Hi Everyone,
I am new to this site but have been reading posts and am happy to see the generous nature of seasoned investors towards virgins (me).
My question is – i am saving to buy my first home this year and i need a little help. With my budget i will only be able to get a cheap property ….about $200,000 so am looking just outside Sydney. I thought i would try and get a cheap house that needs a bit of cleaning up around the Hunter Valley, live in it for 6 months, do the work then rent it out and carry on. Do i seem to be on the right track. I know this is really general but i am very inexperienced and would like to get some direction.
ThanksHi Oceans
Firstly welcome to the forum and i hope you enjoy your time with us.
How have you calculated your budget is this based and on line lenders calculator or something more sophisticated.
Remember you can borrow upto 95% + LMI with the right lender so as long as you can demonstrate 5% deposit over 3 months and your serviceability is sufficient then yoiu might be suprised as to what level of purchase price you can target.
Either way one thing i would suggest is that you consider an interest only loan with 100% offset as this will reduce your monthly repayments whilst you llve in the property and protect the deductibility of the interest when you look to rent the property out.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi oceans
It'd be a good idea to ge a really knowledgable mortgage broker to hold your hand on this purchase. They will be able to talk to you about your living costs, and therefore work out how much you will be able to afford to sink into a property. They also see every day which banks/lenders are accepting/rejecting applications by different kinds of people. for instance, it might be the case that a particular bank is currently not a fan of lending money to contractors, so if you are a contractor the broker will know to steer clear of that bank.
Richard Taylor who has responded to you above is an awesome broker, and everything can be done via email and phone.
Hope this helps
jac
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thank you for the quick response. I don’t have a big deposit (about $10,000) which is why I would only be getting a cheap property. I think I would be a safe person for a lender as I work in emergency services and have good job security. The down side of that though is salaries in that role are low. I love my job but I’m ready to start making more money. I am open to any ideas and appreciate the info already proveded
Hi Oceans,
Emergency Services is a terrific service industry and I must admit I don't know salaries etc or job prospects but if you are alwyas limited by a 'low' income you may need to get creative in order to keep the income and growth coming in along the way.
Given you are a low income earner this would suggest negative gearing is definately not a strategy for you. Value adding and/or cashflow will be the way for you to go.
Not easy – but if you really want it.
Hope this helps.
Hi oceans
Welcome aboard.
I like the idea of buying a property that you will add value to. In my experience, this can be a really effective way of kick starting the portfolio. Just don’t over capitalise on the renos and find a place that doesn’t need structural repairs.
Richards comments regarding the interest only loan with the offset is something that you should consider – particularly as this will become an IP down the track.
Best of luck.
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, thanks for the input. Salaries in the Emergency services are only about $70,000 a year which makes it a bit hard to have substantial savings….(sydney’s expensive to live in).
Regarding the interest only loan, how would i build equity in the house or make money if the house isn’t getting paid off ? Is it just relying on capital gain ? I like the idea of less money going out of my pocket each week, im a bit confused on the strategy ?
Just one more thing…does anyone have ideas on areas to look in ?I think this will be upto you are the distance you are prepared to travel to a from work.
If the property is claimed as a PPOR then you only need to occupy the property for 6 continous months within the first 12 months in order to qualify for the FHOG.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for the tip engelo !
I was looking in Sydney’s west for a unit or just outside sydney for a house (hunter valley or wollongong way)with the strategy on finance…is the idea of the 100% offset account that instead of paying into the house and getting equity, you pay into the offset which lowers your interest and you have easy access to the money to buy again or do reno’s? I think i’m getting it. Sorry again for my ignorance…ive searched for basic information in the forum but alot is still over my head.
Thanks againHi Oceans
Yes you have it in 1.
The other reason is that when you move out of the property and it is available for rent you preserve the interest deduction on the full loan amount.
If you have purchased a new PPOR you can attach the offset account to your next loan.Not every lender offers such a product so make sure your Mortgage Broker is well versed with investment structures.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
hey oceans,
welcome to the forum!
I'm also thinking of going west sydney for cheaper properties too.i'm also keen on +ve cash flow properties, and this may help you too for increasing your income
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