Greetings all!
I appreciate how limited your time must be, so I’ll try not to waste it. Before I purchase Steve’s book, I’m looking for opinions… That is, if you think there’s any hope for us – here’s why…
We are in our mid-30s, married with two children (never owned our own home). I’ve had chronic fatigue syndrome for several years and receive a disability support pension. (I’m not “incapacitated”, but am unable to work firm hours.) We are currently renting a Housing Commission home ($105 /week rent) and with a very strict budget, can save an additional $230 per week. (Bank balance is currently at $3500 in savings.)
So what’s your opinion – is there hope?
Or would you say this is all beyond us and only works for those with employment/greater amount of income?Side note #1: I have spoken to two lenders that may lend us $80,000 – but only if we plan to live there ourselves. It must also be situated in a highly-populated area (to secure their risk against us defaulting I guess)… Which ruins the whole idea, of course. Oh – and they also charge a higher interest rate, as the “usual” lenders will not even consider us on government benefits.
What started me dreaming is, the repayments on $80,000 is only slightly more than our current rent! We’ve approached family, with thousands of dead dollars sitting in the bank. I am determined one way or another that we will not stay in poverty! (And that we’ll never have to turn our own children away begging for help.)
Side note two: Apparently, because we live in government housing, we qualify for zero stamp duty on our first home, as well as the first home buyer’s grant. So what would that make it – a saving of about $9000 up front!?
All opinions/suggestions/directions *MOST* welcome!
Allan.
Sorry I didn’t even read your message. I only read is there jope for us. Thats all I need to hear. I don’t even have a job & I have bought 4 houses and plan to buy another 50 by this time next year. Of course there is hope but it is stil hard work.
Here in NSW Housing Commission tenants are able to negotiate good discounts on the property they are in.
Is this available to you?
Find out tomorrow and get a rough idea of the price range.
With a small deposit plus the FHOG and that savings ability there might ber an opportunity.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Allan, have you considered purchasing the home your living in from GEHA? Take a look at their website (not sure which state your in), but in WA I know that if you are living in a government house you may qualify for a Tenant Purchase arrangement….look further in to it, their must be a way…..and of course once you buy your own PPOR and equity increases you can start using that and any savings to put towards your first IP. Hope this helps.
sq
I don’t even have a job & I have bought 4 houses and plan to buy another 50 by this time next year.… All I can say is – WOW.
Here in NSW Housing Commission tenants are able to negotiate good discounts on the property they are in.Is this available to you?
Yes, we’re in Newcastle NSW. “Good discounts”? Hm… Could you please give some examples/ideas on what you’ve heard in this area? As far as I knew, you simply requested a valuation and that was what you had to pay. You seem to have knowledge I’ve not heard anyone mention in my inquiries with the government!
Find out tomorrow and get a rough idea of the price range.Well, I have asked several of their staff (several times) what the approx. price is for homes in this area. The answer I always get is, to just pay the ~$200 to get it valued (that they simply don’t know). Of course, then you have a limited time to get a loan approval and the trouble with this is, I’m not sure if it’s the best way to go. Should we buy this place – or buy elsewhere and keep renting… Is this type of information and it’s pros & cons covered in the book?
There are currently two houses in our street for sale privately. They were sold some time ago to private buyers, so are no longer owned by dept. housing. So privately, they are listing for $169,000. (Which is more than double what the lenders will allow us to borrow.) Does anyone know if dept. housing sells cheaper to tenants, than houses are selling for it the private market?
With a small deposit plus the FHOG and that savings ability there might ber an opportunity.Much thanks for your info so far, Simon!
Allan, have you considered purchasing the home your living in from GEHA? [snip]
…and of course once you buy your own PPOR and equity increases you can start using that and any savings to put towards your first IP. Hope this helps.sq
Hi Suzie! : )
We have indeed… Please see my other replies above!
So is this the recommended “plan of attack”? To buy the home you’re living in, and use that as equity? I’m desperate not to make a mistake – for instance… If we were to do this, then find no one willing to lend again to us to buy an IP (being on a pension).
Or should we stay here, pay rent, and make our first purchase another house, rented out with postive gearing?
I guess our main difficultly is, the $80,000 limit lenders are offering us (and the higher interest rate to cover their risk). If this house is valued more than that, we couldn’t get the loan – and to buy in a more remote area, they won’t provide *any* loan. Heh… Talk about catch 22!
