This is no ones fault but his own
13
If you drive an hour north of Sydney there are some very nice homes going for $700-800k
Edit to fix $7 to $700
6
Probably need to get on the old real estate sites and update your expectations.
Unless you're talking about 1 hour from the edge of Sydney which is 1.5 hours from the centre of Sydney which is a 5 hour daily commute. Which I think we'll all agree is not realistic.
Please don't reply back with one of grandpa's "I used to walk backwards in the snow in 40 degree heat twice to work daily and it was 13 hours each way and I had a second job".
I have enough of that from my parents who live in Mosman and have a chauffeur to drive them into their merchant banker jobs every day /s
6
I went west and it was the best decision I ever made. All my mates kept renting in the city and they missed the boat. I could afford to buy in all but the best Sydney suburbs nowadays but choose not to. I like it out this way.
2
You not being paying attention? Sydney house prices have been been going up by tens of thousands a month.
Even a top x%er would struggle to keep up with that.
1
Whilst prices have gone up consistently over time the current house price rises in such a short time is not the norm. 360k is more then enough to save a deposit for home in 18-24 months if they really want it
1
I'd hardly call Melbourne much cheaper!
And your assuming with that you would get the same salary.
0
It's fine if you head out a bit. We got a 4 bed 2 bath on a 630m block with a double garage for 570,000 about 60km from Melbourne (1 hour train ride to the cbd) just before covid.
0
TLDR - buy a 750K property now to get your foot on the ladder.
This is literally my plan. I just bought the second "750k" property. The problem with this is that the "1.5m" house I wanted is now worth "2+" so that plan probably won't work. Let's see.
Even just getting the 750k house seems like a nightmare for some people
For the majority of people who don't already own, I'd imagine. For people in more ordinary jobs/single incomes 1.5 million dollar properties just aren't realistic, even with trying to go up the 'property ladder'. You'd need to be a very high earner or be a professional couple to make it work.
It looks like you need around 600k in Sydney to start.. even 750k doesn't give you much! That is twice than what I started with on this journey when I bought a shithole during the GFC 13 years ago. Though I guess it is "reasonable" that property prices are doubled every decade?
If wages are close to double then yes. At 2% increase per year wages take 35years to double. Of course the other variables are reducing interests rates (payments) and increasing population. Are interest rates going to keep going down for a few more decades?
Ya but your 750k house will also be 1m so at least you're not falling behind.
Actually, thats another problem with this plan. My original house is way out west Sydney and a duplex. So it's capital growth is much slower and much more volatile. For a while I didn't think I would even break even on it. Maybe I still have not. I'd still rather have no capital growth than rent. But buying the cheaper house in the cheaper area also means you don't get the same growth of the house you may want to move to eventually.
Duplex has higher rental income and less capital gains so it works out the same.
The property treadmill.
Serious question:
If you could afford a deposit for a property worth $300-350K (regional). Should you get it, rent it out, continue paying your own rent whilst collecting rental income with the intention to use that property in the future as collateral for a more expensive property?
This is hoping your $350K property appreciates as well.
What are the pros and cons of this situation instead of saving up for something $600-750K? Assume that $350K property appreciates to $400K.
Regional properties do not increase at the same rate (In some centres, not even close).
Many regional properties are up between 20-40% right now. If somebody did what I said 12-24 months ago, this would be a realistic scenario for them.
A median house in Darwin for example is worth about 20% more now. It's a wonderful time to sell it.
But you haven't answered my question.
As someone in their early thirties with only 30k in savings and an income of around 45k I have come to accept I'll never own my own home. These news stories coming out saying how great it is that property prices keep rising by these huge percentages. I want to move out of home but my girlfriend doesn't work and I don't think I can afford to support myself let alone her too.
the higher the price go.. the slower the growth. eventually you'll reach it.
Gotta be super picky with property and only buy blue chip locations not Western Sydney. It's not a diversified investment so if you F it up there's no come back as the house you really want grows faster than your IP.
Or else take the easy road and buy diversified share index ETFS and avoid stamp duty altogether. That's how I bought a house. Share gains 2015-2020 killed it.
Correction: buy 2 750k properties. It’s so simple - how has no one else ever thought of this??!
They're so casual about it too!? Just buy one now, and another in a couple of years, easy as !
A 750k property is now 850 at auction... 875
Really that’s how? 🤦♂️ buy a shit location in a suburb you wouldn’t want live in, and then sell later to try get a 1.5M ? Not much for 750K in sydney that is worth buying! Apartments maybe, but apartments tend to lose value and hard to resell when aged! Not sure that’s the best way to buy a 1.5M ? The 1.5M will rise in price faster then your 750K apartment, meaning your even further off buying it and with a big mortgage to go with! Any other suggestions please - invest in education to earn more, stocks etc, maybe?
Apartments barely rise at all
Yes, which is why it’s not a good idea to buy a cheap 750K property (which would only be a apartment) with aim to buy a 1.5M house! Better to go with shares or stocks etc
Wow is it that easy?
Pyramid scheme for boomers
Then get on the local council and/or bribe enough councillors to get your property rezoned to R4.