If You has $30k and just starting out...

Hi all,

If you had only 30k savings and not be able to increase savings for the next couple of years, where limited to 420k borrowing capacity, needed to live on the Gold Coast, were eligible for the FHOG, and wanted to get into the market for the first time, what would you do if you wanted to make a purchase? If your goal end goal was to build a property portfolio and have your own house.



Looking forward to hearing your strategies

 

Rent and invest in cheaper cities like adelaide , hobart , etc

 

Would you be willing to live a bit further out in Mudgeeraba/Beechmont etc? Can still get a nice older house on a bit of land within your budget in these areas.

Would avoid FHOG as its hard to make money on brand new builds, unless you are a builder.

If your goal is to grow a portfolio as fast as possible, as opposed to building a family or buying a home for lifestyle reasons then I would follow D.T's advice and rentvest

 

I started with $50k.
Buy in a low price area at a high LVR.
If you are happy to do some work, renovate and pull out some equity (check with a mortgage broker that that's still possible) and repeat.

 

Could live maybe 10-15 mins off the M1, maybe not as far as beechmont, although there are some beautiful houses at great prices out there!

Our saving capacity took a blow the last 6 months due to my wife’s health. 50k and we’d be in a much better place to buy. :/

And there are some lending restrictions with the suburbs we’ve looked at requiring higher deposits. We’re also limited to CBA due to our employment situation.

 

Yea that’s probably the thing I wanted to do most, but finding we need a 12-20% deposit for most suburbs we’ve looked at which is putting most options out of our reach.

I have 2 jobs, one casual and one ppt and my wife is on a contract so we are limited as to who will loan to us.

 

Are you sure your borrowing capacity is 420k?
I know in QLD stamp duty is low at 1% ($4200) for owner occupier
Other legal fees would be $1800
Hence your deposit would only be 24k which is just over 5% not the 12% you mentioned.

If you were going to go down the FHOG path know anyone you could borrow 20k off which would be paid off once you recieve it?

 

If you've got $30k and that's it, and you're determined to spend it, I'd buy a PPOR that you'll eventually turn into an IP. Stamp duty will eat up so much of your $30k it's almost impossible to buy an IP with that otherwise, unless you're buying super cheap somewhere.

 

Due to our work situation we are limited to CBA as a lender, and with our gross income we have 420k borrowing power. I think we get a stamp duty concession if we buy owner occupied because it’s our first home. Every suburb we’ve looked at has either had a restriction on it due to being high risk or the type of dwelling has required a higher deposit. Ie if we want to get anything strata titled in one particular suburb we were looking at we needed 20% dep. I think that’s down to 12% now but in a 350k duplex that’s still 42k .

What annoys me is that we’ve done our numbers and if we buy right we will have no trouble affording our loan but don’t have the deposit required for anything we’ve looked at.

I’ve only the ole 5% dep was all we needed we’d be cheering.

 

Yea that’s something we’d love to do, we were looking for a house we could afford with the deposit we have but then when that seemed out of reach started looking at duplex’s but then a higher lvr was needed which even kept us out of this market.

 

What about buying a ppor in say Shailer Park, (established house) live in it for the required time, then rent it out and rent yourselves again on the Goldie?
If you’re working on the GC at normal hours, you’ll miss all the traffiic while living up that way.... maybe buy something that needs some minor tlc (changing ugly paint colours, overgrown gardens etc)
As Jess said; you’ll save on stamp duty, plus further down the line you’ll potentially be able to sell cgt free if you follow the rules?

 

30 k does not give you much of a buffer in case of house repairs, health emergencies, legal fees etc. Focus on saving but keep looking.

 

I'd be wary about buying if you can't even increase the savings. Home ownership can come with big bills. You may be better off renting for now, and focusing on growing that savings.
I'd hate to see you in a position where you couldn't come up with a little bit of cash if the rates rise and the bank wants to take the house.

 

I agree with hobartchic and mikey7, this may not be the best time to be buying anything.

Can you sell something else to increase your deposit and provide a cash buffer?

 

If my family was only on one wage and there were some lingering health issues I'd be holding onto that 30k as cash.

The last thing that I'd want is the stress of a big mortgage.

 

I'd invest in shares and try and grow that 30k until I had 50-60k

 

Thanks for all the info guys. I hear your concerns. I was considering putting the 30k into stocks until we are in a better place to buy, but I literally have spent the last 2 yrs learning about property investment and don’t know anything about stocks. Although I heard the big 4 banks stocks took a dive, so maybe they are looking good haha.

If we were to buy, I’d say we would be looking at only a unit, 250-270k, so not super concerned about getting in over our heads, we would save around 100pw from what we are renting now.

My wife’s illness will probably stop our current savings of 500pw but will still leave us able to afford our life style comfortably, with a buffer for rate rises.

I just don’t want to get a few years down the track and wish I had of at least gotten in the market. We aren’t young so really wanted to make a start.

But we will weigh everything up and make a decision together


Thanks for your help!

 

Make sure you have calculated that $100/week that you would be in front over current renting situation.
Don't forget as an owner you have rates, insurance, water, interest rate rises, fixing a tap, A/C breaks down, longer term maintenance like painting, etc, etc.
A lot of people underestimate longer term holding costs of a property.

 

Lot of good advice so far..But 30k will not go far in the area's you wish to invest in ,and just because the Big 4 Banks are in the buy range its still extremely risky and can result in substantial financial losses in a very short period of time..

Always have a plan b,maybe invest outside your area first,target the right property ..
We had a look at this property yesterday,if you do your homework on the link below and how rare something like this is ..This is not advice and I have no interest in the below property,but sometimes you smell the money once you look past the rusted roof and banged up front entrance..ïmho

96 Keogh Street West Ipswich Qld 4305 - House for Sale #127541642 - realestate.com.au