1st Time Investor
- Thread starter Tannign
- Start date
Hi Tannign,
First steps would be;
Find a broker, they can give you firm answers on how much you can borrow in your situation, if you buy a modest property you might be able to afford a PPoR with a $350k deposit, I have chosen to invest rather than get a PPoR but keep an open mind if a PPoR interests you.
Decide on areas you might want to invest in and see if they are affordable with estimated rental returns.
Then consider;
If you do buy an investment property I would look at preserving as much cash as possible by lending 80% or 90% and paying LMI. This will maximise future tax destructibility on the debt and keep a cash deposit for a PPoR for when you might be in a position to do so. You can put your remaining cash into an OFFSET account (NOT a redraw) to reduce the repayments in the interim and hopefully allow positive gearing.
Hope that all helps
First steps would be;
Find a broker, they can give you firm answers on how much you can borrow in your situation, if you buy a modest property you might be able to afford a PPoR with a $350k deposit, I have chosen to invest rather than get a PPoR but keep an open mind if a PPoR interests you.
Decide on areas you might want to invest in and see if they are affordable with estimated rental returns.
Then consider;
If you do buy an investment property I would look at preserving as much cash as possible by lending 80% or 90% and paying LMI. This will maximise future tax destructibility on the debt and keep a cash deposit for a PPoR for when you might be in a position to do so. You can put your remaining cash into an OFFSET account (NOT a redraw) to reduce the repayments in the interim and hopefully allow positive gearing.
Hope that all helps
You may be surprised by the amount you can borrow - with low rates, I find that most clients are surprised by the amount they can borrow. If you feel comfortable, put some numbers up in terms of income/expenses, and the brokers on the forums will give you a guide for how much you can borrow.
This is probably one of the 'first steps' as it will indicate what is possible and what isn't. Once you get a sense, you can then build a plan/goals.
Cheers,
Redom
Hi.
Thanks for your replies and suggestions.
At the moment my income from my part time work is only $20,000 but I also get some government benefits, child support and a small amount of extra cash from a job I do as a hobby. So my only claimable income is the $20,000 (plus maybe the interest on my cash if that is counted). My rent is $600 per week, huge I know but I live in Sydney and have three kids so need the space. I only just break even at the moment with income and expenses.
When I punch those figures into the online sites for borrowing power, there's not much I can borrow. If anyone has any suggestions please let me know.
So I'm thinking if I continue to rent instead of buying a PPR and start to buy property with positive cash flow, then I can use that cash flow to keep going and maybe eventually be able to afford to buy a smaller PPR in a few years when my kids are older and maybe moved out (my older two are teenagers)
I've been looking at online videos, blogs, bought some books, and did the Dymphna one day free course, so have heard of a lot of success stories and would love to get ahead myself.
Thanks for your replies and suggestions.
At the moment my income from my part time work is only $20,000 but I also get some government benefits, child support and a small amount of extra cash from a job I do as a hobby. So my only claimable income is the $20,000 (plus maybe the interest on my cash if that is counted). My rent is $600 per week, huge I know but I live in Sydney and have three kids so need the space. I only just break even at the moment with income and expenses.
When I punch those figures into the online sites for borrowing power, there's not much I can borrow. If anyone has any suggestions please let me know.
So I'm thinking if I continue to rent instead of buying a PPR and start to buy property with positive cash flow, then I can use that cash flow to keep going and maybe eventually be able to afford to buy a smaller PPR in a few years when my kids are older and maybe moved out (my older two are teenagers)
I've been looking at online videos, blogs, bought some books, and did the Dymphna one day free course, so have heard of a lot of success stories and would love to get ahead myself.
Hi and welcome aboard
I haven't crunched the numbers but the banks will automatically assume it costs a single adult with 3 dependents $20k+ per annum in basic living expenses.
Some govt. benefits and child support can be taken into account - but I assume that the $600 p.w rent will negate those.
Sorry to be the party pooper :-(
As mentioned though - I haven't crunched the numbers.
Cheers
Jamie
Here's a few properties you could afford to buy in Sydney using your $350k:
http://www.realestate.com.au/property-villa-nsw-macquarie+fields-117974911
http://www.realestate.com.au/property-villa-nsw-ingleburn-118338691
http://www.realestate.com.au/property-townhouse-nsw-werrington-118567803
The townhouse in Werrington looks really nice.
http://www.realestate.com.au/property-villa-nsw-macquarie+fields-117974911
http://www.realestate.com.au/property-villa-nsw-ingleburn-118338691
http://www.realestate.com.au/property-townhouse-nsw-werrington-118567803
The townhouse in Werrington looks really nice.
Spot on. It is not compulsory to get into debt. 350k could provide a home for your family or a regular source of income for life. Down the track you may feel more comfortable borrowing to invest.
I guess this is the main question - do you want a home and a no debt solution or do you want to invest, and try and spread the money further either by getting (small) loans on higher cash flow properties further out of Sydney or even just getting 2 cheaper properties in stead of one with no loans. If its a home I would just get what your family wants/needs and be happy with that. If its to invest, then read, learn, think, take your time, because Sydney has just had a few strong growth years and you might want to consider other areas that haven't just had so much growth.
