What to do?

[samwise]

Hi all,

Just hoping I can get some advice on my situation and what you would recommend doing.

Got a grad. job for next year after I finish uni. If I continued to live at home I would be able to make hopefully something like $500 a week (the job is like 54k including super).
I also have about 60k invested in shares from my late aunty who sold her house and gave the money to her grandchildren.

I was considering taking out a mortage and buying a property. Then I would rent it out and that money would go towards paying off the mortgage, the amount still left each week/month I would pay myself.

I don't really know too much about it but when someone suggested it I though it was a good idea. A few of my cousins did the same thing and were able to sometimes rent it out and sometimes live in it. 1 cousin is now living in a Thailand resort off the money she gets from the rent from her property in Melbourne which is something I would love to do.

Maybe there's ways to earn more money by investing the money elsewhere but I think it would be an amazing asset to have a property.

I assume this is a good place to get some ideas. I really appreciate any advice.

 

[wmvaux]

I'd be very careful about buying and renting out a place overseas, I know of cases where people were ripped off by real estate agents and other cases where no-one was renting and they were told people were.

Stick to your local suburbs so you can see for yourself. If your starting out make sure the agents you use are reliable and shop around and speak to many to get a feel.

The main thing you need is a good reliable tennant, and the way to attract someone is having a property in a good area, close to transport, shops....etc

I'd be looking at units if I were you, they are cheaper, but make sure you understand body corporate so you know what your looking at.

 

[Simon_Nesbit]

Living at home (even for only a year), and saving $500 a week can actually set you up for a long time. Perhaps looking to purchase after Easter next year will allow you to gradually sell up your share portfolio at opportune times (rather than fire-sale on a specific date).

I've removed the rest of this post as it's well beyond the point you are currently at. In short:

Save everything you can.Empty your wallet of change every day into a jar. Pay your parents "Board" which they can save for you and return when you purchase as a gift. Don't buy that extra round. $1 saved now might save you $10 over the life of your loan.

Plan your exit strategy from shares. Depending on how you are setup, your shares are most likely worth more on paper, than they are if you have to sell straight away. Knowing your timeline allows you to take advantage of fluctuations in the market.

Research Before you buy an investment property, you should know more about it than the Agent selling it. Building inspections, legal consultation on any ongoing contracts (lease, body corporate, etc). Know the area, what it will do, is there any expected capital growth. Look for public transport, schools, etc. Think re-sale value.

Separate Emotion This is a business transaction. You can't buy the house because you love the kitchen, it's close to work, etc. You want to maximise your return. Exception to this may be to use the First Home Owner's Grant (or variations of), in which case you usually need to live in the property within 12 months.

When it comes time to getting a mortgage, the main areas of interest to any lender is your credit history (late payments/overdrawn fees/defaults), your employment stability (probation/full-time/salary), and your savings history (60k held > 6 months, plus whatever you can save in the meantime).

Starting now lets you position yourself in such a way that when you find the right deal, you can snap it up - good deals don't last very long, and the best investors are generally those that can (and often do) deal on the spot. (They can also be the biggest failures if they aren't as prepared/knowledgeable as they thought).

Good luck!

 

[dr_protocol]

Simon offers a pretty good plan and I concur with wm's point about avoiding o/s real estate.

Patience will be rewarded; you'll be in a much stronger position in 12 months if you focus on tucking $$$ away and just watching how the market pans out. You can do plenty of quality research in that time and strike more on your own terms.

 

[samwise]

Thanks for the advice guys. Seems best to probably just wait (which is something I'm good at anyway). If I was to wait at least a year, what would you recommend doing with the extra money I would be saving?
Put some in to that First Home Buyer's account thing? How long do you have to live in the house to get that money?

 

[SriLankanCat]

Hi all,

Just hoping I can get some advice on my situation and what you would recommend doing.

Got a grad. job for next year after I finish uni. If I continued to live at home I would be able to make hopefully something like $500 a week (the job is like 54k including super).
I also have about 60k invested in shares from my late aunty who sold her house and gave the money to her grandchildren.

I was considering taking out a mortage and buying a property. Then I would rent it out and that money would go towards paying off the mortgage, the amount still left each week/month I would pay myself.

I don't really know too much about it but when someone suggested it I though it was a good idea. A few of my cousins did the same thing and were able to sometimes rent it out and sometimes live in it. 1 cousin is now living in a Thailand resort off the money she gets from the rent from her property in Melbourne which is something I would love to do.

