Please provide input or comment on my strategy.
I’m 26yo, single, professional worker with salary $2800/m. My goal is to buy my own dream house as PPOR near the city in Melbourne but I have only 15k savings. This house might cost $450k.
My strategy is to buy a property, which I have done it in thornbury area (2bedroom villa) for $250k recently with utilising home owner grant and plan to stay there for 6 months or so with 1500/m repayment (P&I). I will then move out and rent it out while i’m going back renting for say $550/m. I will convert the loan to interest only and contribute, say $300/m toward repayment.
Therefore i only have to pay in total 300+550 = $850/m. I will do all over again starting from saving $15k and buy similar property paying additional $300/m on top of $850/m and end up with $1150/m for 2 properties.
My whole strategy is to wait for the 2 properties or may be three, if $$ allows, to have capital growth and take the equities from them or sell one of them to buy my dream home.
I’m sure most of you came accross this strategy and if you have done it, what obstacles that might involve with this?
Kind Regards,
Free@LastG’day Free,
You haven’t mentioned what your property at Thornbury would rent for. Have you had a rental appraisal done? And add that to your income less property management fees, land lord insurance etc etc.
Guy.[smiling]
Hi Guy,
Thanks for the reply. At the moment, I’m just looking at the bigger picture and if you the strategy is viable. I’m aware that I have to put agents and other fees that need to be incorporated.
I’m not aware there is such thing as rent appraisal, thanks for pointing this out. Can researching rental price in the area by looking in the real estate.com.au and comparing similar property will do the job? I would say around $230/wk.
Free
Hi Free
If your thinking of employing the services of a Property Manager to look after your property, they should inspect the property, let you know what the likely weekly rent will be for the area taking into account the physical aptitudes of the property and the current market and what you would need to do to improve the property to gain more rent (eg. paint job, new carpets, install an a/c unit etc etc).
Yes, real estate.com.au will also give you an idea. But make sure your comparing apples with apples.
Guy.[smiling]
Hi,
I think your theory is good, however have you seen accommodation that would meet your needs for $550 per month ?Your plan seems to hinge on this low rental being available.
Your strategy could be viable, but you need to “do the sums” as they say and include everything agents fees, tax, loan costs,etc.
You don’t say whether your mnthly income is gross or nett- This will obviously have a bearing on your capacity to borrow for #2 #3 …..
It may be beneficial to have a plan B. Say have someone move in with you and share or you move back home for a few yrs and rent your place out .With the level of financial committment you are anticiopating you are not going to have a social life anyway.
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