So i know this forum is all about investing.
But what advice can people offer for first home buyers?
I am 22 almost 23 in a stable Job earning a good income but have wasted a lot of my money in my early years. Can’t say i look back and think it was bad because i have travelled all over the world and seen a lot!
Anyways, so i don’t have much of a deposit for my first property. I will be moving in with my girl friend of 4 years.
We’re looking at a 2 bedroom apartment in Sydney.
So how much money do i need? Is it a long way off for use to move in, as we really want to move in together for various reasons. We have started saving seriously but how much is a good amount to borrow. Would we be crazy to borrow 90/95%??
Any help would be great, we want to do this ASAP, hopefully by mid this year at the latest!
We have lived together both overseas and also house sitting for my sister when she was OS for a few months and LOVED IT so can’t wait to get our own place!
Cheers
Daniel [cap]
Hi Daniel,
It’s a bit hard to give specific advice with the post you have written, as you haven’t really outlined your circumstances too much.
How much is a good wage? How much is your girlfriend earning?? How much are you saving each week?? Where do you want to live?? A 2 bedroom unit in Rooty Hill is a lot different to a 2 bedroom unit in Paddington…..
As for how much you can borrow, how much do you feel comfortable borrowing??? Do you like to eat baked beans on toast every night, or do you prefer to go out for dinner? Do you or your girlfriend like to spend money on clothes, cars, socialising etc and if you borrow up to the hilt will this restrict your lifestyle too much?? Money is the root of all evil, and probably breaks up more couples than adultery (don’t quote me on that – I’d have to go ask Dr Phil), but from experience, having no money sucks and causes a lot of fights between couples if you’re used to having spare cash around to spend on whatever you like.
Could you afford repayments if the interest rates went up by say 2%?? It can be a shock going from being a renter to a homeowner if you’re not prepared for it. The last thing you want to do is be the proud owner of your new unit, only to have interest rates rise, or something else happens and suddenly you have to sell quickly. The best advice I suppose is just make sure you can comfortably afford the mortgage repayments on even one wage, just in case something happens and suddenly there are little Daniel’s running around!! [cigar] But good on you for wanting to get into the property market, just make sure you do your homework first.
Hope this helps!
JunkersIf I was you I wouldn’t buy a place, not at this stage of the cycle. If you can rent do it, be patient because if you can afford it now, you’ll be able to afford it in a years time.
Even though you’re making good money, dont tie it up in something as expensive as a Sydney apartment.23 and wasted time? wow you are keen. Just in case you don’t know it all please do some research into asset bubbles. If you believe that property can’t go down then think again. Then if you believe it go ahead.
Look up the investment clock. Where do you think we are right now?
This bubble is based on the bigger fool. Hope you aren’t that fool.
If a Registered Nurse, Teacher, cant afford a property then it’s overpriced in my opinion.
Then again at 23 you can afford a decade of negative equity so go for it.
My missus and I are cashed up ready to swoop in on an “investor” when the crash happens. We are ethical though and won’t prey on a person forced into selling their home.
All the figures point to a rosey future. The gov’t, Real Estate Institute or Banks wouldn’t lie would they?
Air goes in and out. Blood goes round and round. Any variation is a bad thing
Yeah, I definately agree with Torachan, the real investors bought 10 years ago, sold everything 2 years ago or aren’t even in the market at the moment. The clock is definately ticking and it’s been getting louder for some time.
Muli,
You should take account of the negative sentiment shown towards the property market by some on this forum, as they are definately not the only people with these views. However, you should also consider that there are also always opportunities in any market. If you worry about prophesies that may never come to fruition you will be sitting on your hands forever.
Purchasing a PPOR is also not just an investment decision. Think carefully about the pro’s and cons of purchasing in the current realestate market, and also with regard to your lifestyle. If the decision is that you still want to buy you can even borrow 100% at a reasonably good rate, if you have a good stable income.
