Is this possible? $40k a year salary and wanting to buy first investment property

Hey,

I was in your shoes about 1 year ago.  I was earning about 42000K per year.  I had about $12,500 in savings.  I approached a broker and he told me i could borrow up to $240,000K.  So i bought a place for $235,000K with a 5% deposit.  At the end of the day after FHOG and expenses my loan was about $228,000K.  My weekly repayments are about $400 a week.  Luckily i have sinced had a considerable pay increase so it's not too bad.  But at $42,000K a year i was clearing about $620ish a week of which i was paying $400 onto the mortgage weekly, leaving just over $200 a week for all other expenses.  At the time that was way too tight for me so i stayed renting where i was, $60 a week in a shared house, and rented out my IP for about $290 a week.  That way i was only out of pocket $110 a week.

On the down side though, to avoid paying CGT you need to live in the place from settlement date for at least 6 months.  I can expand further on this if you would like.

Anyway that is just a basic idea of what you might be getting any for.  Be sure you can afford to do it before you throw yourself in the deep end.  It's been a push for me at times, but i think it is probably the best thing that i have ever done.  If you buy a unit be sure to look into body corp fees and any proposed body corp work.  I got stung by this one because i did not do my research and now i am for about a $5,000 body corp fee to fix up a buggered driveway and plumbing system.

Cheers,
Dean

hi catsgrave,

I am not an expert and dont know your situation but I was in your situation and bought $180K investment.
Salary $40K gives approx $2500 monthly into your bank.
you can aim to save about $1500 per month if you dont have family or other debt(s).
In 6 months you might have $9000 + $3000 saving + $7000 first home grant = $19,000
you might be able to get $150K – $200K property. 
Speak to a broker once you have enough savings and he/she'll tell you the options.
This might sound cruel and boring life but without sacrifice I dont see any other way unless you find a new job.

Hi Catsgrave 

A quick scenario for you ……….. 

An investment purchase        

     Capital Costs                                          Cash flow 

   Purchase price    $250,000            I/O mthly loan payments             $2,100 
   Deposit (5%)       $12,500              Mthly rental income                    $1,041    
   Loan                   $237,500            Mthly cash shortfall                    $1,068 
   Costs                  $15,000          

   Total funds required                    $27,500 

Note: all figures are approximates only. I have not taken into consideration your personal circumstances. Costs include LMI, Stamp Duty, legals and other.  

As you are currently saving $500.00 per month, it may be a difficult to increase your monthly commitments to an extra $1000+ per month. There are many other variables and options (to name a few)  

1.       Family guarantor for the deposit (could eliminate LMI)
2.       Use of the FHOG ($7000 cash + no stamp duty)
3.       Renting rooms to boarders 

 I would suggest that the next step is to run the numbers properly with a broker. Feel free to contact us if you wish.