I've been lurking around here for a while now and have come to the conclusion that I can afford an investment property, but at the same time can't afford one. Let me go into a little detail...
First of all, I'm a student so my income is around 10-15k pa (note I currently live at home so my expenses are relatively low). After running some numbers I'm reasonably confident that I can afford the -ve cashflows of a property with sufficient growth prospects. So making up the little differences between rent and total ongoing costs doesn't bother me (I have some good areas in mind which I'm confident will experience growth).
Now the first problem lies with the LVR. Unfortunately I have no cash for a deposit, but am in the process of cutting a deal with my folks which should help the situation. Still I'm not sure they've got the 20% needed available for me - I think it'll affect their SANF to much - but 10% or even 15% is probably doable. Is this gonna work? I mean, will I be able to secure a loan and MI on a 90 or 85% LVR, given my low income status?
If not... Any other creative ideas on where the deposit might come from? We're talking say 40k for a 200k (inclusive of costs) IP. I don't see saving this amount reasonable seeing as my gross income next year will be 38k, and I'll be out of home by then (it's not an option to stay living at home).
The other option I've considered is buying a cheap unit somewhere as PPOR, using FHOG, and doing some reno work while paying off as much of the principal as possible to create some equity. Personally I don't like this idea at all. I'll be very strapped for cash servicing the P/I loan until starting full-time work in March '06 and for my own lifestyle reasons I'd prefer it to be living elsewhere. The advantage is I make use of the FHOG and would learn a little about doing renovations.
I'd appreciate thoughts, suggestions, ideas on my situation.
Cheers,
Ben
First of all, I'm a student so my income is around 10-15k pa (note I currently live at home so my expenses are relatively low). After running some numbers I'm reasonably confident that I can afford the -ve cashflows of a property with sufficient growth prospects. So making up the little differences between rent and total ongoing costs doesn't bother me (I have some good areas in mind which I'm confident will experience growth).
Now the first problem lies with the LVR. Unfortunately I have no cash for a deposit, but am in the process of cutting a deal with my folks which should help the situation. Still I'm not sure they've got the 20% needed available for me - I think it'll affect their SANF to much - but 10% or even 15% is probably doable. Is this gonna work? I mean, will I be able to secure a loan and MI on a 90 or 85% LVR, given my low income status?
If not... Any other creative ideas on where the deposit might come from? We're talking say 40k for a 200k (inclusive of costs) IP. I don't see saving this amount reasonable seeing as my gross income next year will be 38k, and I'll be out of home by then (it's not an option to stay living at home).
The other option I've considered is buying a cheap unit somewhere as PPOR, using FHOG, and doing some reno work while paying off as much of the principal as possible to create some equity. Personally I don't like this idea at all. I'll be very strapped for cash servicing the P/I loan until starting full-time work in March '06 and for my own lifestyle reasons I'd prefer it to be living elsewhere. The advantage is I make use of the FHOG and would learn a little about doing renovations.
I'd appreciate thoughts, suggestions, ideas on my situation.
Cheers,
Ben