Advice for first time buyers please

[Holgal]

Hi everyone

I am hoping you can give me some advice as I am very new to the property market.

My husband and I have pre-approval of $480K to buy our first home. We have two children, 6 years and 2 years. We are both 40 years old so have left entering the property market a bit late. We understand that and want to make sure we buy as "cleverly" as possible.

Our priorities are somewhere safe with a good primary school. We are very willing to buy a do-up if the location is good. And we obviously want to buy something that has a good chance of capital gain, to catch up with all our friends that bought 10-15 years ago!

We rent in Howick, a beautiful big home for cheap rent. There is no way we could afford to buy it so are looking at these options:

1) Buy in Howick - probably a 2 bedroom flat or a 3 bedroom tiny house with no land. Not ideal with a family but we can handle for a year or two if we know we can then sell and move onto something bigger.
2) Buy out West which I know nothing about... after looking Trade Me and checking deciles of primary schools it seems Green Bay is a good option? Houses seem affordable in Te Atatu South also but the schools don't seem great.
3) Go to Rotorua where we have friends living there. Houses are cheap, we could get something nice and it would be easy. But friends say if we do that, then we will never "get back into Auckland". Which we may not want to do anyway if we are happy down there.

Any advice or guidance would be very much appreciated!
Thanks

[NomoneyNotalk]

I think you shouldn't take option 3. Rotorua.

$480k can get you a bigger house in West, and really small one in Howick, probably a unit. But West is lacking the good primary schools. There are some good ones too but houses in their zone would be more expensive too.

I think you should buy in Howick because you have been there long and you don't know anything about West. If you know nothing, the chances are you might end up buying the wrong house.

[garrett]

Don't leave Auckland if you can.

Your friends are right, do not leave if you can.

I recommend the shore in suburbs like Hillcrest, Totaravale, Beechhaven, Sunny Nook, Forest Hill and Wairau. Hillcrest in particular has many 3 bedroom houses (units if half share) that back on to parks with playgrounds (big yard no longer important) and generally have excellent schools. Property values have risen in Hillcrest year on year even through the recession. Auckland prices are about to go through another boom cycle and the easiest way anyone can make the equivalent of a second salary is to simply buy a house there.

You could of course buy where you want to own a house (the best return on investment), rent it to someone else, and rent where you actually want to live if you enjoy Howick. Don't be trapped by the "nothing like living in your own home" dream.

If you are dead set on living in a house you own (my partner was), I found the book 'Where to live in Auckland' very useful. Google it and you'll find it. It convinced me the bridge was not the beast people said it was and I got over it. Best move I ever made.

Best of luck.

[revdev]

I know zilch about Akld, but will comment on a few points you make:

1, You need to think beyond a "year or two". If you buy, then sell in that time frame, selling costs will hurt.
2, Buy the biggest parcel of land you are able to, within your budget.
3, Playing devils advocate for a second, if you rent and don't own (i.e. no skin in the property game as we speak) then "getting back into Auckland" is a bit of a moot point.

Best of luck

[sjkpark]

If your current rental is good deal, keep living there and buy a house and rent it out initially. That's what I'm doing.
That way at least you get on the property ladder. Also you can claim a lot of expenses (including mortgage and rates) off your income.
It is actually cheaper to live in a rental and rent your own place out. Crazy, but I've been taking advantage of it.
Now I've reached the point where I am sick of moving from rental to rental and my neighbours so will move into one of those houses next year. Very excited.

Despite renting being cheaper than owning a house, I'm a great advocate of owning a house, even if you don't consider capital gains. Owning a house and having big fat mortgage really changes your spending habits!

[sjkpark]

Also, do not buy in Rotorua. If you have any inclination to come back to Auckland to live, you would be priced out of the market. Forever.
I have a rental in Auckland, there's no way I would sell it, even if I end up settling in South Island (where I'm living at the moment, love it) for good.

