Hi All,
Not really sure what I’m hoping to get out of this, but I’m kinda hoping that someone can re-assure me that I’m on the right track..
I’m 21 and itching to get into property, I’m at $40,000 in savings with the goal of $50-55 by the time I’m 22. Am I saving enough? I’m young and I still have a pretty active social life etc, I see so many people on here and on somersoft saying they wish they’d saved more earlier/invested earlier etc and I’m really paranoid now that I’m going to regret ‘living’ now vs living in 10-20 years time with money made from investments..So to put it simply.. If you (being an experienced and wisened investor who with the exception of people like Nathan, seem to be a fair bit older than my 21 years of age) could swap bodies with me (a novice 21 year old itching to get into property) would you be ‘living’ life actively, or cutting every penny to save that extra $5-10k a year?
In the long run am I going to regret the choices i’m making now?
$40k at 21 is not something to look down on- it’s more savings then a lot of ppl i know who’s twice your age!
With 40k you could potential invest into 2 properties ( def 1 ) as long as you can service the debt/loan with your income+ Rent – However nice and slow wins the race…
Yes Nathan is an exception to a lot of ppl! a smart investor i have to say.
To answer your question- it’s a simple game of balancing…you dont want to sacrifice your youth and lifestyle just to make a few quick buck- because at the end of the day you make money to “enjoy a better quality of life”.
Make your first investment- see how you go…then move decide from there.Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
I reckon you can have your cake and eat it too.
If you buy an IP, search for something with a decent yield that will look after itself (or come close to) in terms of rent coming in and costs coming out.
If you buy a PPOR, you could consider renting a room or two to friends/family.
Both of these scenarios allow you to enter the property market and shouldn’t significantly impact on your current lifestyle.
I agree with starting out young. Property is a long-term asset, as a young person starting out you have time on your side.
Any particular reason why you’re saving up to $50k? It’s shaping up to be a buyers market at present so you may be able to find some good deals right now.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Have a read of Jan Somers book 'More Wealth from Residential Property'. At 21 with that level of savings you have the property investing world at your feet. Listen and learn from professionals and there are many good one's on this forum – Michael and Jamie above being just two of them. Knowledge will give you the courage to believe in yourself and to be confident when you commit to your investment strategies. Keep going and keep asking questions!
I think you need a balance.
Sure lots (me included) wished we'd started earlier but not to the exclusion of living.
You can't put everything off till "later". My wake up call was my friend. Her dream was to travel extensively to Europe for her 50th (I had a similar dream). She got cancer at 48 and was dead before she reached 50.
That year I took time off work and traveled around Europe.You can have a balance of living AND saving for the future. You sound like you are on the right track. Live your life but save on those things that don't give you quality of life (big screen TV, expensive cars etc).
At 21 you still have at least 40 good years investing under your belt. Read, get in there and enjoy the journey. Be careful though it's addictive once you start.
Thanks Everyone for your feedback!
I’m definitely going to go down the IP track, I don’t think I’m ready to settle down to any specific location. I have an aunt & uncle who are longtime renters (renters by choice, they are very frugal and invest heavily, but do not believe in any debt (no credit cards, loans etc) so they choose not to tie up all of their wealth in their homes.) They have been renting at their current place for over a decade and are starting to talk about wanting to downsize to something smaller, I’m hoping to work out a tenancy agreement with them as I know they would take better care of the place then even I would.I’ve re-worked my budget and lowered my saving goals to $51,600 by my birthday next year. ($9,000 in additional savings + $2,600 in interest.) And i’m going to keep living my life as frugally as possible, rather than squandering my other $5,000 in savings I’m going to budget $2,000 for a holiday and aim to build a $3,000 safety fund. (I picked up Jan Somers books and a few Rob Kiyosaki books at an op shop on the weekend for a dollar each, they recommend having one, $3,000 is easily 3 months living expenses (rent&fuel are my only big expenses) /enough for me to replace my car etc. So I think it will be enough
Edit: Jamie you asked while I’m waiting until I’m at the $50k mark, it is purely for comfort. I’m looking around the $300k mark for my first purchase and 50 paid down (maybe more depending on how I structure it for FHOG) seems like a reasonably safe level of leverage to me given the current market. Additionally to this my financier has told me I shouldn’t have any issues getting the loan today, but I don’t feel that I’m ready to purchase yet. I don’t want to rush into it, so I’m inspecting as many properties as possible in the price range I’m comfortable paying. If I see something I think is a great buy, I might try and snap it up, otherwise I want to inspect at least 50 similar places before I go into serious buy mode after my birthday.
Would definitely have to agree with Jamie, there is no reason why you can't enter the market and still enjoy a good lifestyle
I purchased an IP when i was 22 (am now 24), with significantly less savings than you have, lived in it for 6 months to satisfy the first home owner requirements and then moved back in with the folks and rented it out. It is currently costing me about $70/week to hold so no real dent into my disposable income.bbt wrote:Edit: Jamie you asked while I’m waiting until I’m at the $50k mark, it is purely for comfort. I’m looking around the $300k mark for my first purchase and 50 paid down (maybe more depending on how I structure it for FHOG) seems like a reasonably safe level of leverage to me given the current market. Additionally to this my financier has told me I shouldn’t have any issues getting the loan today, but I don’t feel that I’m ready to purchase yet. I don’t want to rush into it, so I’m inspecting as many properties as possible in the price range I’m comfortable paying. If I see something I think is a great buy, I might try and snap it up, otherwise I want to inspect at least 50 similar places before I go into serious buy mode after my birthday.That’s understandable. At the end of the day, you want to be able to sleep comfortably at night – and if this makes you feel more comfortable than keep at it.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
hi bbt, congrats on your hard work and savings!
I purchased my first property at age 22, and I worked and saved hard for that. Most of the time I was a bit of a scrooge, and found it easy to skip the little things like buying a drink when I’m out because I’m thirsty (just wait til you get home), or going out for coffee, or expensive nights out for drinks. I also resisted the temptation to shop for new clothes/shoes/junk regularly, and used to spoil myself twice a year – in June sales and post-christmas sales. I found by delaying purchases it made me appreciate when I did buy things, and also avoided buying unnecessary crap… I also found it important to not stop socialising, so started inviting friends over for dinner rather than go out for expensive meals/drinks. I also gave myself a holiday every year too, destination based on great airfare deals.
Buying property at a young age doesn’t mean you have to give up your life! It just means you may benefit from making some sacrifices, but the thing is YOU can choose what you’re willing to sacrifice and what you still need to budget for. “Pay yourself first” in my opinion applies both to your savings account, and some fun. No point working so hard, saving all your money and not being able to ever enjoy it. Just remember, you’re only going to be this age once… Don’t stop yourself having fun, just plan what is important to you
Buying a property doesn’t mean you wont get to travel. At age 24 I moved out of my PPOR, rented it out and bought a one-way ticket overseas. Was out of Australia 17 months, had an incredible backpacking adventure, and I must say there’s not too many backpackers you meet on the road with an IP back home paying for itself.Buying your first PPOR with the FHOG with a 50k deposit is fantastic effort. Congrats and be proud of your achievements. Perhaps get a friend to move in with you to pay rent and help out with the mortgage. Consider doing some reno’s if you can to the house you buy, find a way to add value to your property. Satisfy your 6 month requirement for FHOG, then get the property valued, a depreciation schedule done, move out and voila your first IP. If you’ve added some good value you should then have a decent amount of equity to enable you to pull out a deposit for IP #2. However don’t expect the prices to magically go up in 6 months unless you’ve done some work to add value.
Cheers,
Emma
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