20 yo looking to buy first IP

[ozzult]

G'day.

I just turned 20, and I've got a full time job, while I'm taking time off uni, and I'm still living at home, so my living costs are minimal. I'm going to have about $15k cash by early mid March, and I'm looking at buying a 1 bedroom unit somewhere close to the city in Perth, for around the $80-$100k mark.

I think I am correct in stating that the first homebuyers grant is still at $7000, so assuming the property I get, is only worth about $100pw in rent, it's better off just leaving it empty for the first 12 months. (I'm under the impression you aren't permitted to rent in the first 12 months when you accept the first homebuyers grant).

Suburbs I'm looking at are Maylands, Scarborough, East Perth, West Perth, Gwelup, Claremont, Como, South Perth and any other similar places.

Also, when I get back to uni, I can still work at my current job and clear $300-$400 a week, so repayments won't be a problem, only forseeable problem is getting the loan, last resort will be getting my parents to undersign it. I've also worked out, that if I can repay $300 of a $400 wage (which is very viable as I have almost no living costs) I can pay it off a $100k property in about 7 years.

What tips would you give someone like me, who is looking to get into their first IP?

 

[Kristine..]

Hi Ozzult

Good on You!

This is one of my favourite subjects. My son bought his first property 'off the plan' when he was 16 half (settled when he was 18) and my daughter bought her first at 18&4 months.

Check out the WA State Revenue Office website for more details of how the FHOG applies to you.

No, you don't have to not rent it, it just has to be your Principal Place of Residence some time within the first twelve months after purchase for a non-specified period of time.

All of us happy mortgage brokers on this forum will offer you our services - Rolf, Rolf, Simon, me and recently, Chris.

Distance is no problem with email, faxes and Aussie Post.

And going by your post, you probably won't have to wait as long as you think before you can buy!

Good luck, happy investing

Kristine

 

[Simon]

Do some more research on the FHOG mate. You may rent the property out without prejudicing the FHOG.

There may be a property on the market with an existing tenancy in place. This may run for months after settlement.

The reqirement is that you occupy it within the 12 months as your home.

Check out www.osr.nsw.gov.au and follow the links to the FHOG.

Don't worry if you are in a different state as it is a federal initiative administered by the state governments and I believe all the regulations are the same.

Cheers,

 

[D.T.]

Hi,

Congrats on wanting to do something with your future.

A couple of questions tho:
1. Why do you like the areas you've mentioned, and how much do you know about them?
2. With regards to your quote: "I can pay it off a $100k property in about 7 years". May I ask why the heck you'd want to do that?

And about the FHOG, theres a couple of ways you can do it. Someone I know bought a place, rented it out straight away, then at the 12 month mark "accidently" decided to not move into it afterall, therefore having to pay the $7k back, out of the $35k the property went up in the year. Alternatively, you could live in it for a couple of months while you renovate/tidy it up a bit, then just rent it out.

-Cheers

Dave

 

[Aceyducey]

Originally posted by dtraeger2k
And about the FHOG, theres a couple of ways you can do it. Someone I know bought a place, rented it out straight away, then at the 12 month mark "accidently" decided to not move into it afterall, therefore having to pay the $7k back, out of the $35k the property went up in the year. Alternatively, you could live in it for a couple of months while you renovate/tidy it up a bit, then just rent it out.

hmm - does that mean youcan then claim the FHOG on the next place you buy (provided it's after the 12 month period)???

Ozzult,

Good luck with your strategy- it sounds as though you have a good head on your shoulders & are planning much further ahead than many other people (both your age & older!)

Provided you follow your plan, keep seeking the support and advice of experienced investors/advisors and don't let that internal negative voice get in too many words edgeways, I'd say you'll be abletolive thelife of your dreams before you are thirty - for the rest of your life!

Cheers,

Aceyducey

 

[Oscar]

Ozzult - At the age of 20, I would say that if you can comfortably afford the repayments long term, then do it. I am sure that when you are 40 you won't be regretting that first purchase you made all those years ago.

What a lot of us would give to have thought the way you are doing now when we were 20.

Cheers

 

[ozzult]

Originally posted by dtraeger2k
A couple of questions tho:
1. Why do you like the areas you've mentioned, and how much do you know about them?
2. With regards to your quote: "I can pay it off a $100k property in about 7 years". May I ask why the heck you'd want to do that?

The areas I've mentioned are just ones I've seen some decent one bedroom units in, for around the $100k mark. I'm looking for something that is within 15 minutes of the city and beach, and most of those suburbs are. I mean, I've seen units in East Perth for $90k, that is a bargain really, when you consider it is basically inner city living.

With the loan, I'd just want to pay it off as quickly as possible.

 

[ozzult]

Thanks for the advice from everyone as well.

I know I have to do something with this money, and not just waste it. I've got friends who left high school at 15, and started working full time, and are now 20. 5 years of full time working and NONE of them have anything to show for it, all they've got is a debt on a high interest loan that bought them their cars. No cash, nothing.

This motivates me to do something with my money.

I'm also doing an Economics & Finance degree at uni, and I think doing something like this at such a young age, would give me a little more experience out in the real world, rather than just in the academic one.

 

[FrankGrimes]

Bit of advice from someone else your age. I bought my first place at 19 and got the FHOG. You have to live in unit/house in the first 12 months. My solicitor advised me to simply put all the bills in my name for a few months so it 'looks' like you lived there.

Apparently he's had a lot of people doing this without a problem. You also won't have to pay stamp duty which will save you alot.

Alot of people will shoot down this - but it does work. Even if you don't rent the property out for a few months it's still well worth it. (For me I paid off my car and saved around 5000$ in stamp duty)

 

[ozzult]

Do you have to be living in it for the whole 12 months, or for just a period within that first 12 months.

 

[FrankGrimes]

Just a period. In NSW it's 3 months. So I just put all the bills in my name for that amount of time.

Regards

Luke

 

[ozzult]

They don't do random door knocks to see if you are actually living there or whatnot?

 

[mckennal]

Im from WA, I called up the OSR here in WA and spoke to someone from the FHOG department.

FHOG: you have to start living in the place within 12 months of purchasing the property, you have to live in that house for a 'period'* of time.

*That 'period' as was described to me was:
If you leave within 3 months, you need to provide written evidence why you had to vacate so soon.
Between 3 and 6 months -- dicey.
Move out after 6 months, no problems.

That's the information I was given, unless you want to have people breathing down your neck, or be checking behind your shoulder, Id recommend living in the house for at least 6 months within 12 months of buying it. Depends how easily you sleep at night I guess..... Personally I dont like people ripping off the government - coz I know its my tax dollars "hard at work".

My 2c.

Luke
Perth

 

[Simon]

Luke,

Some wise advice there.

You got more from the OSR in WA than I have been able to get here in NSW. Anecdotal advice says the period they are checking is three months - but who knows for sure.

I am surprised a solicitor is advising people how to commit fraud against the commonwealth - I wonder how that stands with his P&I insurance?

Cheers,

 

[christobel]

oh what a tangled web we weave when first we practice to deceive

 

[abcdiamond]

Originally posted by Simon
I am surprised a solicitor is advising people how to commit fraud against the commonwealth - I wonder how that stands with his P&I insurance?

Cheers,

Simon
I think you forget that Solicitors are Human also

In fact, the more I think about it, and remember some solicitors I "used" to know, ...... nah, I think I will leave well enough alone....

 

[Simon]

ABC,

Point taken.

If the client is convicted will this solicitor be up there next to him taking responsibility? Hope so.

Cheers,