Yeah I think this is a really good point. As per your original post you are recently divorced, low income earner and carer for 3 children. My concern would be that whilst property investing is a great vehicle for wealth creation it does carry risks. Like all investing those risks can be mitigated but it just seems like you already dealing with a lot. There can be A LOT of stress that goes along with property investing from bad tenants, falling markets, rising interest rates.etc.etc.
Have you thought about perhaps purchasing. I totally appreciate its not as simple as just picking up, you have kids, schools, family.etc. But the $600 is a lot of money for rent given your income. You could buy a place totally or almost debt free and then you can spend time educating yourself, on property investing. No rush at all!
Is there a need to remain in Sydney? I just looked at those $350k properties posted by gcb160 and lol'd at the absurdity of paying so much to live 45-60km out from the CBD (I guess Sydneysiders are used to it).
Obviously your situation may require you to stick there, especially with kids, but $350k would buy you a comfortable 3-4 bedroom home within 10-15km of Adelaide CBD or if you were ok living further out (25-30km) you could buy outright for around $200k and the remainder could be used as a deposit for a positive cash flow investment property or two.
Obviously your situation may require you to stick there, especially with kids, but $350k would buy you a comfortable 3-4 bedroom home within 10-15km of Adelaide CBD or if you were ok living further out (25-30km) you could buy outright for around $200k and the remainder could be used as a deposit for a positive cash flow investment property or two.
Buy a PPOR for $350k
You're now "up" by $600 a week in rent you're no longer paying.
Of that $600, some will go toward rates & maintenance on the house etc and maybe a bit extra pocket money.
Say you have $400 left per week.. put $200 in a "safe" deposit/savings account for emergencies, holidays, general savings.
The other $200 start investigating shares maybe? That $200 a week is $10k per year you could be investing in shares whilst also saving the pther $200 a week, ($10k per year) in general accessible savings and meanwhile your PPOR is going up in value to give you equity down the line.
PS..I know nothing about shares, just seems like an avenue to investigate if buying a PPOR outright would free you up that $600 a week to invest.
You're now "up" by $600 a week in rent you're no longer paying.
Of that $600, some will go toward rates & maintenance on the house etc and maybe a bit extra pocket money.
Say you have $400 left per week.. put $200 in a "safe" deposit/savings account for emergencies, holidays, general savings.
The other $200 start investigating shares maybe? That $200 a week is $10k per year you could be investing in shares whilst also saving the pther $200 a week, ($10k per year) in general accessible savings and meanwhile your PPOR is going up in value to give you equity down the line.
PS..I know nothing about shares, just seems like an avenue to investigate if buying a PPOR outright would free you up that $600 a week to invest.
Hmmmm. Lots to think about. The thing that I know is I need to stay in Sydney for the kids, schools, family, work, the kids dad etc,..... and the $350k properties are just too far from the area that we need to be in Sydney. So I'm pretty sure that the buying of a PPR is out for me just now.
So I need to work out the best thing to do with the money so that it doesn't just dwindle away on living expenses.
I'd love to be able to have a passive income that counteracts the rent I pay and hopefully be able to keep going with more properties to increase my income even more.
So I need to work out the best thing to do with the money so that it doesn't just dwindle away on living expenses.
I'd love to be able to have a passive income that counteracts the rent I pay and hopefully be able to keep going with more properties to increase my income even more.
Your rent is higher than your annual income. I would be worried that I couldn't sustain paying that for very long and live comfortably. I would also be concerned about having to rent as a single person as I became older. Think about how much more you could offer your children if you didn't have to worry about paying rent. Many children change schools and adjust well. Maybe your ex-husband could consider moving to the same area so that they could have a more comfortable life and he could still be close by. Perhaps the Central Coast, South Coast or Blue Mountains might be other good options. Another possibility could be to buy a property using the $350k and rent it out while your children are still living at home and when they have grown up and moved out you would have somewhere to live rent free. Although having $350k in assets or savings would probably reduce the amount of money you could get in government payments whereas if the money was used to buy a home to live in it wouldn't.
My rent is just being maintained and it has been for the past 18 months since I separated with the help of child support, government family tax benefits, interest on my cash and my part time income. I just break even. I know it's a huge amount in rent and I could do so much more if I didn't have to pay that but moving to a different area or state is not an option.
My question is where to start in buying property, not whether or not I need to move.
My question is where to start in buying property, not whether or not I need to move.
If you don't mind me asking, which area of Sydney do you live in? You could buy a 2 bedroom unit around Mount Druitt, St Marys, Penrith or Campbelltown. They fit your price range and have good rental yield. You may be able to get a townhouse around those areas like I showed before but there isn't much under $400k anywhere in Sydney. I'm not too sure about areas outside of Sydney.
I'm from the Sutherland Shire. A nice area of Sydney, close to the coast, about a 15 minute drive to the beach. I've grown up in this area and so have the kids. The house we used to live in is worth $800,000 and my ex has bought me out of my share and taken on the rest of the mortgage. The kids live with him 50% of the time.
Mount Druitt is really not a nice place to live......sorry if anyone on this forum is from there. Lots of crime and a very bad reputation. A lot of those western suburbs might be ok but they are not for us.
Mount Druitt is really not a nice place to live......sorry if anyone on this forum is from there. Lots of crime and a very bad reputation. A lot of those western suburbs might be ok but they are not for us.