Thanks for help all, with this basic stuff too… This debilitating illness makes it difficult to think through the consequence of such things clearly. So all help is very much appreciated!
[
]Allan.
First off; you might be best to send your income and liability deatils to me.
I’ll be able to give you a borrowing power, that should be much higher than $80000, depending on what lenders you have been to.You will need either 5% genuine savings or 10% deposit (doesn’t matter where it comes from), depending on location and lender.
Secondly; with past clients that have had housing commision houses, loaning from them, when it comes time to sell they want 80% of valuation as payout figure. I have also had a client where their interest rate kept climbing. It was over 16%p/a at the time. I didn’t go into much detail with this client, however you do need to ask the questions.
It may pay for you to apply with a different lender and even a different house if they use the normal valuation methods, which I would believe to be correct.
I have heard of discounts, but only when the housing commision put their properties up for tender. Also, when this happens if you are renting through them you will have first prefference.
Quote:Greetings all!
Hi Allen, iam new to the forum and so is my experance compared to some of those who will reply. But i would have to say after reading Steve Mcknights book 0-130 in 3.5 years that if it were me i would place an add asking for intrest in someone providing me with vendor finance and then make sure that they follow the same code of conduct that Steve talks about in his book which is a win win for both parties.
Remember it’s not can i do it but how.Dont give up.Siruse
Are you serious? Being Wrapped? At this early stage?
He/She could save the immediate charge of $20000min by wrap investors by just contacting a good mortgage broker,especially one that deals with non-conforming loans.
Just Allan has many options to purchase his own home in his own name saving him thousands$$$$$$.
He may have a relative that will lend him a deposit.
He may recieve a non-refundable gift from a vendor
He may find an investor willing to lend him a deposit in the form of a 2nd mortgage
The List goes on……Always leave being wrapped as the very last option!
After every possible avenue has been exhausted to purchase the property in your own name!
Quote:SiruseSorry i forgot to add if all else fails.
Quote:SiruseSorry i forgot to add if all else fails.
First off; you might be best to send your income and liability deatils to me.Ok, I’ll do that (soon).
I’ll be able to give you a borrowing power, that should be much higher than $80000, depending on what lenders you have been to.Sounds interesting – any hints about the details of how this works? Please note that, we’d like to own a home yes, but more than this, long term I want us to be free of government benefits, generating our own passive income. (In other words, owning our own home is not the final destination I’m aiming for.) Hey! We want it all! [
]
You will need either 5% genuine savings or 10% deposit (doesn’t matter where it comes from), depending on location and lender.I guess I’m still at a crossroads at this point. Trying to decide if we should buy where we are – or buy one of the cheaper ~$40,000 homes often seen in more remote areas – and keep renting ourselves, while our tenant pays off the other home.
So (anyone!) I’m still looking for opinions on this! [?] To buy a house and live in it, or aim for an IP first up?
Secondly; with past clients that have had housing commision houses, loaning from them, when it comes time to sell they want 80% of valuation as payout figure.Do I understand you correctly above?? Do you mean, housing comm. regularly will accept 80% of the total property valuation, if you pay it in one lump sum? Great stuff, but how would that help us?
I have also had a client where their interest rate kept climbing. It was over 16%p/a at the time. I didn’t go into much detail with this client, however you do need to ask the questions.Heh… Now I really *am* lost. What caused their interest rate to climb so drastically?
It may pay for you to apply with a different lender and even a different house if they use the normal valuation methods, which I would believe to be correct.Sorry to drag this out so much… What are your reasons for saying this?
I have heard of discounts, but only when the housing commision put their properties up for tender. Also, when this happens if you are renting through them you will have first prefference.Ok. They have mentioned to me that the house we are in will not be sold, unless we’re the ones buying it. Oh – or do you mean, that when they decide to sell one of their *empty* homes, that current tenants have first preference at purchasing? Hm… I’ll have to ring them tomorrow and ask them about this one.
In the meantime, I’ll dig up our budget spreadsheet…
Allan.
In regards to lenders;
Each lender has their borrowing limit, some higher than others.In regards to purchasing an investment property;
1) Will this effect your govt benifits?
2) I personally think that you should purchase your own home first, then when you got the equity , use it to purchase an IP. Especially the way the market has gone recently, it wouldn’t take long to get to this stage.But, on the profession side let’s crunch some numbers first.
