Buying a house at 22 - should I do it?

[sabre_ac]

If you were looking for an investment in Perth you could go either way. Go for cash flow with low interest rates or go for capital growth based on price falls from the peak. Or a combo of both. I actually looked at a property tonight (with someone) that will sell for about $460k, give or take, which is down about $50k from a couple of years ago. At 90% LVR and 4% interest rate that's $318 a week. It's tenanted for $425.

It's all opportunity cost. If you bought a house tomorrow, rented it out on a 12 month lease and moved overseas for a year, would you be in a better or worse position when you came back? Historically (for our generation) houses have gone up each year, so what might cost you a couple of grand over the year might save you $50k on buying 12 months later. That isn't the case any more. Houses haven't gone up for years. There are good buys out there that won't be there in a year's time, but it's not easy money any more.

I agree with all of that.

I think it comes down to what your comfortable with investing wise, the $100 a month difference between the rent and mortgage payment wouldn't cover the maintenance and taxes (especially for someone like me who isn't going to do the maintenance themselves), so cashflow wise its a zero return on my 50k for at least a couple of years. Capital gains wise (as you've alluded to), Perth property prices generally speaking are lower now than they were in 2014 and predicted to continue to fall and I'd be concerned about a lack of diversification in my assets if that's all I had. That said if an investor can't stomach the share market and is willing to hold for over 5 years, it's very likely to be a better choice than putting money in a high interest savings account.

If your a property investor, you probably would be far more likely to make the numbers work than me. Ultimately though, the lessons I've learn't along the way are.

1. Spend less than you earn
2. Invest based on what you want in the future.
3. Any time horizon greater than 5 years should result in an investment in property or market based financial assets.
4. Diversify, which also includes investing outside of the ASX if you decide to only invest in shares.
5. Don't get a car loan!!!

 

[Deliverance]

Silver. Buy silver.

 

[The Edukator]

Buy where you will get good investment growth and rent where you want to live.

Otherwise yeah handcuff yourself financially for the next 10 years.

 

[Hawk Dork]

I bought my first house at 23 or 4.
Mortgage free by late 30s
Its quite liberating

 

[AFLOnline]

Sorry for being nosey, and you don't have to answer if you don't want to..

But what the hell do you do to save so much? At that age I barely had a cent to my name. 26 now and have a house so really cracked down since then, but Jesus... 65k at 22 is very impressive. You must barely spend a cent! (Assuming you're not a miner)

 

[Hellgood]

Couple of years of full time work I don't think it's impossible. Have had the been working away from home the past year so have found that helps with saving a lot with the uplift and nature of the lifestyle.

 

[Hawk Dork]

Sorry for being nosey, and you don't have to answer if you don't want to..

But what the hell do you do to save so much? At that age I barely had a cent to my name. 26 now and have a house so really cracked down since then, but Jesus... 65k at 22 is very impressive. You must barely spend a cent! (Assuming you're not a miner)

It was a long time ago, I set up a small biz after uni that went well and girlfriend was on good money.
First house was about $150g in Sth Yarra,I renovated and sold 5 or 6 years later for $210
Then bought in Port Melb for $140 virtually no mortgage left.
Then sold that and bought others a few more times.

The neighbour in Port was youngish and had his mates renting the spare rooms to pay off his mortgage, it didnt take him too long to pay it off.

Its a lot lot harder now the maths has changed.

 

[AFLOnline]

It was a long time ago, I set up a small biz after uni that went well and girlfriend was on good money.
First house was about $150g in Sth Yarra,I renovated and sold 5 or 6 years later for $210
Then bought in Port Melb for $140 virtually no mortgage left.
Then sold that and bought others a few more times.

The neighbour in Port was youngish and had his mates renting the spare rooms to pay off his mortgage, it didnt take him too long to pay it off.

Its a lot lot harder now the maths has changed.

Oh that must have been a long time ago at them prices... 20 years ago??

But I was actually referring to the OP. 65k at 22 years old is phenomenal

 

[Hawk Dork]

Oh that must have been a long time ago at them prices... 20 years ago??

But I was actually referring to the OP. 65k at 22 years old is phenomenal

$100g mortgage at 17% was a fair whack in those days and would compare with todays mortgages for repayments.

 

[The Edukator]

Oh that must have been a long time ago at them prices... 20 years ago??

But I was actually referring to the OP. 65k at 22 years old is phenomenal

it's not that difficult to do if you don't move out. I saved and spent (traveling) about 60/35k over between 19-22 working pt and studying.

 

[raskolnikov]

My biggest question is why you would want to live in Ipswich.

 

[IQ3]

My biggest question is why you would want to live in Ipswich.

or Logan

 

[NightTerrors]

Before you do anything be sure to run the numbers - that is, owning a home vs. renting a flat. In the US it is often cheaper to rent.

 

[crownie]

I'm hoping to have saved up 80k by the end of the year (haven't been paid for September yet). If that is the case then I will probably spend $60k or so on the deposit and keep the rest as a buffer.

I'm in the exact same situation financially but 10 years older...