Maybe there's ways to earn more money by investing the money elsewhere but I think it would be an amazing asset to have a property.

I assume this is a good place to get some ideas. I really appreciate any advice.

HI mate
i am doing exactly what ur proposing to do. I purchased a property for 330K back in 2008. I pay back $985 per fortnight on this, which is above the minimim amount of $885 per fortnight. I am getting $410 per week in rent which is $820...i pay my agent a commission of 5.5% (mates rates), normal comossion would depend on which agent, lets say 11%. SO lets say i was charged 11%, that means after agents comission i would get around $730. I have torrens title so dont pay strata, i have the odd repair now adn then as well asd water and council rates which are quarterly.

So on a normal week this is my financial break down per fortnight: "
Rent after commission: $730

Mortgage payments per fortnight: $985

Balance: $255 out of my pocket.

I get a salary of $1900 in my pocket after tax every fortnight.

I live at home, i pay the phone/internet bill which is $100 a month, foxrtel $65 a month. I pay the odd grocery bill.

So im VERY VERY lucky!!!!

Added to this i took on a second job tutoring at uni in the evening, did 2-8 hours and i raked in heaps, one year i made nearly $10K!!!!!!!!!

I should haev lots of money in the bank right? ahah well everty year for the past 6 years i have travelled, up to 6 or 7 weeks at time. In the last 12 months, i have travelled 3 times!!!!. Im lucky i work for a big organisation which means i can take my annual leave when ui want plus some unpaid leave. This basically means i have not much money left but its been worth it.

Mind you im in a very lucky situation with my folks letting me live at home and having a flexible job.

If your that lucky then u can do the same.

of course u have to tweak things depending on ur situation.

The last 6 years of my life have been amazing mate

Good luck mate.

Remember one thing...ur young and ull be paying a property of for a number of years, so whilst it sounds good to haev a property Enjoy being young and free ull have plenty of time to have a property. Having a property does restrict u in that although the amount u ahve to make up is small cause of the rent ur getting at the end of the day u STILL have to pay it so if u wanna go overeas and work or somehting (which means u have to pay for livign expenses) it makes it harder. I wanted to go overseas and work last year but couldnt afford too but that is because i travelled every year which meant i didnt save, maybe if u saved a few years u might be able to haev a property AND work overseas.

The trick is to manage things depending on ur situation and waht you want.

Good luck mate.

PS: i have been lucky to have a second job, living at home and having a flexible full time job u may not be as lucky but u can still enjoy urself

 

[samwise]

Thanks for that, good story. The thing I would be worried about is if the tenant decides to leave, then you could get into a lot of trouble no?
Is there a minimum time they have to let you know before they leave?

I think I will go with the main advice on this thread and save up for a bit longer at least for the next year.

 

[SriLankanCat]

Thanks for that, good story. The thing I would be worried about is if the tenant decides to leave, then you could get into a lot of trouble no?
Is there a minimum time they have to let you know before they leave?

I think I will go with the main advice on this thread and save up for a bit longer at least for the next year.

Well it depends on the rental demand. Where i am the rental demand is -1 which means there is no problem getting a tenant.

In NSW its 3 weeks notice. Not sure about Melbourne.

There is always a risk of a tenant not sticking around but u will get landlord insurance which will include a rental income protection component.

 

[SriLankanCat]

Thanks for that, good story. The thing I would be worried about is if the tenant decides to leave, then you could get into a lot of trouble no?
Is there a minimum time they have to let you know before they leave?

I think I will go with the main advice on this thread and save up for a bit longer at least for the next year.

BTW further to this, if you put in more than 20% of the house value you wont be paying Loan Mortgage Insurance (LMI). If you havent got it if you can hit up your parents or something to avoid the LMI that would be a good idea.

Get in the market in the next 6-12 months and ur doin well.

 

[Hail Ants]

Firstly, living at home and saving cash is a great thing, you have to use it wisely though.

Don't think about investing in property overseas, too risky. Plus you get bent on by taxes, dodgy tenants etc. It looks tempting but dont do it.

Shares, nah - I only recommended shares once you have a house.

FHSG is not going to do anything for you if you get an investment property.



Basically, either interest account or investment in AUSTRALIA, where you can physically see and beat up any dodgy tennants.

There is always that thing that comes out of the ground which is a 99.9% good investment....