Oh it will instantly push everything on the low end of the market in newcastle to the 1.3million cap@Hackofalltrades

it’s disgusting.

and I don’t have a doubt in the world all the property flippers will somehow find a way to take advantage of it instantly e.g parents will buy places for their kids in good locations and use it as a placeholder until their precious wants to build one day.

it won’t even get audited and people will say they are living there even though they are still at home with mum and daddy in Merewether.

i’m so jaded…lol

i can’t believe there’s not rioting on the streets….

i honestly wish someone in Canberra just had the balls to hire Scott Phillips, @Strawman, Alan Kohler or Ross Gittens to run the country….

#notjoking

@Hackofalltrades Here's my property investing journey. Like @Chagsy I have a number of investment properties all purchased via different buyer's agents (BA) and all with mixed success. I engaged a BA as I was too busy trading the ASX options market and also had analysis paralysis so couldn't committ to making an investment property purchase.

When I finally purchased my first two investment properties they were both apartments in small boutique blocks (as there is more land value per apartment compared to a high rise apartment block). Also the higher yield from investing in apartments helped with the cash flow and interest payments. In hindsight I regret buying apartments and wish I stumped up the extra cash to buy a house with a decent land component as I believe I would have been more successful as the difference in yield between an apartment and house was minor compared to the capital gain between the two property types (at least in the areas I invested in).

To cut this story short, I sold one of the apartments in an affluent suburb called Armadale in Melbourne. The result? A capital loss of $13,000 after 14 years of ownership! I went in believing that property doubles every 7-10 years but suffered a massive opportunity cost. I still own a few properties but like @Chagsy I find it a pain in the ass as there is always something to repair. Whenever I see my property manager's mobile number light up I just dread the worst as she usually only rings me for one reason.

If you go down the BA path, finding a good one is obviously paramount but working that out is not as easy as I thought based on the varying results I experienced. I also forgot to mention the BA fee was anywhere between 1.8% - 2.2% of the purchase cost. So when I add the BA fee to the stamp duty I was already starting behind the 8 ball. Good luck with whatever you decide.

@Hackofalltrades I used a small team (3-4 people) for my Sydney purchase, an individual for my Brisbane purchase and a large organisation for my Melbourne purchase so you could say I tried them all.

The results? Sydney >100%, Brisbane > 100%, Melbourne -1.6%.

@Hackofalltrades The large BA only purchased in Melbourne when I first used them but I think they may have now extended their services to Sydney and maybe Brisbane.

With respect to the properties with gains, the Sydney one was close to the beach whilst the Brisbane property was just in a northern suburban area. I was actually close to selling the Brisbane one after 7 years of doing nothing and then it suddenly took off.

In regards to your conclusions @Hackofalltrades, they seem logical and obviously a good fit for you, so there's no push back from me with your stated strategy of using a high quality buying agent.

I've always used and enjoyed the process of researching, locating, negotiating and finalising all of my property purchases over the years, including project managing my own builds on a couple of occasions, but I recognise how things have changed now as a new market entrant. Keep in mind, I've always purchased within a 300klms radius as well.

I reckon if I was trying to secure a property for the first time now and was heading down the investment property method to get into property that I would probably follow your methodology.

Only recommendation would be to make sure you live in the property first ( there's no defined period this has to happen, but initially connect power, etc in your name to make it obvious you are living there). Then you can move out for up to 6 years, claim the property as an investment and all of the deductions for interest, rates, etc. If you move back in before the 6 years (once again, even if it's only for a short period) you can trigger another 6 year period claiming your investment property as your principal place of residence and hence no CGT if you sell.

Sorry, I can't help with suggestions for a top quality buyer's agent, other than suggest there are some Agent rating websites out there that may be helpful.

Good luck and hopefully I've understood your strategy correctly (rent out initially to help with repayment costs).

@Hackofalltrades I'm interested in your quest. Not so much for myself, but my kids will be having to face a similar challenge very soon. I have managed to do well with shares and super but I am not too far from retirement so maybe a different situation to you.

I don't know of a buyers agent but I would be getting one local to the area you are looking to buy. I'd be thinking about buying in a similar market to where you ultimately want to buy because at least the price appeciation should move in sync. It might be less risk than buying in an uncorrelated market which may not be going up as fast or at the same time. I assume you would sell the investment to buy your first home.