If you think your Job is safe for the next 2-3 years and you have no plans for travelling then in your shoes i would buy. If something goes wrong after 3 years then you can rent out the place and still have savings.

There's no difference travelling in your late 20's or early 20's.

 

[Cruyff14]

No. Go and see the world. You'll be able to go on a good trip, and still have heaps left over.

Go and live life a bit before you're tied to your mortgage.

 

[Power Raid]

Hey guys.

I've got an even $65k saved up in a ME Bank high interest savings account. I'm looking at moving back up to Queensland for lifestyle reasons early next year, and I figure now's the time to buy my first home.

I know the financially responsible option is to stay in Melbourne and save save save, but in the end if you're not enjoying life then what's the purpose of having money.

I'm hoping to have saved up 80k by the end of the year (haven't been paid for September yet). If that is the case then I will probably spend $60k or so on the deposit and keep the rest as a buffer.

I'm thinking of moving to Redcliffe, where houses are in the $350-400k range for a renovated average size house. I am also considering Logan and Ipswich. I'm pretty conservative so I wouldn't spend something like $600k+ on a house in inner Brisbane.

I considered going country where houses are cheaper, but that locks me out of employment opportunities and makes travel back to Victoria much harder (can't just jump on a train to Brisbane Airport). I am happy to rent out each bedroom I'm not using.

BOQ Specialist will lend to me without having to pay LMI, even if the deposit is below 20%. They will provide a variable rate home loan with offset account.

So I ask all of you who have more life experience than I do- should I do it? Can I do it? I hear all the chatter about how it's impossible to buy...

I can also sell my car if necessary (worth 15k or so) and get something a fair bit cheaper. I'm not into fancy things, and the car I drive doesn't matter much to me as long as it's manual.

firstly well done

second, if you are likely to be an employee with a steady job, buy a house with a split home loan/ investment loan to make further investments

if you are planning on being in business for yourself, then do not have a mortgage hanging over your head whilst in start up stage



my only other advice is, you're only young once and real money is to be made in your 30s and 40s. No point busting a gut for $20-50k profit a year and missing out on your 20s when you could earn that in a week in your 30s and 40s.

 

[chargers 09]

firstly well done

second, if you are likely to be an employee with a steady job, buy a house with a split home loan/ investment loan to make further investments

if you are planning on being in business for yourself, then do not have a mortgage hanging over your head whilst in start up stage



my only other advice is, you're only young once and real money is to be made in your 30s and 40s. No point busting a gut for $20-50k profit a year and missing out on your 20s when you could earn that in a week in your 30s and 40s.

What sort of monthly wage would you consider 'real' money?


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[Power Raid]

What sort of monthly wage would you consider 'real' money?


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It depends on what, why and when.

Most people don't think about making money before they leave to go to work each day. Rather most just think about how long.

The best I've seen consistently is $250k a week. But as I suggested above $20k-$50k is not out of reach if you look.

To achieve this, think different. Ask yourself every time something pisses you off.....how could this be done different. Every time you see something under utilised.....why and can you remedy the why. Every time the govt, terrorist group or union (here or overseas) does something......think of the arbitrage.

 

[Cruyff14]

It depends on what, why and when.

Most people don't think about making money before they leave to go to work each day. Rather most just think about how long.

The best I've seen consistently is $250k a week. But as I suggested above $20k-$50k is not out of reach if you look.

To achieve this, think different. Ask yourself every time something pisses you off.....how could this be done different. Every time you see something under utilised.....why and can you remedy the why. Every time the govt, terrorist group or union (here or overseas) does something......think of the arbitrage.

Er?

 

[chargers 09]

It depends on what, why and when.

Most people don't think about making money before they leave to go to work each day. Rather most just think about how long.

The best I've seen consistently is $250k a week. But as I suggested above $20k-$50k is not out of reach if you look.

To achieve this, think different. Ask yourself every time something pisses you off.....how could this be done different. Every time you see something under utilised.....why and can you remedy the why. Every time the govt, terrorist group or union (here or overseas) does something......think of the arbitrage.

I'm on a very good wicket for someone my age, and I do enjoy the industry I work in. These numbers you are quoting is job income only? Or investments ect.


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[Power Raid]

I'm on a very good wicket for someone my age, and I do enjoy the industry I work in. These numbers you are quoting is job income only? Or investments ect.


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The $250k a week was income but most common would be a combination

 

[Cruyff14]

The $250k a week was income but most common would be a combination

What are these people doing if they are not professional athletes?

 

[Power Raid]

What are these people doing if they are not professional athletes?

fund managers

 

[freebloke]

What are you waiting for? Go buy one...

Just research and get a lot of advice on which one though...

 

[maryjames]

Buy as close as you can to the city. Forget the country. You will build equity. In 8 years time when you are 30 you may have 2 other investment properties. The market may even double in 8 years. You purchase 400k now by then it may be 800k. I bought when young. I suggest it's a must. Otherwise you end up chasing when in 30s and 40s and by then property market will be more insane then it is now.