I am a young investor looking to get started and this is my first post.
I'm currently in training as an officer in the military (a stable and secure job).
Although I only have a few thousand saved up so far, I have up to $350-$400 a week that could be used if necessary to fund my investment plans and this will increase greatly in the coming years.
After a fair bit of reading and research I'm keen to get into cash flow positive real estate as I love the future freedom that can be created from building up a source of regular passive income.
1. Is there any way to be able to obtain a mortgage and therefore buy my first property (currently looking at apartments around $100K) without having a lot of savings to go towards a deposit?
2. Is this a good idea, or would I be better to focus my investing somewhere else for the time being? (I'm not too worried with putting my money away where it will earn moderate long term capital growth, I am determined to build a stream of passive income over the next 10-15 years)
Thanks a lot for any advice that can be given!
Also it is worth noting that I am only pointing out the weekly funds I have available as a contingency plan/way to meet the repayments in times of vacancy etc. I plan on investing in a positive cashflow property that should make profits from day one.
BrentL wrote:1. Is there any way to be able to obtain a mortgage and therefore buy my first property (currently looking at apartments around $100K) without having a lot of savings to go towards a deposit?
2. Is this a good idea, or would I be better to focus my investing somewhere else for the time being? (I'm not too worried with putting my money away where it will earn moderate long term capital growth, I am determined to build a stream of passive income over the next 10-15 years)
Hi Brent
Welcome aboard.
1. You need a minimum of 5% plus enough to cover purchase costs such as stamp duty and legal fees. As a guide, use 10% of the purchase price to work out roughly how much you require. Note – some locations require more than a 5% deposit.
2. I don't know the area that you're looking to purchase in but I doubt you'll experience decent growth in a $100k property. Properties like this are usually found in regional/remote areas where growth isn't usually that strong. That's just a generalisation though.
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]
Thanks for that Jamie M
As for the property, I should have specified that I am looking at a student apartment in Brisbane which rents at $270-$300 a week. Without going into all the fees and costs associated too deeply yet it appears that it will be positive cashflow as long as it has a reasonably low vacancy rate
BrentL wrote:Thanks for that Jamie MAs for the property, I should have specified that I am looking at a student apartment in Brisbane which rents at $270-$300 a week. Without going into all the fees and costs associated too deeply yet it appears that it will be positive cashflow as long as it has a reasonably low vacancy rate
In that case you may need higher deposit, 20 to 50%. Are they serviced apartments and/or smaller than 50m2?
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
Terryw,
Yeah they are around 30m2 and a lot of the ones that I was looking at were serviced.
BrentL wrote:Terryw,Yeah they are around 30m2 and a lot of the ones that I was looking at were serviced.
Ah, it will be very difficult to find a lender for these. Try CBA maybe.
There is a reason why they are cheap – no one can finance them. You have to ask yourself if these are a good investment.
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
Hi Brent, I would steer clear of those types of investments. You will need a larger deposit as terryw said, they are harder to onsell, you will get less capital appreciation due to the smaller market demand for these types of investment properties. I sent you an email.
I'm with Ten – rarely do they make for good investments. There's certainly better options out there.
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]
Agreeing with others – not a good investment.
If banks require a higher deposit (see Terry's comment) then it means the banks have determined this type of property to be high risk. If they are risky for a bank then, by extension, they are risky for you too.
While chasing cash flow is understandable don't forget to make sure the underlying fundamentals are suitable too.
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