Just bought my 1st house

[Lyyynnnchy]

So your house value has gone up 60k since Feb?, yeah right

The bank did a market valuation as they always do before they approve a loan
In this market it nwould be eithe rright on or a conservative loan, especially as I only had a 10% dpeosit

Valued it at $385,000
The house was originally on the market for $439,000
Purchase price was $340,000. The vendor was incredibly keen to sell

Have since re-done the whole kitchen, bathroom and outdoor area

 

[Smell The Glove]

Sounds like you have things figured out.

As someone around the same age who has only just started saving for a home deposit I'm a bit jealous, but its nice to see someone put the hard yards in and succeed.

Well done mate

 

[MagpieJoel]

Anyone else just starting on there property investing path? Or anyone well into it have any advice?

I'm looking at investing in property, rather than buying my first property to live in at the moment. Just considering a few things,

ie. do we want to live in it to qualify for first home buyers, do we want to buy locally or in the city (if in the city, we couldn't live in it). Going to speak to a bloke I know who specialises in helping people invest in property.

We were set on buying our own home, but if we do it right, the wealth creation route will be fair better, and we can buy the house we want down the track.

 

[bunsen burner]

So your house value has gone up 60k since Feb?, yeah right

A couple of points:

1. Possible if he bought well under market value to start with
2. Another possibility is the lender didn't physically visit the property and went on averages. I have a place that was revalued well over market value when applying for additional funding because a new part of the area with all new shmicko houses increased the whole area's average. Mine was in the shit part.

 

[saj_21]

Anyone else just starting on there property investing path? Or anyone well into it have any advice?

Im looking at buying a place, i live in Melbourne looking at places in northeast 15-25km from the city in established suburbs.

Most houses in the area have been around for a while (since the 50's), im lookin at 3 bedroom i will leave in it for 6 months to qualify for FHOG and to see wat living out of home is like. A couple of mates will come live with me an pay $100 rent per week.

I have $ 65 K saved and pre approval for $270K, but i am looking for more as the bank will now take into account rental income from my mates.

So my price range is upto bout $350k (possibly more). I have followed relevant markets for 2 years and prices have always increased, but the market has slowed. I personally think the FHOG is inflating prices as people want to get in the market before it is reduced therefore are over paying for what their house is actually.

There are concerns it could lead to a sharp fall in prices so i am happy to wait another 3-6 months to see what happens.

 

[AjsGuns]

how does a 21yro buy a house in these tough economic times?
im 19 just finished year 12 in december 2008 took a gap year and go to UNI next year. Wouldn't even want to consider having a mortgage hanging over my head anyways goodluck and well done

 

[bunsen burner]

Im looking at buying a place, i live in Melbourne looking at places in northeast 15-25km from the city in established suburbs.

Most houses in the area have been around for a while (since the 50's), im lookin at 3 bedroom i will leave in it for 6 months to qualify for FHOG and to see wat living out of home is like. A couple of mates will come live with me an pay $100 rent per week.

I have $ 65 K saved and pre approval for $270K, but i am looking for more as the bank will now take into account rental income from my mates.

So my price range is upto bout $350k (possibly more). I have followed relevant markets for 2 years and prices have always increased, but the market has slowed. I personally think the FHOG is inflating prices as people want to get in the market before it is reduced therefore are over paying for what their house is actually.

There are concerns it could lead to a sharp fall in prices so i am happy to wait another 3-6 months to see what happens.

I suspect you will be disappointed.

The market is moving very fast right now and it hasn't got a lot to do with the FHOG. Melbourne had a mini boom 2 years ago and then it stopped when the GFC came. Seems confidence has picked up and the market has returned to what it was doing before - growing. Pricing have already recovered and are moving further ahead.

 

[SirJimi05]

I suspect you will be disappointed.

The market is moving very fast right now and it hasn't got a lot to do with the FHOG. Melbourne had a mini boom 2 years ago and then it stopped when the GFC came. Seems confidence has picked up and the market has returned to what it was doing before - growing. Pricing have already recovered and are moving further ahead.

So would you say it is a good time to buy in Melbourne? I'm going to be buying a place withing the next month or so in outer SE.

I am paying for the house with cash, in full, so don't have to worry bout mortgage repayments or stuff like that.

We are doing it more as a long term thing because the other half is pregnant so not overly concerned about making heaps of money out of it. As long as the place doesn't lose heaps of value in the long term we will be happy.

What are your thoughts?

 

[bunsen burner]

So would you say it is a good time to buy in Melbourne? I'm going to be buying a place withing the next month or so in outer SE.

