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Starting at 30 years old

Discussion in 'General Property Chat' started by Ella86, 17th May, 2016.

  1. Ella86

    Ella86 New Member

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    Hi all,

    I'm 30 years old and used to post on the Somersoft forums when I was 20, dreaming of being financially free at 30... Well embarrassingly that didn't happen and I find myself at 30 (where has the time gone!) really wanting to begin my investment journey. Over the past 12 years I have been renting in Sydney and always earnt under 45K until now. I recently completed a degree and got a promotion to 85K per year. I have 15K in savings and am continuing to save $1500 per month.

    I feel pretty overwhelmed at all the options and paths out there. I want to buy a modest house in Western Sydney within the next few years that could be a PPOR in 5 years when I have children but I really feel there is a better way to this than just moving in and paying $800+ a week on a non deductable mortgage especially if there are rate rises. I'm happy to "rentvest" if I'm better off financially.

    I was thinking I would be better off purchasing a unit out of Sydney with CG potential now, which will cost me next to nothing after deductions and then use that to secure the PPOR in Sydney (a 1 bedroom in St Kilda?). But I could be completely wrong.

    I currently pay $230 a week rent in a share house for both myself and partner which my share will decrease to $130 when he gets a full time job so I'll have around $2000 a month to put into savings/investment. I do feel that is a very good deal rather than paying rent for our own place. I'm happy to do this until I have children within 5 years, which we will want our own place then. However in saying all this, I am on the lease of the house so if my 2 housemates move out I could be liable for the $580 a week total rent minus the $100 my partner would pay. Living with parents or other relatives for free/cheap is not an option.

    My parent's are umming and ahhing about loaning me around 50K to put towards a deposit. I think it is a matter of how quickly I could pay that back. I know the days of 105% finance are long gone.

    Any advice would be fantastic.
     
  2. bobbyj

    bobbyj Well-Known Member

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    Hi Ella,

    It's never too late! 30 is a good time to get cracking and you're in a good position with no debt and low weekly expenditures (high savings).

    My first advice will be to go see a broker and find out how much you can borrow based on your current income.

    I agree that rentvesting is a great option for you if you're happy to continue to live the rent/share house lifestyle.

    I don't want to force down my ideals down your throat but I would tread carefully with the Sydney market. One negative is that even if you find something of good value and neutral/slightly negative geared, you may be stuck without being able to progress for many years until you either save another deposit or get capital growth.

    Other options: Brisbane (that's where I'll be buying next).
     
  3. thatbum

    thatbum Well-Known Member

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    +1 vote for rentvesting, as a 31 year old rentvestor who has been doing it for a few years now.

    It really gives you so many more options for your first property, which I think is the most important to get right when aiming for a big portfolio.
     
    Ella86 likes this.
  4. MsAli

    MsAli Well-Known Member Premium Member

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    @Ella86 welcome. 30 is good time to start. Earlier the better of course. If you aren't aiming to move in for another 5 years, what draws you to Western Sydney? Would be good opportunity to look at other markets in Australia that may rise (as Sydney has been at peak with fairly low returns). What terms will you have upon borrowing from parents? Great position to in to be offered that!

    As bobbyj said, look at your affordability first. What sort of a portfolio do you want...are you considering building one (or do you want a home?)

    Well done on completing your course and the big jump in income. It will help you move forward!
     
    Ella86 likes this.
  5. Ella86

    Ella86 New Member

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    Thanks for the replies :)

    Yes it is great to finally be on some decent money after all these years. I also went through a separation where I lost more money than what I should have and got put behind, but I've almost recovered and really trying to focus on the future.

    I want a house in Western Sydney as it is close to work and parents. It would be great to have the option of using it as a PPOR further down the track. I can't afford a house now, so I was thinking buying interstate now and in Sydney in another few years.

    I want to start building a low risk portfolio slightly neg geared with good CG that will give me enough equity to keep purchasing.

    The loan from the parents doesn't really have terms, just a matter of pay it back as soon as possible. But, it's their "emergency" money so if I can avoid borrowing it all together, I will.

    Oh, there's also the issue of trying to explain rentvesting to my partner's parent's and why I don't want to purchase in Sydney yet. They are of the opinion that buying in Sydney and having a ridiculous mortgage is smart becuase it's "better than renting". They think I'm a failure because I don't have a property at my age (my partner is a fair bit younger than me).
     
  6. dabbler

    dabbler Well-Known Member

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    Plenty of people have had to start again at a much later date than 30yr old
     
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  7. thatbum

    thatbum Well-Known Member

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    Hopefully not much of an issue for you because I wouldn't recommend investing while at the same time trying to pander to uneducated views like those...
     
  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Ella86, post: 216593, member: 5540"]

    I'm 30 years old and used to post on the Somersoft forums when I was 20, dreaming of being financially free at 30... Well embarrassingly that didn't happen and I find myself at 30 (where has the time gone!) really wanting to begin my investment journey.

