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Made my mistakes... Ready to move on!!!

Discussion in 'Introductions' started by timnit, 5th Jan, 2017.

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  1. timnit

    timnit Member

    Joined:
    1st Jan, 2017
    Posts:
    12
    Location:
    Melbourne
    Guys

    I am trying to enter the property market... Keen for your thoughts on my analysis on my situation..

    A little about me;
    - 31 Year Old, Married, 1 year old, wife is no longer working
    - $205k p.a income + bonus (recently jumped from $135k).. Not mining.. large company management
    - wage jumps to $225k in April
    - $105k in savings at 2.4% interest rate
    - Discharged bankrupt... (young(er) and dumb)... It is well and truly off my file and my credit score is in the "Very Good" range @ 769
    - Strong savings history until wife went on maternity leave then no savings history for last year.. Now on new wage we are saving again - over $2000 per month
    - Risk profile... Conservative based on history but on the aggressive side of conservative.. when faced with a 50:50 call i will always lean to the conservative side.

    Strategy;
    - Rent where we want to live (inner north of melbourne) and invest for the next few years
    - Maximise cashflow and build asset base
    - Get first property mortgage free ASAP (i get this isnt wise but it is important to me)
    - Buy PPOR in next 5 years.. Likely $1.4m+

    Is property attainable given my past, or should i focus on shares/funds etc??
    Any advice?
     
    House likes this.
  2. Marg4000

    Marg4000 Well-Known Member

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    If the property you buy is, or will be an IP, don't pay off the mortgage. Put the money into an offset account attached to the mortgage. Continue till the offset amount is the same as the loan outstanding if that us important to you.

    Then, when you buy a PPOR and the interest is not tax deductible, withdraw the offset and you should have a hefty deposit. Or, for more flexibility, simply transfer the money to an offset on the PPOR mortgage.
    Marg
     
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  3. WattleIdo

    WattleIdo midas touch Premium Member

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    Well why not property? You can structure your strategy to suit your maturing conservatism. I would take a good look at your spending plan and make sure that you are saving for / spending on what is important to you and not spending on stuff that doesn't add anything to your life, too.
    Good on you for getting your credit rate up.
    I understand if you want to pay your first property off however, you can put its equivalent in the offset account as already mentioned to give you more flexibility with your decisions about a deposit when it comes time to buy the ppor. At the same time, it cuts down your interest payments while it's sitting there.
    I just encourage you to take things at your own pace, research carefully with numbers not emotions as your guide. And if you think it's better to put your money into shares for a while, maybe it is.
    Good work.
     
  4. drg86

    drg86 Well-Known Member

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    I believe property is easily attainable for you. As above do not pay off an IP ASAP if you want to buy a PPOR in the next 5 years. I know it is important to you, but will an offset give you the same peace of mind?

    The item in your situation that stands out to me is the savings per month, around 2k. This to me highlights some serious discretionary spending on a 200k+ salary. It's just my opinion but I would think 5k+ a month is easily saved on that kind of money. This will initially help with a larger deposit/higher priced or multiple properties.
     
  5. Patamea

    Patamea Well-Known Member

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    Chat to a great mortgage broker such as @Steven Ryan
     
  6. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @timnit

    Definitely recommend speaking with one of the great brokers from Property Chat to look over the numbers in detail and the blip on your credit history to see what's possible :)
     
  7. timnit

    timnit Member

    Joined:
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    Location:
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    You are absolutely correct!!! The number is actually $2894.. But it needs to be better..
    This is the 2nd month at my new wage so we are trying to work out what it means..
    my total package is $225k inc Car, Super, Shares etc... After all of those things my take home is $9876 per month.. My wage will move to $250k inc everything from April.

    I am also expecting a bonus in sept of which will be min $50k max $150k before tax but that will not be spent...

    I also have a holiday savings account where we put $300 a month, and a car expenses account where i put $400 a month which included savings for a new $25k car for my wife in 9 years time...

    I have had a good chat to my wife about spending and it being something we need to reign in .. she comes from a VERY VERY large family and as such there are ALOT of birthday, christmas presents etc... event at 20-30 each trust me it stacks up... In fact presents for birthdays and xmas, anniversaries etc, plus also putting a small amount away for a birthday party for our girl every year is WAY too much of our income... roughly 9% and that just has to change!!!!!!!

    PHI is also a big one as I dont really get the rebate anymore (because of bonus) so our PHI insurance with pregnancy cover is outrageous!!! $692 per month!!!

    Finally rent is a hard one... Currently $1,700 a month but the place is now way too small for the 3 of us!!! Its actually un-sustainable its just too small.. So looking to move to something slightly bigger... I am expecting rent to jump to $3,250 which is what 3 bedroom places in our area rent for... Our area is quite cheap rent wise vs. other parts of melbourne for what you get and it is very close to my in-laws meaning we get massive amounts of support with out baby and the next one no doubt so not looking to move..

    Thanks to all for the feedback - I am continually fine tuning spending and forward projection on cash surplus... every expense is at line detail and if i don't spend it then it is going to go into a surplus account until that reaches 3-4 months living costs and then into our deposit/investment account..

    I feel alot more in control but I want to save a larger portion of our income as i am conscious we are very lucky to be on such a high income and we need to capitalise!

    Steve - I will drop you an email over the weekend!

    Cheers
    Tim
     
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  8. timnit

    timnit Member

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    Sorry also worth adding we have about $60k worth of shares which give us circa. 5% yield on dividends so another $3k per year.. I had $10k but was just given $50k when i started my new role...
     
  9. Gockie

    Gockie Be the change you want to see in the world Business Member

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    With your income I'll suggest make your IP purchases in a discretionary trust - you'll be able to move investment income so it distributes to your wife, not you!

    And once your kids get to 18, you can distribute the profits from your assets to them! Easy uni support right there. Talk to @Beano on this! :)
     
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  10. Darren

    Darren Well-Known Member

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    If I was fortunate enough to jump up from 100k to 250k per year It would be my mission to live exactly as I was on the 100k and change nothing. Your expenses should be no different meaning more money to buy more assets.
     
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  11. Terry_w

    Terry_w Structuring Broker and a Structuring Lawyer Business Member

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    I suggest you get legal advice on whether a trust is suitable. Just buying a a trust could cost an extra $8,784 per year in some situations.
     
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  12. tomlemke

    tomlemke Well-Known Member

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    Cut spending, start leveraging.
     
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  13. bobbyj

    bobbyj Well-Known Member

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    Agreed.
    Speak to a broker.
    Test the water and see if you can score an investment loan

    With a decent income you can build a strong property portfolio in no time.

    The porsche can wait.
     
  14. JDP1

    JDP1 Well-Known Member

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    disagree.
    you dont want a porsche when you are old , bald, and fat...
    you want it now at this age...just make sure you are not wearing your wedding ring when driving around in it :)
     
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