What should I do with my money?

Hi All,

I'm moving to Australia and looking to invest in property from the get go. I have about $50,000 ($40,000 for the down payment + $10,000 for stamp duty and other fees) to invest and am looking for a reasonably good return so that I can re-invest again in year 3.

My question is what do I need to do first considering that I don't have any real experience with the market and have just watched a bunch of Australian property investment videos online. Would I need to have a full time job before I secure a property with the down payment because finding a job is going to take time I suppose. My second question is whether it's gonna be Perth or Melbourne. Melbourne is at the top of its property cycle and it's likely that I'll be priced out of anything worthwhile. On the other hand, Perth has hit rock bottom! Recovery?...Maybe? I've got time. I'm 28.

What are your thoughts?

Thanks

 

Yeah you're going to need a job. But that's fine, work for 6 months and get to know the place and then make a decision. Perth may be a buy in 6 months. Not sure its rock bottom just yet

 

For a bank to loan you money to buy property, they need 2 things

1. deposit
2. ability to service - showing that you can pay the loan repayments each month

deposit - as someone just arriving, I am guessing they will need you to produce at least 20% deposit, but I am just guessing here so talk to a broker.

serviceability - yes you need income vs expenses to show you can pay

eg if you borrow 400k (to purchase a 500k property property) that will produce 4% in rental return (20,000/yr), then they will assume 20% of rental income goes in fees/costs and leaves you with 16k/yr income from the property. to safeguard against an unsure economic outlook they will calculate P&I repayments at 7-7.5% which is 32,750/yr, so you will need to show income of 16,750 that can be used for this. also they will assume you spend 2-2.5k/month on living expenses (I am living outside Australia and my total expenses for all living including rent is about 10k/yr but they still calculate it on 2-2.5k/mo living expenses), so in this example you will need an after tax income of at least 16,750+27,000 = 43,750 to borrow this amount.