    I'll give you my honest 2 cents from my perspective. Firstly nothing to be embarrassed about but I would take a few moments to ponder why it hasn't happened yet and resolve to not let those factors stop you ever again.


    Over the past 12 years I have been renting in Sydney and always earnt under 45K until now. I recently completed a degree and got a promotion to 85K per year. I have 15K in savings and am continuing to save $1500 per month.

    Well done on the promotion and increase in salary as well as savings. Continue to save madly.

    I feel pretty overwhelmed at all the options and paths out there. I want to buy a modest house in Western Sydney within the next few years that could be a PPOR in 5 years when I have children but I really feel there is a better way to this than just moving in and paying $800+ a week on a non deductable mortgage especially if there are rate rises. I'm happy to "rentvest" if I'm better off financially.

    Look, long story short, depending on what your "financially free" means to you, you are going to have to separate emotional decisions from investment ones. moving into a place and paying $800 a week and on your income will severely affect your serviceability and hence reducing/slowing your ability to build an investment portfolio faster.

    I was thinking I would be better off purchasing a unit out of Sydney with CG potential now, which will cost me next to nothing after deductions and then use that to secure the PPOR in Sydney (a 1 bedroom in St Kilda?). But I could be completely wrong.

    There are many ways to approach this but the major thing to keep in mind (from a perspective that wants to build a portfolio asap) is that you don't want to buy a place that will have huge weekly repayment. You need to A)preserve your capital and B) avoid negatively affecting your serviceability as much as possible. Buying a place that doesn't affect your serviceability too much AND you feel after DD has good potential for CG seems 1 great option.



    My parent's are umming and ahhing about loaning me around 50K to put towards a deposit. I think it is a matter of how quickly I could pay that back. I know the days of 105% finance are long gone.

    That's a personal choice but remember that they may want you to buy a place that has repayments that could affect your serviceability too much, and hence affect you growing your portfolio. In your original post you said:

    "I'm 30 years old and used to post on the Somersoft forums when I was 20, dreaming of being financially free at 30... Well embarrassingly that didn't happen and I find myself at 30 (where has the time gone!) really wanting to begin my investment journey."

    If you want the next 10 years to be different from the last 10 (with regards to building wealth), then I would:

    1. Start to learn about property investing from books, forum and networking here. This will make a huuuge difference to your success with building a portfolio, the education/self learning part.
    2. Identify your financial goals and then work out a plan how your going to get from A to B in a basic sense.
    3. Love your family and friends but realise that they are most likely not the best people to talk to/ask advice from when it comes to investment decisions unless they have built successful portfolios themselves.
    4. Once you have strategy and plan make sure you take action.



    Just my 2 cents. I know its not easy :) Good luck
     
    Last edited: 18th May, 2016
  9. drg86

    drg86 Well-Known Member

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    Hi Ella,

    You say your parents may loan to you. There may be a better way if they own their own home and would go guarantor for your purchase. That way they get to keep their emergency cash.

    Have a read of this example by Terry Tax Tip 61: How to borrow 105% on your first purchase

    I'm an '86er too and have been on very similar income, 35-40k. I started at 22 and have built up a decent portfolio in the last 8 years so it can be done on low wage. I would suggest share house for as long as you can to save on rent. Even if you do go ahead an purchase a home in western Sydney to live in, look at renting out the spare rooms. I did this with my properties and basically lived in my own house for free. Put my money into renovating and built up equity to go onto the next purchase.
     
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  10. Excalibur1

    Excalibur1 Well-Known Member

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    I agree with @Leo2413.

    One thing i would suggest is to have a chat with accountant @Terry_w is a huge contributor here and would recommend reading his tax tips. Also look after your interests when it comes to separations from partners. You don't want to lose a lot of money again. Sorry i'm being negative here, but you should always look to minimise risk when doing investment.

    I would also recommend reading Other Asset Classes forum on here. The money you have might be better invested in managed funds than being in bank account. Once you need to purchase a property then you can sell the shares. It is risky but it can pay off. I used this method when i started investing to save for deposit.

    Congrats on the big promotion! And just so you know its never too later to start. :)
     
  11. York

    York Finance Broker Business Member

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    Just to clarify @Terry_w is a solicitor and mortgage broker not an accountant.
     
  12. EN710

    EN710 Well-Known Member

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    I am quite sure he is all three :D
     
  13. Excalibur1

    Excalibur1 Well-Known Member

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    Thanks for clarifying @York . I do believe he works closely with accountant?
     
  14. York

    York Finance Broker Business Member

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    I don't know. But for any tax law related questions he is well versed to deal with any scenario whether simple or complex. Tax law is one of his areas of focus as well as business entity structure, estate planning & wills.