In regards, to Housing Commision;
I was just mainly implying that it might not be the best way to go. There are other options out there for you.
Also with the 80% thing;
In a case the person was paying out a loan from the housing commision and wanted to refinance. He was told: for them (Housing Commision) to be paid out, they would require 80% of the valuation. So if the property was valued at $100k they wanted $80K.Interest Rate climb;
The interest rate was on a continuing climb from when they purchased the house. Once again, though I didn’t go into details with this person, so there is no doubt, that there may have been otrher factors involved. Maybe late payment default rate? I don’t really know. However I thought it might be worth knowing to ask the question before you sign anything.
First off; you might be best to send your income and liability deatils to me.
I’ll be able to give you a borrowing power, that should be much higher than $80000, depending on what lenders you have been to.Actually, It’s probably easier if I just post the info here. Then anyone wanting to comment on point they think of, can do so.
Ideally, we’d like whatever our first purchase (residential property, or IP) to be as cheap as possible. Quicker to pay off, less chance of making a serious mistake, etc.
Here’s the info:
We have zero debts. We own our own reliable old Volvo (hey, don’t laugh – cheapest maintenance of any car I’ve owned!) We make our own clothes, so clothing costs are minimal. Our children are homeschooled, so again minimal expense. (I’m not sure of the homeschool figure, but I’ve allowed $600 per year, which should comfortably cover it.)
My wife’s f/nightly income (Family Tax Benefit A, B & parenting payment) totals $537.99
My f/nightly income (disability support pension) totals $265.05 – oh, plus a slight extra payment every few weeks (a Telstra line rental discount I think it is).
TOTAL F’NIGHTLY INCOME: $1013.74
TOTAL F’NIGHTLY EXPEND: $576.93
TOTAL F’NIGHTLY SAVINGS: $436.81Oh – and of course, if we purchased & lived in a house, we wouldn’t be paying rent. So add another $210.70/f’night to savings, making our total fortnightly savings: $647.51 instead of $436.81
Whew!
In regards to lenders;
Each lender has their borrowing limit, some higher than others.Boy, talk about a learning curve! Lenders have been giving me the impression that I’d only get $80,000 no matter who I approached.
In regards to purchasing an investment property;
1) Will this effect your govt benifits?Good point. I’ll have to check.
2) I personally think that you should purchase your own home first, then when you got the equity , use it to purchase an IP. Especially the way the market has gone recently, it wouldn’t take long to get to this stage.Hey, I think I’m learning something! [
] So we’d be paying off our own home, and it would (likely) be increasing in value while we doing so.
In regards, to Housing Commision;I was just mainly implying that it might not be the best way to go. There are other options out there for you.
By all means, please suggest some! In all honesty, I was assuming (perhaps wrongly) it would be the ideal situation… That housing homes would generally sell cheaper. But maybe there’s drawbacks I haven’t even considered?
Also with the 80% thing;
In a case the person was paying out a loan from the housing commision and wanted to refinance. He was told: for them (Housing Commision) to be paid out, they would require 80% of the valuation. So if the property was valued at $100k they wanted $80K.Hm… I think why I’m having difficulty understanding the above is because, I don’t think they give out loans themselves anymore (if they did in the past?). The way it works now (as I understand it, anyway), is the tenant pays ~$200 to have the house valued by HComm., they provide a written valuation, the tenant takes that valuation to a lender – and the lender fills out some specific paperwork that eliminates the stamp duty.
Oops, went a bit too far with that one, but you’ll get what I mean.
However I thought it might be worth knowing to ask the question before you sign anything.Forgive me – what was that question to consider?
Allen,
I have had two clients in Newcastle in the past 12 months who were offered very favourable prices from the Housing Commission to purchase the house they were renting. One was at Elemore Vale and the price was $80K – that was a year ago and we have had much growth since.
The houses are only sold to the tenant for two reasons. It gets rid of an older house whilst also getting rid of a requirement for that house.
I am in New Lambton myself – in fact we are having a bit of a get together tonight at the Blackbutt Hotel with some people from this forum – why don’t you come along?
Lastly, if you email me a street name and suburb I can look up all the sales prices in the area around it in the last 12 months and send that to you. You can then walk around and compare similar houses and get a feel for the value.
