Dear All,
We are currently renting at the moment in Melbourne’s south eastern suburbs having moved from overseas recently. We would like to get our own place soon, taking advantage of the favourable stamp duty terms and first time buyers grant. We have about 250K in the bank as result of selling our overseas home . We are thinking of Setting aside around 150K as a 20% deposit towards our new home and want to invest the remaining 100k elsewhere. Would you suggest investing in land or land+house packages so that we get both rental income and capital appreciation.Sorry new to investing, so please go easy on me :)
Hi Valluvan. I would start by meeting with a investment focused broker to work out your borrowing capacity. At least from there you can work out how much you want to use for PPOR and the rest for an investment. The lending requirements are changing daily so I would personally try and get the PPOR sorted first and than worry about the investment side. Best of luck.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Hey Valluvan.
I’d recommend a different strategy in terms of usage of your deposit. Instead use all of the cash funds as your deposit for your PPOR (principal place of residence) – then after settlement you could apply to release the equity back up to 80% LVR with a new investment equity release split. That way you’ve minimised the PPOR loan as much as possible, whilst having the equity available for you to be able to invest.
You get the best of both worlds. If you do this repeatedly as you come into further funds from saving etc – you can get your PPOR paid off at an accelerated rate and grow a portfolio at the same time.
This is the basic gist of debt recycling and a good investment focused finance broker can set this up for you with some of the better lenders in this space.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Dear Tony and Corey,
Thank you so much for your pointers. Met with a mortgage broker who has suggested to wait for at least 3 months to get some sort of bank pre-approval for mortgage(as I started employment only recently). So looks like realistically our PPOR may happen only after 3+ months…However wife is concerned with the raising land costs in Melbourne and suggests to put in a deposit for a plot
So this is what we have been thinking….
1) Put in a an initial 10% deposit for a plot of land(for investment purposes) which will settle after 6/12 months
2) Once we get the bank’s pre-approval(after 3 months from now),get an established house as our PPOR for around 600K which is within the range of the stamp duty exemption but no first time buyer grant(as it is an established home)
3) Pay the remaining 90% pertaining to the transaction#1 when its time to settle the land.Now the question is how will we ensure that our first time buyer status gets applied to transaction#2 and not to transaction#1(as this will result in maximum benefit for us as first time buyers).
Let’s assume we do only transaction#1, do we need to apply for stamp duty exemption once the land is settled or when we pay the 10% deposit?. If the stamp duty exemption kicks in only when we settle the land then potentially we could do transactions1,2,3 in that order and still apply for the stamp duty exemption for transaction#2. Is this allowed and will it work?
Hope I have not confused anyone… :)
What do u think?
If you put 100k into a house, what sort of montly rental income could you expect to get? $400?
Not sure why u think I will put only 100k into the house. Obviously I will top up my deposit with a mortgage for the investment property unless iam missing something from ur question?
Valluvan, If its only in your name you get the FHOG/NO STAMP
your wifes name for second PPOR then same applies if she has never owned the first PPOR.Kind regards
Jaxon Avery
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Another option is to look at alternative investment than property and try and pay down your non deductible home loan as quickly as possible.
Funds borrowed for investment are Tax deductible so if the after tax return you can receive from an investment is greater than the net cost of funds then divert the surplus income to pay down your PPOR debt.
We are starting to see more and more investors adopt such a strategy especially in the current low interest rate environment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Valluvan, If its only in your name you get the FHOG/NO STAMP
your wifes name for second PPOR then same applies if she has never owned the first PPOR.
Kind regards
Jaxon AveryHi Jaxon,
I am slightly confused now… are u saying both wife and I will qualify as first time buyers separately which means we can both buy our first properties separately and get 2 FGOG/Stamp duty benefits in total? I was under the impression only one FGOG/stamp duty exmeption applies for a couple who are buying their first property?Valluvan, If its only in your name you get the FHOG/NO STAMP
your wifes name for second PPOR then same applies if she has never owned the first PPOR.
Kind regards
Jaxon AveryHi Jaxon,
I am slightly confused now… are u saying both wife and I will qualify as first time buyers separately which means we can both buy our first properties separately and get 2 FGOG/Stamp duty benefits in total? I was under the impression only one FGOG/stamp duty exmeption applies for a couple who are buying their first property?You can only claim it once as a couple – if either party has received the grant before or owned property before they cannot claim the grant.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Sorry to be confusing, I went and relooked at the legislation and thought there may be a legal loop hole but turns out in your case it would be illegal. Sorry and hope I didnt cause any confusion, In certain cases each person can get it, for e.g. if you were not living in the same dwelling/legally married in this country.
Thank you Corey for the clarity for Myself and Valluvan
Valluvan in regards to what to do with your money and moving forward, I think an end goal and dream is the best starting point, look at where you want to be and then work out the right path to it.
there are a lot of different options and many have different benefits, but finding the right path that suits your lifestlye and desires is something that will take a bit of time, effort and calculation.
All the best on your journey and any questions I am happy to answer or look up if I dont know
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Sorry to be confusing, I went and relooked at the legislation and thought there may be a legal loop hole but turns out in your case it would be illegal. Sorry and hope I didnt cause any confusion, In certain cases each person can get it, for e.g. if you were not living in the same dwelling/legally married in this country.
Thank you Corey for the clarity for Myself and Valluvan
Valluvan in regards to what to do with your money and moving forward, I think an end goal and dream is the best starting point, look at where you want to be and then work out the right path to it.
there are a lot of different options and many have different benefits, but finding the right path that suits your lifestlye and desires is something that will take a bit of time, effort and calculation.
All the best on your journey and any questions I am happy to answer or look up if I dont knowThanks Corey and Jaxon. The mortgage broker has confirmed based on my current earnings, my borrowing potential is upto a million. However he has asked me to wait for atleast 3 months to get bank’s pre-approval. Meanwhile what do u guys think about the below plan:
We have seen a new estate in one of the regional town in the south east Melbourne(which is 1.15 mins by train to the CBD) and land prices are relatively cheaper in comparison to the suburbs of Melbourne and you get more land for your money. Initial research indicates that this town is set to benefit from the planned infrastructure upgrade in that town and the estate is quite close the train station and the main freeway leading to Melbourne. So the question is how about we putting down a deposit for a plot of land and the land settles 9 months from now.At that point in time we either sell it on or build a house and rent it out(we will have the funds to cover the land settlement and we can go for a IO loan for the house). Do you think this is a good option. Newbie hear and need some advice please….
A lot of my friends are buying empty plots of land in new estates as their investments. Is this a good strategy.
If it suits your need its fine,
there are other strategies that I think bear more options/cashflow/gain but Its not a bad idea.
Especially if you could get a large block/corner block (depending on that councils planning leg) build on one side, leave the other side to build granny flat/sub div/etc
Could be smart.
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Hi Valluvan
Which area in South East Victoria are you looking at?
Cheers
StevenWarragul
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