Good luck with your decision.
Alistair
Ok after a discussion with my girlfriend we will actually have a 20% deposit which makes things a lot easier!
We will be borrowing around $300k for an apartment in the inner city, not right in the city but maximum 30mins out of the city as a lot of our life revolves around the city both work and weekends.
I’m currently saving half my salary and living off the other half.
The loan repayments wont mean we will be eating baked beans for dinner [blink] lol, we will be living off my GFs sallary plus there will still be some left over from mine once the repayments are made off. So there is a buffer there if rates rise.
And there will be NO little muli’s coming around i can tell you that [cigar] [baaa]
Now what Torachan said has me interested. We’re aiming to buy around August and no the market isn’t the best at the moment. But are you sayig you think it is going to get a lot worse??
We are plannng to live it for approx 4/5 years before moving, and from advice from investors and financial planners (my dad is a finacial planner) it seems then it wouldn’t be a bad move to buy.
Thanks for your comments, i’m all ears.
Dan
Hi Dan,
The market isn’t the best for selling, but it’s not too bad for buying, and in August it may be even better – especially as it is end of winter which is always a slower time for properties to move and vendors are generally more open to offers. Inspect lots of properties and once you get a feel for what you think properties are worth, make some offers. And if you start low, you can always come up, but you never know, they might just say yes to your low offer! Asking price is not always the same as buying price, in fact, the area that I am researching to invest in, I can guarantee that properties generally sell for $20K below the asking price because i’ve been watching what the properties were originally listed for, and then looked at the sales data to see what the final sales price was. If you do this you’ll start to get a really good feel for what properties will go for in the area you choose to buy in.
You’ve got a good 6 months to inspect loads of properties, and prices may come off even more in that time.
A 20% deposit is a nice little deposit for a property, from your original post it came across that you would only have enough for a 5% deposit or something similar.
The crash will happen, the sky will fall in, the world will blow up on the stroke of midnight 2000……people will buy and sell property at any stage of the property cycle, no matter what the interest rates – the 80’s are a prime example. Whether they make money or not is another matter and whether that is their prime motivation in the first place, or whether they’re just happy to have a roof over their head and they can afford the repayments if interest rates go up.
I reckon it’s 3 oclock on the investment clock….tick, tock, tick tock……..Thanks for that junkers.
How do i go about getting Sales data? That would be great to see what the propertys actually sell for compared to listing price.
Cheers
Dan
I have a friend who is a real estate agent who has access to the data. Everytime I come across a property I’m interested in I ask them to print out the data on that street which will give me what price the original owner paid for it and when, and I can also see what houses in that same street have sold for recently, and I can also see what has sold in the whole area over the past 12 months.
It’s a nice contact to have although I do tend to bug him alot!
I’ve never purchased a Residex report, but maybe other investors have an idea of how you can get data on sales prices in your area?? I know the SMH lists in Domain each Saturday the sales prices for Sydney suburbs, so at least that is a start in the right direction.my tip: be wary of the predictions of disease, death and famine. many of the opinions that are floating around now about property being at ‘unsustainable levels’ ‘irrational exuberance’ etc etc were floating around before GST… just look at what has happened since then – anyone not in the property market has really lost out. I went with the herd, lost my nerve and tried to time the market a bit so sold a few IP’s hoping to buy back later – cost me hundreds of thousands when I think about some of them. Eventually something bad will happen and the naysayers will be vindicated. In the meantime, if the deal is right for you, go for it.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Muli….I agree with AUSPROP.
But unlike Torachan, I have no conscience when it comes to investments. Do whatever is in the best interests of you and your gal. Have a read of Feb 2005’s AFR Boss Magazine article on page 44:
“…sure winning isn’t always pretty; you may have to screw your competitors or lay off a thousand people, but when the cash is counted would you rather be on the wininng team or on the team that failed beautifully?”
Happy hunting !!![smash]
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