Hi guys, I'm 22 years old and have been reading, learning and going to different auctions and open houses for a while now. I have saved up around 18k in hopes of getting my first IP. I have come across a nice house that is up for auction soon and it's a great one to do some work on and rent after. I have spoken with my older siblings (29, 30 years old) and they have 25k saved each. (all three of us have decent paying jobs)
Would it be worth me getting a threeway and renovating then renting out with siblings? It's even possible to build a granny flat in the back yard and rent that out too at some stage.
If anyone could provide me with some tips or things i should know before i venture into this exciting new world that would be great.
Cheers!
Hiya
Welcome aboard.
Something to consider is that you'll all be liable for the entire debt – despite owning a third of the property.
Another option could be to have your older siblings "gift" you the deposit – that's if they'd prefer to avoid taking on the liability of the investment loan.
If all three of you are happy to take out the loan, them consider having the loan set up in three splits so you can each have your own loan split to make repayments on.
Some people prefer to avoid mixing business with family – others don't have an issue with it.
If you're planning on going to auction, then best to get a preapproval in place.
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]
A few quick points:
1. What is your purchase price budget?
2. There is no problems in getting a loan in 3 names (all 3 also need to be on the title) however you have all the problem associated with having 2 other parties (albeit family) on the investment.
3. Just because you can put a Granny Flat in the back doesn't mean its a great idea and the numbers add up. Think about the area and the returns on both dwellings before you butcher the backyard.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi and welcome
Buying through a family discretionary trust with agreements in the background might be an option. Makes for easier buyout of siblings later.
Either way you need legal advice to ensure it is structured properly.
D
RPI | Certus Legal Group / PRO Town Planners
http://www.certuslegal.com.au
Email Me | Phone MeProperty Lawyer & Town Planner
Hi viks
Is there a reason why you want to buy with others and not on your own.
As long as serviceability is sufficient then there are a couple of products that might get you over the line in relation to the funds to complete.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Buying with family? Think very carefully. At the ages that you all are things can change very quickly when you get married, kids etc. Definitely seek advice and structure correctly when the inevitable happens.
Oscar
Discuss exit strategies up front. What happens when one wants out?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thats right
Depends on your motives, If its about money i wouldn't get family involved, If its about helping them, invest in teaching your siblings knowledge to able them to make their own decisions how to become wealthy.
Maybe when you's have become wealthy and experienced you's could possibly develop property? mixing business with family can get not pretty, I'd hate to that especially over money.
Think wisely… my 2 cents : )
Hi all,
Thankyou for the replies . Much appreciated
So we've had a long hard think about things and come to the conclusion that it's best to get separate IP's. As we are all in different stages of our lives and have different amounts of money saved up.
To be brutally honest i am about 22 years old and have 17k saved up. I wish to keep saving and hopefully get 20% of property value (looking into something about 350-400k) around Ryde. 20% so i can skip out on the mortgage insurance.
The big question here is, say i was getting a unit for 400k, thats 80k i need to have so i don't have to spend 11k on mortgage insurance. Would it be wiser to buy the property earlier if i have only 30k so i can get the property and start renting out. Saving 80k is going to take a long time for me maybe 2-3 years. IF i have the property i can just start putting money straight into there instead of a bank account waiting to acumulate 80k.
Viks Sorry why do you see LMI to be something to avoid.
Most successful investors accept the fact that LMI is an opportunity cost and if it means they can grow their porfolio that much quick then it is a cost worth incurring.
In most cases it can added to the loan so doesn't have to come out of savings.
Remember if you purchase a property for $400,000 you are going to need a lot more than 80K to avoid LMI as you will also need to have saved the acqusition costs such Stamp Duty, Mortgage Registration / Transfer etc etc.
One lender offers an unsecured line of credit at 90% at the same rate as the home loan and this can be used to cover stamp duty, renovation costs etc
I think as has been mentioned earlier buying with friends / relatives is fraught with issues.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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