[jimO]

480k will buy a really nice house in the better suburbs in Dunedin where we have excellent schools, low crime, no racial problems, no gangs, no tagging to speak off

http://www.metrorealty.co.nz/search....=9999&search=1

[Maccachic]

Tauranga is lovely close to the beaches not too far to drive to Auckland, you can drive to Rotorua.

$480,000 could get you a lifestyle block or very close to the beach - although you would want to be wary of leakers there are quite a few here (as has Auckland).

[Craig Pope Mortgages]

I agree with one of the other comments, you could keep renting where you live and rent out the house you buy. But you would want a long term lease in your current house to make sure you keep your good location at a cheap rent.

I think first and foremost if you are buying a house to live in then it has to be right for you and for your family, rather than future capital gain. It needs to be close to the schools you want, have enough room for your family and a reasonable commute to work or job prospects. Tick these boxes and the capital gain will follow.

[NomoneyNotalk]

If someone is renting a house and he also receive rent from another property, how is the tax situation? Will the rent he pays be considered as expense and deducted from the income he receive from his rental investment?

[Simmo]

You really want to decide where you want to live long term, it is an emotional decision and only you know what's best for your family.

Investing is another story, but if your line of work has no difference in pay it's a no brainer to be outside Auckland if you can. Even if your package is a bit better north of the Bombay's a few things worth considering:-

- Insurance, my car insurance is about half what it was in AKL. I'd like to say it's because of better drivers down here but that's debatable. Similar reduction in home/contents due less crime (Mt Eden vs Papamoa).
- Parking, you can. It cost's a lot less too.
- Fuel, again about half. To and from work and the fact you don't need to apply for a leave day in advance just to get to the bank, doctor, have a haircut and get groceries in the same day. Think what you could do with all the extra time you'd have!
- Rent/Mortgage
- You don't have to drive for a few hours to be somewhere decent for the weekend

[Maccachic]

Weird thing I found when I moved north my car insurance was more expensive in Taupo than Dunedin (uni students) and more expensive again when I moved from Taupo to Tauranga. Maybe the further North you go the more expensive it gets.

[NomoneyNotalk]

hi, I don't quite agree with the keep renting and buy another house idea. As she would be taxed on her rental income, and she is also paying rent on the house she is living in. So she would be better off to own her own house.

Because the rent she pays for the house she is living in is not deductible against her rental income from her rental property. However, if the she manages the property herself then and have a dedicated office for doing this, she can claim a proportion of the rent as a home office deduction, which will be based on the floor area of the office divided by the total floor area of the house

[jimO]

the old ask a question and never come back trick

[Gladdynook]

You really want to decide where you want to live long term, it is an emotional decision and only you know what's best for your family.

Investing is another story, but if your line of work has no difference in pay it's a no brainer to be outside Auckland if you can. Even if your package is a bit better north of the Bombay's a few things worth considering:-

- Insurance, my car insurance is about half what it was in AKL. I'd like to say it's because of better drivers down here but that's debatable. Similar reduction in home/contents due less crime (Mt Eden vs Papamoa).
- Parking, you can. It cost's a lot less too.
- Fuel, again about half. To and from work and the fact you don't need to apply for a leave day in advance just to get to the bank, doctor, have a haircut and get groceries in the same day. Think what you could do with all the extra time you'd have!
- Rent/Mortgage
- You don't have to drive for a few hours to be somewhere decent for the weekend

Also worth considering where you want to live long term. Moving to Tauranga/Rotorua etc would more than likely become a permanent move as the OP as has been told by friends. Take a look at the house price increases in the last year alone. Auckland 10-11%, Tauranga 0.3%, Rotorua 0.6%. I know where i'd want to own houses.

Renting a house and owning investment properties has been discussed before. It has significant financial advantages, and only stability/pride of ownership disadvantages. But for a short to medium term I believe it is the best way to get on the property ladder and get ahead.