The market is moving very promptly right now.

Don't know how long it will go for but I'd be comfortable buying now, not so comfotable waiting 6 months.

I am paying for the house with cash, in full, so don't have to worry bout mortgage repayments or stuff like that.

Why would you do that? You should do some reading up on property investment because you will be doing yourself a huge disservice.

We are doing it more as a long term thing because the other half is pregnant so not overly concerned about making heaps of money out of it.

I see, so she is "nesting". I understand how she feels and what is important to her right now - but that doesn't change the fact you are doing the wrong thing.

As long as the place doesn't lose heaps of value in the long term we will be happy.

Selling yourself waaaay short. You need to be thinking about retirement and your child's welfare (education, health) right now.

[/quote]What are your thoughts?[/quote]Buy multiple properties that are slightly -ve geared (so you can comfortably afford it). Let's assume you have $400k and the market doubles in next 7 years:

option 1

400k house now worth $800k. Your net worth = $800k

option 2

3x 400k house
$1.2m is now $2.4m
You owe $800k but hold $2.4m. Net worth is $1.6m
It might cost $20k pa to hold those places so subtract $140k, so you're really at $1.46m

This is how diligent property investors set themselves up to retire at 50 with out huge amounts of effort or risk. This is the beauty of our Govt policies - any mum and dad investor can learn it and implement it as long as they can afford their first property.

 

[SirJimi05]

Why would you do that? You should do some reading up on property investment because you will be doing yourself a huge disservice.

How so? Isn't it better to own a home in full as opposed to payments ridiculous amounts of interest to a bank?

I see, so she is "nesting". I understand how she feels and what is important to her right now - but that doesn't change the fact you are doing the wrong thing.

Yes she is nesting but it is also a culture thing for her. Her family is dead against borrowing and have always saved for everything they have in life. When they found out that i planned to get a mortgage for some of the house (because the gf wants a real nice house with all the bells and whistles) her father would have nothing of the sort and has actually chipped in a fair amount for us to pay in full. I don't understand how it could be the wrong thing.

Selling yourself waaaay short. You need to be thinking about retirement and your child's welfare (education, health) right now.

We already own 3 properties in full. A beach villa in Singapore, a house in Northern Thailand, and an apartment in Bangkok.

I see what you are saying but owning 4 properties outright at my age isn't too bad a start.

Buy multiple properties that are slightly -ve geared (so you can comfortably afford it). Let's assume you have $400k and the market doubles in next 7 years:

option 1

400k house now worth $800k. Your net worth = $800k

option 2

3x 400k house
$1.2m is now $2.4m
You owe $800k but hold $2.4m. Net worth is $1.6m
It might cost $20k pa to hold those places so subtract $140k, so you're really at $1.46m

This is how diligent property investors set themselves up to retire at 50 with out huge amounts of effort or risk. This is the beauty of our Govt policies - any mum and dad investor can learn it and implement it as long as they can afford their first property.

Sorry to be such a noob but i have no idea what all this means. I don't even know what -ve geared mean.

 

[Lynch takes a mark]

Negative cash flow - i.e. the investment loses money each month in order to claim tax deductions.

 

[bunsen burner]

Negative cash flow - i.e. the investment loses money each month in order to claim tax deductions.

Not quite.

You should never -ve gear a place just for tax. The tax rebate is a bonus but the real reason you -ve gear is to be able to hold more assets.

 

[bunsen burner]

How so? Isn't it better to own a home in full as opposed to payments ridiculous amounts of interest to a bank?

You have a lot to learn. Interest payments aren't ridiculous at all - they are the tool that people use to become financially independent.

Her family is dead against borrowing and have always saved for everything they have in life.

So you haven't considered that it's possible they are doing it the long way?

When they found out that i planned to get a mortgage for some of the house (because the gf wants a real nice house with all the bells and whistles) her father would have nothing of the sort

So your father in law wears the pants in your family?

I don't understand how it could be the wrong thing.

I've just given you a simplistic explanation but you seem close minded about it. And don't believe what I say - go see what the property investment leaders say. I suspect they know more than your FIL.

I see what you are saying

Do you?

Sorry to be such a noob but i have no idea what all this means. I don't even know what -ve geared mean.

There's no crime in that. But there is a crime in not learning how to handle money.

 

[drewie_rama]

got pre approval of 270k..

bought for 320k

However a bit worried with how the bank will value the house..may not give me the loan

 

[isthisavailable]

Whatever happened to all those people who were saying the GFC would precipitate a calamitous collapse of the Australian housing market?

