Hello
My girlfriend and i are currently looking at buying our first home towards the end of the year.
We will have around 25k-30k saved, both working full time on good wages, my girlfriend is living with her dad and im paying board to my sister. (very cheap)
We were originally planning on saving for a few more years and coming up with a substantial deposit, around 60k for our PPOR and then look at investment. But now we're contemplating purchasing an IP at the end of the year making the most of our cheap living arrangments and hopefully with a cash flow + property be able to purchase another IP.
Any ideas as to what would be the best strategy??
Cheers
Hi Josh
Welcome to the forum
If you’re happy with your current living arrangements (and they’re happy to have you!) then purchasing an IP or two might not be a bad option.
On the flipside, you won’t be entitled to the FHOG for these properties (but that’s cool, you can get that later) and these properties won’t be exempt from CGT if you ever sell them.
There’s been a few similar posts recently. If you do some digging around you’ll find some comments on the pros/cons of going down this path.
With saving a larger deposit, have you considered how much properties within your area might be worth by the time you’ve saved that additional amount?
All the best with whichever option you choose.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks jamie for your post!
I guess its all about timing and deciding on a strategy. We live on the Gold Coast in Qld but wont rule out investing interstate or regional Qld.
No worries at all. Stick around here, ask lots of questions, continue to develop your knowledge and you’ll have a strategy devised in no time.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
joshkay83 wrote:Thanks jamie for your post!I guess its all about timing and deciding on a strategy. We live on the Gold Coast in Qld but wont rule out investing interstate or regional Qld.
Hi Josh,
Jan Somers makes the comment in one of her books that regarding real estate, it is all about time in the market, rather than timing the market. I am of the opinion that if you have the capacity to buy an IP, why not do it. If you plan on holding it for the medium-long term then there is a good chance you are not going to lose out.
Especially if you are relatively young, the earlier you can start the better i feel.
Just my two cents
Hope everything goes well with what you decideHi Josh
I have been working on a project for people in your position for almost 3 years and have done heaps of research during that time.
My results tell me this:
1. Buying an investment property before a home is paramount, Why ?
Simply because the Govt. support is much larger by a country mile and that support is for all years you own the property not just a first year benefit. These subsidies usually allow you to finance the deal for less than $100 per week.
2. It also tells me that to buy a $500K property you need to use a structured approach via a special fixed trust, Add formal family loans and pay those off before the main loan (IO finance).
3. This leaves you with a hard track to run on for about 2 -3 years and after that you can ease off.
4.One of the best ways to own a home is to buy an IP first and use the equity growth by re-finanancing the trust to give you back capital to use for a home deposit.
Then the rental income flow subsidises your loan interest in the trust.
5. Because the IP is not in your name you can later arrange for your super. fund to ultimatel own the property.
There are many variations possible – this is the basics.
My next ittem will be about :- "The First Nine Years" (of your home or IP mortgage).
Watch this space.
Regards to all would-be IP and home owners.
Anthony KGiven the First Home Owners Grant, and stamp duty exemption in some states, I don't think there is any question that you would be best off buying a PPOR to start with, even if it bacame an IP once you've fulfilled the requirements of the FHOG scheme. Your problem at the moment is your equity position, I would be more concerned with fiing this than the cashflow you can receive from any property.
Regards
AlistairMy advice would be to get into the market as soon as you can.
That is exactly what I did a few years ago, while saving my deposit, I realised I can’t save at a rate quicker than the rate at which house prices were going up in the area I was looking at. So as soon as I had enough deposit (and the right property came up), I bought my house and rented it out and then moved into it when I got married just over a year later. This step has set me up quite well, as the property has gone up a fair amount in the last few years.
Agree with Nathamillion.
If property prices increase on average by say 6% a year (a low figure), then a $500 000 property will increase in value by $30 000 every year. Saving $30 000 per year is pretty tough (unless you are on really good incomes with no dependents), so you would probably be better off getting in sooner rather than waiting, even if it means paying LMI and using a deposit less than 20%.
Cheers,
Lukeluke86 wrote:If property prices increase on average by say 6% a year (a low figure), then a $500 000 property will increase in value by $30 000 every year.I'm not so sure about that.
toe wrote:luke86 wrote:If property prices increase on average by say 6% a year (a low figure), then a $500 000 property will increase in value by $30 000 every year.I'm not so sure about that.
There are many opinions out there on where the property market is heading, and there always will be. If you think it will keep rising slowly and steadily, then you would be better off buying property. If you think property will not go up in value anymore or fall in value, then you should not buy property. No one has a crystal ball, so you cant be sure either way I suppose.
Luke.
luke86 wrote:toe wrote:luke86 wrote:If property prices increase on average by say 6% a year (a low figure), then a $500 000 property will increase in value by $30 000 every year.I'm not so sure about that.
There are many opinions out there on where the property market is heading, and there always will be. If you think it will keep rising slowly and steadily, then you would be better off buying property. If you think property will not go up in value anymore or fall in value, then you should not buy property. No one has a crystal ball, so you cant be sure either way I suppose.
Luke.
Sure, but I should've been more specific, I'm not on about where the market is heading. An average historical property price increase of 6% does not mean a specific property will increase by any particular amount per year.
Forecasting future gains is a perilous game, and in property beginners often have to stake their future on each deal. If the forecast is 6% average over 10 years the safest bet is 0% growth for five years then higher growth for five years.
A real estate agent recently said this to me about averages. "Put one hand in a bucket of icy cold water and the other hand in a bucket of boiling hot water, on average you'll be just snug." Kinda reminds me of 2010 vs 2011 so far in Melbourne.
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