You didn’t mention whether you had a deposit saved? This is your biggest challenge. If family can help with a deposit that is great – but you need to have a 6 month savings history for 5% with most lenders so sooner it is trickled into your account the better! If you have at least 10% maybe even 20% then we can usually get around this requirement.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
One was at Elemore Vale and the price was $80K – that was a year ago and we have had much growth since.Hm… The usual flat-walled fibro home, I take it? (That’s what ours is.) Since you sound like you’ve had some experience in this area, a few questions, if I may:
1. In your experience, how eager to sell are they? Can you bend their arm til it nearly breaks? [
]2. How to know where to start negotiating? Begin with $15,000 less (haha!) and go up from there? [
]Also, the house also has some brickwork damage that *may* be structural… Could I “force” them to repair this once they settled on a price – and they’d probably accept and repair it?
3. It struck me this morning, that once we purchased this home, we’d no longer be their tenants – and – that maybe it would be a good thing to purchase a *different* one of their houses, but keep renting this one. If we could do this, we would qualify to buy *more* of their homes (since they are generally cheaper to buy). What’s your opinion – would this work? Or do you think that once you purchase one of their houses, they expect you to vacate the first one?
I’ll ask them this one today, if I can find someone there who even knows! [xx(]
I am in New Lambton myself – in fact we are having a bit of a get together tonight at the Blackbutt Hotel with some people from this forum – why don’t you come along?Yes, I just saw that thread – we did have something planned, but will probably come there instead!
Lastly, if you email me a street name and suburb I can look up all the sales prices in the areaDone.
You didn’t mention whether you had a deposit saved? This is your biggest challenge. If family can help with a deposit that is great – but you need to have a 6 month savings history for 5% with most lenders so sooner it is trickled into your account the better! If you have at least 10% maybe even 20% then we can usually get around this requirement.Just the $3500 I mentioned, I’m afraid. (It’s actually closer to $3700 atm.)
Family is out. I’ve asked them several times and despite them having thousands sitting in dead interest bank accounts, no dice. This is a major part of the reason I am determined to succeed at this. If they can’t help us buy a house now with interest rates low, the chance of buying a cheaper HComm house, the kids young (inexpensive), me sick – and the chance to renovate, resell, invest using equity, etc. then they’ll never help. This is the most frustrating part. (People that big-note themselves as family, but in reality act like nothing of the sort.) They won’t even help us get the loan and service it ourselves, because “we’re afraid of losing our own house”. Since repayments would only be slightly more than our current rent (and we have over $200 per week extra above that), what they’re really saying is, “we don’t trust you to make the payments”.
Anyhow, I digress…
Cheers,With MUCH thanks, Simon!
Alan,
Build the deposit. I am sure you know this but you need to focus on 5% of the purchase price. This is your goal atm.
I am no expert with housing commission although I did speak to a very helpful girl from the RT office last year for an hour or so about an client I had out there in the same position. Unfortunately she has moved on now. hopefully you will find someone as good.
She was a property investor herself and she thought that the housing comission places were a steal at the valuations they were getting.
I also seem to recall that they would adjust the price downwards if there was outstanding repairs required – be best if you were there to point out every single defect to the valuer! Make it seem a terrible place to live!
I think you can only buy the one you are in. They do sell them to the public occassionally but via auction so you will pay market price.
I emailed you the prices in the surrounding streets for the past 12 months. As I said, take a look at the houses and see which ones closest match yours. This should help give you a feel for the market. Also ask a real estate agent for a market appraisal – even over the phone they will give you an idea of value.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Allan,
You are getting some fantasic advice and help here!
Don’t give up! I was in a similar situation to you. Ill while my wife worked, trying to stay afloat and trying to buy a first house with minimal deposit (with quite rich relatives standing well back!).
We did it. So no doubt you can too. I spent the last year working (when I could) on the “dump” we bought and we now have over $100k equity thanks to the improvements and the rising market.
One note of caution. We’re nearing the end of the property boom, so don’t feel “rushed” into buying. Cycles come and go and by concentrating on building that deposit, and learning all you can about real estate in the meantime, who knows – the market may change in the next 6 to 12 months and you may be able to pick up a real bargain.
Best of luck to you.
cheers,
Darren.
]
]
] So we’d be paying off our own home, and it would (likely) be increasing in value while we doing so.
]
The topic ‘Low income – is there hope for us?’ is closed to new replies.