I guess the other consideration is the land value to building value ratio. I understand that land appreciates and buildings depreciate so a house might fit that profile rather than apartment? There's also different profiles for old vs new, city vs country.

I understand the advantage with property over shares is the leverage and the lower CGT depending on your personal income(s) and stage of life. I'm no expert though, so interested to hear how you go. Good luck.

@Hackofalltrades I’ve been having some great conversations with Chatgpt really digging into house ownerships suburb by suburb in my hometown.

Really useful tool.

You can put in your budget, breakdowns, and do some pretty decent analysis, even popping links to recent sales and ads.

Keep your eyes open for the federal governments Help to Buy scheme in the second half of the year.

They have said they are increasing the purchase caps significantly and the income caps.

In my hometown, it will be $160k for a couple and $1.3 million for purchase cap.

Of course it's inflationary, but try and do all your preparation before it opens and be first to apply.

Ross Gittens wrote a great piece on how conservatives aren't actually conserving families because each generation is having to live further away from the previous.

It's a joke, I'm wondering when the numbers will change so the 1/3 of people that don't own a home can finally grow to become a viable voting block.

Australian's are getting stupider and stupider. The first order thinking going around by home owners who can't accept that house prices need to go sideways for 20 years is truley indicative of a cultural dip.

Guess we're getting the government we deserve.

My kids are not going to be able to afford to make any mistakes with money like I did.

#tuesdayrant

@Hackofalltrades , I'd reiterate and support both @topowl and @lowway here. The Help to Buy scheme, if you can get in on it, may make the difference on getting into property in your area. In effect the government will take a percentage ownership in your property of 30% on an existing property or 40% on a new build. So while you might not get a mortgage on a $1million property yourself, you may well be able to service a $700k mortgage for a 70% share of a $1million property.

This gives you the option to get in the market and start building equity as property values continue up, even with a view to transition to a investment strategy afterwards. Like @lowway mentioned, if you buy a property as your primary place of residence and reside in it initially you can subsequently rent it out for 6 years without incurring a CGT liability. As you pay down your proportion of th mortgage, building equity you could then consider refinancing to buy out the government's share (you'd have to check the rules around that and any stamp duty liability).

I started out investing in property and then predominantly changed to shares, but if you do go the investment option make sure you take the following into account (sorry if any of this seems overly obvious):

• land taxes - different jurisdictions have different taxation rates, some have a tax free threshold and some (like NSW) don't, it can make a big difference;
• stamp duty - more for investment property in some jurisdictions;
• rates - generally more for investment properties;
• interest rates - generally will be higher for an investment property. It might seem counter intuitive, but consider going interest only in this case, if you are disciplined you can work out what the Principle and Interest payment would be and put the difference in an offset account. You have lower minimum payments for when the going gets tough, the offset account lowers the interest payable, and it provides a cash buffer for when things (inevitably) go wrong with the property;
• landlords insurance - for damage by tenants and failure to pay rent, it's a must have, read the terms and conditions carefully and make sure you have a cash buffer for if they don't pay rent (this happens more often than you might expect);
• real estate agents - I've both personally managed and used real estate agents, if you are going to use them again drill down into fees and charges, letting fees vary a lot generally they will charge 1-2 weeks letting fee, plus a weekly percentage of the rent. Make sure that you use an agent where they transfer the rent weekly or at worst fortnightly, you want that money in your account lowering interest charges;
• tradies - particularly if using a property manager (they often have existing arrangements that work for them, not necessarily for you), check what the tradie call out rates are, if you are handy (and have the time, and it is near you) you can instruct your PM to contact you first to do basic repairs yourself. Budget a % of your property value/earnings for maintenance;
• depreciation - new builds and some renovations can be depreciated, this is great for initial tax management but keep in mind that it changes your cost base for CGT calculations;
• CGT - currently for investment properties you would get a 50% CGT discount, don't count on that still being there in the long term, Labor will definitely target that in the forseeable future;
• Accounting - you're going to pay more to your accountant for your tax return. Get them to drill down with you exactly what you can an can't claim.
• Body Corporate - if buying a unit or townhouse check the Sinking Funds, ask to see the last couple of years of Body Corporate meeting minutes (looking for ongoing , unrectified problems), check the body corporate fees and be aware that they can jack them up pretty much whenever they want.

