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No problem. You have to look at the bigger/longer term picture. Don't look at your current repayments lasting the full 30yrs. Your income goes up, the mortgage goes down.
"I am currently on $25K and studying. I am thinking of dropping uni so I can earn more, and not have to repay HECS."
While I agree uni is a waste of time (just a piece of paper), unfortunately employers don't look at it this way. Unless your gonna be a tradie, your better to have the degree in the long run. It adds to your income later.
I thought the degree was a waste of time, but I am now on $110K base + super (8yrs in industry). It does open doors to the corporates you might not otherwise be able to get into.You get out what you put in. I don't buy into the rich getting richer, poor getting poorer, wow poor me CR#P. Many "below average wage people" go home and watch reality TV rubbish on TV. Most higher income earners are lifelong learners. We learn what the industry needs, and so get payed accordingly.
The other problem is that all the 20-30's want the kind of property it took their parents 15-20yrs to upgrade into, but immediately. Start small, and upgrade. What's wrong with a 2br unit for $200-210K. You can't complain if your fussy mate!!. The kids are OK in unit when younger (just look at most of Asia and Europe).
Look, we are on a combined income of $215K. We live in a one bedroom unit in city, but have investment properties. No, but we are just greedy landlord. Stop complaining and aim for something more in your budget, rather than "the perfect" home. Upgrade later. That's the way previous generations did it. I'm sick of all the Gen Y's whinging.
Christ, why are you complaining. With your $20K, your already have a 10% deposit for a 2br in the middle of Melbourne.
http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Carlton/?adid=2008463438
Whinge, whinge, wow poor me!Sorry for being harsh, but it's usually those that want the perfect house that can NEVER get into the market.
Hi Wynyard
You sound like one of the typical whingers out there who are not prepared to make some sacrifices now to get ahead. Any whinge to keep renting.
"and the repayments would mean we would be living off less than the pension for those 30+years. "
Your logic is stupid. Genious, your wage does not remain constant (it goes up), and your mortgage goes down over time (so with more money, you pay less mortgage). But keep renting my friend. Cause the prices are just "too high", and you have to live poor for 30+yrs. Haha, you fool.Medium wage 1980 $250/wk $13000/yr
Medium wage 1991 $592/wk $30700/yr
Medium wage 2006 $1058/wk $55000/yr
Medium wage 2010 $1288/wk $67000/yrMedium wage 2020-2025 ~2000/wk $100000/yr etc
House Call wrote:We don't want to buy further CF+ IPs in my name (already in upper tax bracket) as it will just bump up my income further and any income will just disappear in tax.So do we bite the bullet and go for positive geared in my name and pay heaps of tax or in my wife's name and lose a lot of the depreciation benefits?
House Call, that is the dumbest thing I have every heard. So as a property "invester", haha, you would be prepared to loose money rather than make money. The ultimate goal of the majority of property investors to find positively geared properties, and eventually turn negatively geared property into positive (rent increase, etc).
Not sure what you trying to achieve with LOOSING money deliberately to save tax. Let me break it down for you with a calculation.
Assume you are negatively geared $15000/yr. At the tax bracket up to $180K, you get 40% back in refund, so you are spending $9000 of your OWN money. So the value of your home needs to go up $9000, just to break even. Otherwise, you are loosing money on your "investment".
Now assume you are positively geared $15000/yr. You pay $6000 extra tax, but have made $9000 profit.
I often find it interesting why someone deliberately looses $1, to get back $0.40 is tax refund.
Negative gearing is good in a rising market. Negative gearing is a poor investment in flat and falling markets.
For me, I'll go with the ultimate goal of most investers, and aim eventually for positively geared. Personally, I would LOVE to be in a position where I pay $1million in tax for property (it means that I'm earning $2.5million/yr)
So lets get this straight nzuvo09. Your on a combined income of 100K/yr, yet have virtually NO saving, and a credit card debt. So effectively you have nothing, except your supposed "equity". Even for your existing hosue it sounds like you have NO savings, and used government money for all the costs. It sounds like you have payed off very little of the home loan in 6mths.
What delusion makes you believe you are even remotely in a position for an IP. Your purchase costs would be at least $15K, where are you going to get that from.
No, I'm sure the banks will be willing to lend 105% (IP cost + purchasing cost) to someone with a poor financial track record like yourself."borrow 80% with a different bank?". Your calculations are very "immaginative". 80% of a 300K property would require 60K deposit. You only have a fraction of this in "equity" to begin with. Plus purchase costs, where's your 75K coming from?
Haha, I really home some bank gives you the money. Makes it easier for me to get 3-4 more properties next year when the financially irresponsible run into financial problems next year.
Even $300K puts you at a 85% LVR. You can try, but most banks won't touch you. With your little saving history, no bank will take you to 95% on 2 properties.
PS: your $300K value is not real. It's gone up temporarily because of other first home buyers that rushed in. Wait till next year, and see where it is. (Back to $270) I suspect.
Oh, but please try. Then when the interest rates start going up, I get can more properties from the "me" generation that wants everything now!.
I'm also wondering how would we go with using our PPOR for equity?
What "equity" nzuvo09? You have bugger all. It looks like you already used just the FHOG on 95% LVR to get your PPOR, no stamp duty, etc. With no saving, little equity. Forget about an investment property. Save a little. Your probably need to get your LVR down to 70% (oe your loan down to ~$190K), before the banks will even look at your for pulling "equity" from your PPOR for an investment.
"We are looking to purchase another property in the next couple of weeks."
I'm curious Fiona. Did you end up getting the 2nd investment property?Fiona, are you also factoring in on the (rent approx $560/week) management fees of 8-9% =$515.
Even if you fix, it's at just under 7% now, and fixed rates will just rise from now on if you wait (5 and 10 yr bond yields are rising), so the fixed rates will as well.
Loan $600,000
Say 7% (interest only)
Weekly repayments of $810
Rent of $515
= 1200/mth + all other costs.The point is that it's clear that you have not even done a basic calculations. "Note, our strategy is to buy quality inner-city property's, as close to neutral/positively geared as possible"
This seems to go against your "actual" strategy of being highly negitively geared.??
560/wk rent on 600K is 4.85% rental yield.
7% fixed interest rate + 2% holding cost = 9% = Very negitively geared.Where do you get neutral/positively geared from ??
Most investors even in a booming climate would be thinking twice about 90% LVR (some buffer in cause of unexpected emergencies). Most investors in a recession would tell you they are comfortable with a max of 70%.
Personally, we are waiting till early next year to buy the next IP (after all the FHB frenzy is over), and are sitting on a comfortable 41% LVR waiting to pounce with 2-3 more investment properties in the next 12-24mths. There will be plenty of distressed FHB in 12mths.
Yes and we are on 200K combined income. Damn, 1.1million debt with 90% LVR in these conditions. Good Luck!!Also, if you parents are away for 2years, where will you live after that?
Fiona, looking forward to buying the properties off you for a bargin, when you go broke in a few years.
Have you got your rates fixed? What will you do when the interest rates go back up to 8-9% in 3 yrs on 90% LVR. Scary!!
Loan $600,000
Say 8.5% (interest only)
Weekly repayments of $980.
Rent of $550.Aprox $1730/mth, then other costs. For 2 properties, $3500 + all costs.
"5 of these in 5 yrs". Clueless. The kind of people we see on Today Tonight crying about the big bad banks taking their homes.
And the interest rates will go even higher than that with the amount of money governments around the world a spending.
Haha, little growth over the past 12mths, hehe. So you've already caughed up $32K in interest alone, and you call that investing. Prepare for little growth for a bit longer at that price range.