 

[isthisavailable]

Re: Just brought my 1st house

....and a number in their 40's who followed the Schiff model and now rent having sold Australian property 6-12 months ago

How'd that work out for you?

 

[isthisavailable]

Don't know anything about the Adelaide market....

But I wouldn't be touching property for a good 12-18 months. Not until we can put a figure on how bad unemployment will get (and all the forced house sales / mass panic sales). We've also got another correction coming in the stock market, IMO. I'm certain that not all of the bad news has been factored into stocks and when the US defaults on payments... USD collapses... buggered if I know where its all heading.

The Tsunami is at stage 2 out of 10.

Hmmm, yes, well, I have a couple of questions for you. First, how many 'forced/mass panic sales' have we seen so far? Second, what stage is the 'tsunami' up to now?

 

[Lyyynnnchy]

how does a 21yro buy a house in these tough economic times?
im 19 just finished year 12 in december 2008 took a gap year and go to UNI next year. Wouldn't even want to consider having a mortgage hanging over my head anyways goodluck and well done

Well I decided to go to Tafe for 12 months after I finished yr12. Studied business, finished with a Diploma and have mainly worked full tim ever since, the last 18 months have been particularly kind to me after a, guess you would call it rough patch, in regards to getting a job that I probably wasnt qualified for with a good wage. My work has now offered to pay for me to go to uni next year to study finance and business law part time which has worked out really well

Anyway, house is going well, changed my loan from Principle and Interest to Interest Only with a 100% offset account. Have just had a lease signed to rent my place out for $425 a week, self managed. My girfriend has just brought an apartment 6ks out from town so will be moving in with her for $50 a week in 2 weeks time when the new tennants move into my place and she finished renovating her's. Might have to move in with the olds for a couple of weeks knowing how long girls can take picking out paint and flooring haha.

Paying of the interest only part of the loan and putting $2000 a month from my wage into the offset account to keep the interest down and to also use as a deposit for my next house, will be living off the $425 a week rent.

Thanks for all the kinds and also not so kind words, always good to hear from both sides!

If any other young people have any questions ask away! Wouldnt ask me for advice just yet though

 

[AjsGuns]

well done, ill be doing a double degree in Bus/law next year most likely, at least i have the grades to do it, although unsure if i will due to time length/fees 5 years full time then work. Hopefully a bust will occur in the market or itll continue its ridiculous growth =(. Can i ask how much money you had saved up, what equity you used, and how much your earning p/a?

 

[Lyyynnnchy]

well done, ill be doing a double degree in Bus/law next year most likely, at least i have the grades to do it, although unsure if i will due to time length/fees 5 years full time then work. Hopefully a bust will occur in the market or itll continue its ridiculous growth =(. Can i ask how much money you had saved up, what equity you used, and how much your earning p/a?

Yeah I am hoping it stays flat for now. Have got about $100k in equity now and would like to buy again in the next 6 - 12 months.

I only had $7500 saved up, although it wasnt much it only took me 3 months to save and the bank viewed that favourably. Borrowed $15,000 off my parents and also had the $14,000 FHB grant. I was on $50,000pa at the time of the contract being signed (Dec 08)

I had my finance approved late Jan. I was really lucky that it was only a few weeks before the banks really started to tighten lending. It also helped that I went through the bank my work uses as I get a .75% discount on my variable interest rate. I was really borderline as to whether I could lend the amount I did but being a corporate partner it helped me over the line. Didnt help I had only been in my job for 5 months as well. Most banks now require 12, some do 6 though.

 

[Jimmy_the_Gent]

Question Lynchy - You mentioned that you got your first place with Keystart, did you refinance with another company or are you going to try and get your second with them too?

I was told that they only let you hold one house (or mortgage) with them at a time.

 

[Lyyynnnchy]

Hey Jimmy

Didnt end up going through Keystart in the end. Went through HSBC as they are a corporate partner at my work. Halves all my fees and I get a .75 discount on my interest rate

 

[Eagle87]

Re: Just brought my 1st house

How'd that work out for you?

Great thanks

Sold at the top of the market and could buy back into the $1.5 million+ segment of the market for way less than then....

You?

 

[Scotland]

Great thanks

Sold at the top of the market and could buy back into the $1.5 million+ segment of the market for way less than then....

You?

But property prices always go up...

 

[bunsen burner]

But property prices always go up...

Any chance you can quote one single person who has ever said that?

You and your knob-ed buddies keep crapping on with that one but no one has ever said it.

Time to put up or shut up.