There is more to consider obviously, but that's a good starting point. Personally I think the best way to invest in property now is in your own name, as a primary place of residence, potentially using the 6 year window to rent it out. Also keep in mind that, if it suits your circumstances, that having a boarder in your house does not count as declarable taxable income (but you can't claim any deductions either). If you live in the house and rent a part of the house (particularly useful if you have a property with a granny flat etc.) and you do declare the income then you can claim a proportion of the property expenses. Again, keep in mind the 6 year rule and get advice around any potential CGT impacts.

Good luck mate.

I’m hoping the help to buy will allow knock down and build with the government contribution only applying to the initial land purchase.

in principal I think it aligns as long as you intend to live in it. I mean we want new houses right ?

so much crap old house stock out there, government can’t keep ignoring it (…lol of course they can).

I mean they’re not really helping people if they are just helping peeps into a position where they use all their savings to buy a house that’s falling apart and require significantly more money to fix….

Lots of good comments on this thread and I have a few of my own:

• I can't stand buyers agents. They're incentivised to make you pay a higher price for the property - it's insane. It makes sense for a Seller to incentivise the Selling Agent to get a higher price, but for a Buyer to incentivise a Buyer's Agent to pay a higher price is wild. I've had several dealings with Buyers Agents and they tend to get in the way of clear a direct communication with the Buyer and muddy the waters. Everyone thinks RE Agents are out to get buyers and swindle them - that's definitely not the case (there's always a few rotten apples in every industry). A happy buyer and happy seller is the aim.

• Strata Fees/Body Corporate is often misunderstood. High Fees are ok, if there's significant works being done to the building and if they're being spent efficiently. You don't want the strata manager feathering their own nest. If they're high when you're at the purchasing point, then you can factor that into the purchase price. Not so much the case if it changes when you already own it...

• Avoid complicated buildings. Moving parts are always going to break. things like lifts, pools, intercoms, cameras, etc. Low rise, walk up buildings in good positions are key.

• As a RE Agent, I do have preferred trades I use and I use them because they're good at what they do, they're respectful to my clients and will do a good job first time. They aren't the cheapest, but if you want to have the job done where you can sleep well at night, then you want the right people doing the work.

• Real Estate isn't rocket science. It's amazingly simple. You know what else is simple? playing the piano. But you don't become a concert pianist overnight and there's a lot to be said about living and breathing the nuances of a local market. I'm on the sales side myself, but have a number of investment properties that I look after privately. Doesn't take much to look after them and a property manager is worthwhile if you are better off spending your time dong something else. Opportunity cost is key here. We have systems, software, economies of scale which allow us to operate at a much more efficient level than the mum & dad investor. Especially when it comes to a problem tenant or legislative requirements. having someone that lives and breathes it is important.

Speak to older, experienced real estate agents. They have been around the block a few times and know the cycles, locations, local development strategies, road widenings, and all the minute details that come into property. Stay away from the upstart, social media frenzied agents who are getting lots of attention. They often don't have the time to look after you and are so focused on their own narcissistic world that you, the client, are a clear second.

Not really to be honest. There's always going to be good buys in any market but figuring out the nuances is pretty key to a successful purchase.

If I was looking at an area I know nothing about the starting point would be to follow the infrastructure investment.

• Massive government spending and revitalisation is good for property values as value follows amenity.
• Go where there's no new supply - stay away from a new development where there's still a few stages to be developed. Having said that, owning a larger property next to an area which is getting significantly higher density will also make it more attractive.
• Transport routes are important
• And my favourite areas are the bridesmaid suburbs - next door to the hotter market. when prices go up in the hot area, then the adjoining area looks like great value - e.g. Mosman Park and Cottesloe in Perth

Here's a link to an article in Morningstar today regarding the 6 year rule @Hackofalltrades.

https://www.morningstar.com.au/personal-finance/future-focus-one-most-generous-tax-breaks-australia?user_segment=indinv&utm_source=eloqua&utm_medium=email&utm_campaign=ind_apac_aus_au_en_2505_mf_n_n_editorspicks&utm_content=editorspicks_64203&utm_id=33214