Hello all out there, my topic has been hashed over in different forums to some extent however my particular situation hasn't quite been catered for. What better way than to create my own thread?!
I jointly own a unit (PPoR) in Newcastle with about $80k equity. I am looking to start in this property game without risking too much of the equity in our unit. My partner and I are on modest incomes so are unable to be exposed to too much gearing.
There are a number of options available including purchasing a house to renovate and sell on, purchasing a CF +ve property (not many of those in my area), purchasing a small unit in order to more easily service the shortfall on the mortgage, or going all out and purchasing a house on a large block with a view to putting several townhouses on it.
With interest rates rising and property prices seeming to be fairly stagnant, I am not sure if this is a good time to get into the game, or whether it might be best to look into a managed fund or something similar for the next few years. Unfortunately our limited income means we would not be able to afford the holding costs on any decent sized mortgage.
Does anybody have any advice on the most appropriate method of making money on an initial twelve month timeframe? I am leaning towards purchasing a house to renovate then rent or sell, however I don't know if there are many buyers in the market around that price range at the moment.
Thanks for your help!
Al
Hi
Bit hard to tell what's possible. The $80K may or may not be 'accessible depending on what you're unit is worth. If your unit was worth $100K and you have $80K in equity and $20K in debt, that could be good. If your unit was worth $800K and you had a mortage of $720K and $80K in equity, you're options may be fairly limited.
Also do you jointly own the unit with your partner or someone else? When investing with a partner, it's important that you're both comfortable with decisions that affect your joint future. So it may come down to how you both view risk and the 'sleep at night' factors. If you're both committed to the same goals, that will go along way.
With a modest income, you may need to think about a modest venture, such as buying small (as in small mortgage commitment) something you can service. Is looking inland rather than just in your local home town an option? Take a weekend trip/drive and spend some time in a regional town, and compare that with Newcastle. If nothing comes of it, you'll at least have taken a chance in looking outside of your comfort zone.
Thanks for that, Gary. The unit's worth about 310k, mortgage 230k. I should have been more specific; I own the unit with my fiancee so our appetite for risk is the same – we're in this together now! We're looking at having kids in a few years so my fiancee will not be working and I would like a little extra income to cover this.
I would definitely consider something out of Newcastle, however I am a little concerned with going too far astray as I am not familiar with the market further inland. A quick Domain.com.au search did bring up some houses at greatly reduced prices than in town. The only problem I see here is that gearing would again be a problem.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
