first timers



From: Aline Palloure

Myself and partner have just purchased our first property, a 2 bedroom unit in the MacTaggarts Woolstore in Newstead ($196K). We are planning to stay here for a few years but are looking at buying more investment properties in the future and would also like to be able to purchase a house in the New Farm area at some point in the not too far future. Our joint income is not huge ($75000/pa)and starting a family in the next 3 years is also on the cards. What would be the best investment strategy in order to be able to buy a $300K-450K home in the next 5 years???
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Reply: 1
From: Anonymous

Save, then save some more, then keep saving.

You should do some sums to figure out if you're better to slug every extra cent into the home loan on the unit to let you then use the equity (with a Line of Credit) to pay the deposit on your dream home


place that money saved, and use an automatic salary deduction as well, into a managed fund. if you don't have a lot of money right now, I understand there are some funds eg ING which have no, or a very low, minimum starting amount.

You should also think about whether your goal is achievable because, remember that if those are New Farm prices now, think how high they could be in a 3-5 years.

Also, having kids is one of the most expensive times of your life! That will make a SERIOUS dent in your income if you go back to only one breadwinner AND you'll have more baby expenses than you thought possible!

(remember too its hard to be frugal when its just the two of you but there'll be a guilt factor too when you're being frugal with the kids' xmas pressies etc...)

All of the above sounds a bit negative...I'm sure you can achieve your goals, but you need to recognise that it will take commitment, sacrifice and perhaps even struggle.

BUT if you commit to eating at home for then next 2 years, weekly videos and cheap movie nights only, taking inexpensive holidays, not buying new outfits/shoes/appliances/cars/other sundry doodads you will make it, I'm certain.

One purchase you probably should make is the book entitled "how to pay off your mortgage in 5 years" to get from where you are to where you want to be you might need to implement some of its suggestions.

Figure out what you want, then grit your teeth, tighten your belt and get to it!

good luck (which of course you'll make for yourself)
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Reply: 1.1
From: Jacque Parker

I'd have to agree about the saving saving part. If you intend to buy a bigger house in the next few years and downgrade your income, then try to pay off as much as you can in the unit you are currently living in. (especially as the interest on it is not tax deductible) By building up equity you can then have a better deposit for the house. I assume that you would keep the unit and rent it out, thus increasing your asset base. BTW, kids do eat into your income. Just ask my three! And I consider myself pretty budget-wise...
Cheers, Jacque :)
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Reply: 1.1.1
From: Sergey Golovin

In regards to the investment strategy - buy couple of IP's now for $150K while you can, hopefully in 3-5 years time they will be neutrally geared and in another 3-5 years (10 total) you will start making living out of it, not much but still...

And then you probably can afford bigger house for your self.

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