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Hello - would love some advice :)

Discussion in 'Introductions' started by Cascades, 16th Dec, 2015.

  1. Cascades

    Cascades Member

    Joined:
    16th Dec, 2015
    Posts:
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    Location:
    Sydney
    Hi there. Just a quick introduction, I am almost 26 years old, living in Sydney with very little to no knowledge and experience of real estate. I am interested in learning about real estate and property investing though. A rough goal is to buy a few investment properties to better my income and also to buy my first home. Currently I am interested in buying my investment properties first as my partner and I rent very cheap and don't mind renting while we get ourselves sorted financially.

    I am currently working an average of 33-35 hours a week earning roughly $680-$715 per week.
    My roughly current breakdown is this:
    $75 Rent per week
    $92 Car payment per week (about $1500 to go and it will be paid off)
    $100 Groceries - average
    $40 Gas and Petrol every fortnight
    $288 goes into my house deposit savings account

    Whatever is left over I keep incase I need to use it. If it's not used the night before pay day, I transfer more into my savings. I treat myself to a book, a new top etc once every fortnight or so.

    Would getting into property be smart for me?
    Am I able to do it on such as small income?
    Am I stepping in the right direction?
    What could I do to further go about all this?

    I am thinking about buying my first investment property in Melbourne maybe in an area such as Tullamarine. I don't know too much about the area but it's close to the city, I can afford to buy there, close to the freeways and near an airport.

    I am not interested in buying a home in Sydney currently as it's too expensive and I'd rather not fork out 600k for my first home!

    Would really love some advice.
     
  2. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Welcome @Cascades. Good to see you are thinking about your financial future at a young age :)

    Property has worked very well for a lot of people, so it's worth considering. I don’t know of any other asset that has the same up side with such minimal risk (if done wisely).

    Your big hurdle will be stumping up a deposit. Also, banks don’t generally like fluctuating income. PAYG full time employees are smiled upon in contrast. How much have you saved so far?

    There are some other options to consider which may get you going sooner but have their own implications: buying jointly with your partner (who may have stable income), a parental guarantor (for deposit) etc.

    I’d be reading up as much as you can (books and this forum), asking lots of questions and working on boosting both your savings and income.
     
  3. Cascades

    Cascades Member

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    Location:
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    Hi there Steven, thanks for your reply.

    Currently I have 16k. With my $288 I put aside weekly and extra additions when ever I can, I could probably save about 17k on my own each year.

    My partner works from home running 2 businesses. One business at the moment is extremely slow and the other he started 3 months ago and is doing ok but he is reinvesting the profit he makes to make it bigger and move onto other businesses that can bring in more more so his income fluctuates as well :/ He also has gone halves in a house with his brother so he has some equity we could use. I think he roughly has the same amount as me in savings to use for our deposit.

    My parents will most likely help me but giving me extra money (which I will want to re pay) and also go guarantor.

    Can I ask, do you think it's a good idea to wait until the market cools a bit to buy? I guess I will have to wait a little longer anyway since I'd rather have a much larger deposit but I do want to get moving within at least a year.
     
  4. Fargo

    Fargo Well-Known Member

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    Vic
    Have you thought about investing in shares for a few years to get to your to your end goal quicker. You might want to look into buying into something like Xero shares, I think they may be ripe for picking now and have potential to take off when the market wakes up. Is one property going to get you any where you want to go and will you be able to move forward after that.. Property is about leverage and finance, in the present environment with absurd serviceability requirements it is difficult to get, and can tie up your capital for little gain and retard wealth building. If you get enough Tax advantages property may be viable, but for lower income earners it may be a slow way to build wealth. Even if you manage to gain some equity it will be useless if you cant access it. Don't expect property to remain a way too build wealth like it has been in the past, but it is still a good way to store wealth.
     
  5. The Y-man

    The Y-man Moderator Staff Member

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    This is absolutely my biased opinion only, but:

    Tulla - the yield is relatively crap from the few properties I've looked at compared to Mill Park/Epping or even Broady. Beware airport overlays.

    http://services.land.vic.gov.au/maps/pmo.jsp

    The Y-man
     
  6. Cascades

    Cascades Member

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    I know absolutely nothing about shares so I'm a little worried to get into it. I have been thinking about doing some reading/research into shares to see if it might be something I can get into.

    As for the one property..no I don't think it will get me anywhere but I was planning to snowball till I have as much as I could handle and am satisfied. I know it might be slow but I am unsure of which road to go down. Do I just forget about investing since I am a low income earner and focus on getting a house for myself or do I give it a go and risk hurting myself financially? :/
     
  7. Cascades

    Cascades Member

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    Yeah I've noticed that recently so I think I'll do research other areas
     
  8. Azazel

    Azazel Well-Known Member

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    Hey @Cascades , welcome aboard.
    Those numbers are like a flashback to a bygone era! You're pretty fortunate to be paying such low rent.
    I would continue to save and put away the extra as my pay increased.
    Read as many different books as you can, and also ask as many questions as you can on here.
     
  9. Cascades

    Cascades Member

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    Thanks Azazel. I'll be purchasing some books soon and using a notebook to keep all information and write some advice down. I'll be continuing to save until I am ready to take the next step.
     
  10. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Your main obstacle is the banks being comfortable with your incomes to service the new borrowings. Have a chat with a broker who can look over that stuff in more detail including borrowing capacity and how the guarantor might work.

    I assume you're talking about the Melbourne market? Out of my depth. I concentrate heavily on Sydney (stopped buying early 2014) then focused on Brisbane which still looks good to me. No idea Melbourne will do from here (except CBD apartments - steer clear) though others may have some thoughts.

    :)
     
  11. Jennifer Duke

    Jennifer Duke Well-Known Member

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    NSW » Sydney
    "$100 Groceries - average" --- for ONE person? What are you eating?! Lol!
     
  12. Cascades

    Cascades Member

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    For two :) If it was just me, I could be happy eating two minute noodles and chucking extra into the bank
     
  13. Cascades

    Cascades Member

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    Also would like to ask if anyone can see this, when will banks take a serious look at me? At what deposit amount can I go to the bank and say "Right, I want an investment property"
     
  14. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You need enough money to cover a basic deposit plus the settlement costs. As a rough guide:

    10% deposit
    5% for stamp duties and other costs
    2% for mortgage insurance.

    Essentially 17% of the purchase price should get you there comfortably.

    Not all banks have the same lending criteria. Talk to a mortgage broker that will be able to better figure out which lender is going to suit your needs and circumstances the best.
     
  15. Cascades

    Cascades Member

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    Thanks for your reply Peter. I am getting there... :D
     
  16. Azazel

    Azazel Well-Known Member

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    No worries.
    If you're trying to save money, keep an eye out at for books at op shops, Vinnies etc... Some books you might only read once. Ebay is good for finding specific books cheaper too.