After many years of renting we have been looking at buying our own home (not first home) but have struck a few snags from banks and brokers etc because of the new sensible lending laws and my wife only been working casual for 5 months.
We are now looking at buying a smaller home in a country town, with word of new mines opening in the area the town is growing.
The plan is to buy this house, fix it up and in about 6 – 12 months sub divide the block and build another home for us to move into and rent out the older home. Further on down the track we hope to buy another home and rent out the home we have built, giving us 2 rental properties.
We have done some checking and sub-dividing is possible and precedents have been set.
The property we are looking at is around $170000 dollars and needs probably $10-15000 to bring it up to a nice comfortable home. Rentals in the area are sought after and we should be able to get about $210 per week rent.
As this is our first step into property investment any thoughts would be appreciated.
Thanks.You gotta do what you gotta do.
If owning a place to live in is very important to you and you are prepared to 'sacrifice' what you are currently doing to move to a smaller town then this would all make sense from a home ownership perspective.
It seems securing finance is currently presenting problems for you – and this is where your intentions may come unstuck.
How confident are you will both be able to secure employment in this town?
Have you considered the social impact moving to a smaller town will bring? Some people thrive in a smaller town – others don't and end up 'going home' pretty quickly.
Are you going to be able to secure funds for subdivision plans and build in 6 – 12 months time? This timeline would suggests you have some wriggle room in your borrowing capacity – whereas your earlier statement suggest finance is really difficult doesn't portray the same message.But as they say in the classics – sometimes you just have to take a chance.
make sure both you and your wife can get a job when you move to the new town and borrowing money is not a problem.
Darek – agree with you on the classic saying – sometimes you just have to take a chance. but i think taking some precaution so that the risk is minimized, would be better.
We are only finding it hard to get the finance at the moment because my wife is employed as a casual and has only been there 5 months, banks and most mortgage insurance companies are insisting that a casual has to have been employed between 6 months to 2 years. When they use my wage alone we could'nt come up with enough funds to buy what we had originally planned. So in the 6-12 month period that we have planned my wifes wage should be able to be used and a loan shouldn't be a worry.
We have allready moved to the town and already have employment.
My biggest worry is am I going to be making enough of a return from my outlay. I'm a ponderer and find it hard to trust my own instincts.
DaveHi Dave,
OK – so you have ticked off a few of my original questions.
Without knowing the numbers (and you don't have to tell me) I still wonder about your capacity to service the grand plan through the next 6 – 12 months. That is will you be able to get the additional funds (assuming your wife's work is fully recognised) to do what you want to?
Is this a discussion you have had with your brokers or the bank? As an aside comment I would use a broker as your first point of reference as your preferred bank may not have the product/s allowing you complete your grand plan.
Assuming you can get the additional funds – all that remains is for you to do some modelling based on the information you have gleaned to see if how likely it is you will receive your estimated income, what the projected growth in property values could be (use history as a guide) and so.
This process, while not infallible, should give you an indication of how possible your dreams are!
As an aside is the talk of mining arriving local scuttlebutt or more than that? Many mining projects don't get off the ground for a whole raft of reasons.
Derek
michaelandre70 wrote:Darek – agree with you on the classic saying – sometimes you just have to take a chance. but i think taking some precaution so that the risk is minimized, would be better.Without a doubt.
Due diligence should always be undertaken – they key is trying to determine what and how much should be done. Trouble is I have seen some people never take the step and live to regret it later.
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