Getting started

[wanna_b_rich12]

So I'm 22 almost 23 and ready to buy my first property. Up until now I have been living at home. My girlfriend an I are going to move in and she will pay me rent (approx 150 a week) I want to buy a unit in cronulla For around 280k-330k. At the moment I only have $11200 saved but I'm saving around $600 a week. I want to buy around beginning of June and I've worked out with a little bit of extra money coming in due to working away for 2 weeks I will have around $23000

My income is around $67k before tax which works out as $1014 a week
my expenses are around $400 a week at the moment but will be reduced by $80 board when I move out

It's a 1 bed 1 bath 1 garage were looking for and my intention is to borrow against it in around 5 years and buy a house to live in and put this up for rent.
my questions are:
1. Is my deposit going to be enough? If I have 5 percent will I have to pay mortgage insurance? If so approx how much and will that be added to my loan?
2. Can I claim expenses on the unit from the day I put it on the market or is there a period I have to wait from when I move out?
3. Do you think cronulla is a good place to buy?
4. How much will I be looking at per week if I borrow 314000(330000-16000 deposit) on a 30 year paying principle and interest
5. Do you suggest interest only or priniple an interest?
6. Fixed or variable? And any suggestions for which bank to use? Nab is my everyday bank

any other tips are greatly appreciated! Thanx

 

[mary&mat]

Hi wanna be rich12,

Is it feasible for you to rent somewhere with your girlfriend & for your first property to be your IP?

The reason I ask is b/c I'd be VERY cautious about living with a partner who may possibly make a de facto claim on half my property should we split up. Just remember there's a fine line between love & hate & exes have said to me in the past 'you realise I could take you for half'. Once you hear those words, you realise what a precarious position you're in letting someone live in your property. Better to rent somewhere else together first.

If you live in this property, you can't claim any expenses as you could with an IP. Maybe speak to someone or sit down & do figures on which scenario would see you financially better off.

My understanding is you can claim expenses on a property from the time it becomes available for rent (ie becomes an income producing asset).

Why do you believe Cronulla is a good place? Will it assist in achieveing your wealth goals? What has the growth been there over the last 3, 5 & 10 yrs?

I'd go IO every time as it frees up more of my money for other investments.

I'd go variable too as historically variable comes out on top. However, if you don't like uncertainty or don't have a cash buffer (eg LOC, cash etc) then maybe fixed is better for your risk profile than variable. It comes down to can you afford it if interest rates go up by 2% this year or next year?

Have you factored in rates, insurance, body corporate, repairs, water, agency fees into your expenses?

Regards,
M&M

 

[orangestreet]

So I'm 22 almost 23 and ready to buy my first property. Up until now I have been living at home. My girlfriend an I are going to move in and she will pay me rent (approx 150 a week) I want to buy a unit in cronulla For around 280k-330k. At the moment I only have $11200 saved but I'm saving around $600 a week. I want to buy around beginning of June and I've worked out with a little bit of extra money coming in due to working away for 2 weeks I will have around $23000

My income is around $67k before tax which works out as $1014 a week
my expenses are around $400 a week at the moment but will be reduced by $80 board when I move out

It's a 1 bed 1 bath 1 garage were looking for and my intention is to borrow against it in around 5 years and buy a house to live in and put this up for rent.

I wish I was this money savvy when I was 22!!. You are doing very well. Also, you have the right idea in wanting to get on the property badwagon. You have a good income with very few liabilities and going by your post, excellent saving habits.

Spend the next few months when you are saving for a deposit to educate yourself in Property 101. You could start off with a few books borrowed from the library (thats what I did) and make sure you buy the 2 popular investment magazines available on newstands every month. I have found that Michael Yardney and Steve McKnight's books are the best to get a good grasp of the basics involved. All the very best on your property journey.

 

[FormerLurker]

So I'm 22 almost 23 and ready to buy my first property. Up until now I have been living at home. My girlfriend an I are going to move in and she will pay me rent (approx 150 a week) I want to buy a unit in cronulla For around 280k-330k. At the moment I only have $11200 saved but I'm saving around $600 a week. I want to buy around beginning of June and I've worked out with a little bit of extra money coming in due to working away for 2 weeks I will have around $23000

My income is around $67k before tax which works out as $1014 a week
my expenses are around $400 a week at the moment but will be reduced by $80 board when I move out

It's a 1 bed 1 bath 1 garage were looking for and my intention is to borrow against it in around 5 years and buy a house to live in and put this up for rent.
my questions are:
1. Is my deposit going to be enough? If I have 5 percent will I have to pay mortgage insurance? If so approx how much and will that be added to my loan? should be sufficient given proven income and saving history and yes you will have to pay mortage insurance factor in 2% and you should be fine and yes added to loan2. Can I claim expenses on the unit from the day I put it on the market or is there a period I have to wait from when I move out?
3. Do you think cronulla is a good place to buy?
4. How much will I be looking at per week if I borrow 314000(330000-16000 deposit) on a 30 year paying principle and interest
5. Do you suggest interest only or priniple an interest? I'm a fan of interest only for IP's but different horses for different courses as they say
6. Fixed or variable? And any suggestions for which bank to use? Nab is my everyday bank variable for me unless you can fix @ historic lows like we just had but again horses and courses

any other tips are greatly appreciated! Thanx

As noted above in red

 

[Ed Barton]

So I'm 22 almost 23 and ready to buy my first property. Up until now I have been living at home. My girlfriend an I are going to move in and she will pay me rent (approx 150 a week)

is her 150 pw 'rent' half of the mortgage. if not, why not? is she putting in half? if not why not? you may have different financial goals that could cause problems to your relationship. unless you're willing to pay her way. if you break up she won't be viewed as a tenant but a wife.

if she has debt and you break up before your asset increases in value you might acquire an STD (sexually transmitted debt)

 

[skater]

Like some of the other posters the main issue I see is your girlfriend. How strong is your relationship? Do you see this co-habitation as a de-facto relationship in which you both envisage a life together? IF you wish to co-habitate and live in a marriage like relationship, then make sure you realise from the start that just as in marriage, if/when the relationship breaks up, things will be split in half.

If you don't see yourself in a very serious relationship, one in which the pair of you intend to spend your life together, then I very stongly suggest that you DO NOT live together in your PPOR. You could purchase an IP in your name, and so long as she does not contribute to the mortgage, then the property should be completely yours.

 

[Lily House]

As this unit will eventually turn into an IP,
if you do decide to pay more than interest only,
(that is, if you end up paying off some of the principle),
it would be best to set up an offset account.

That way you can have the effect of paying down your loan,
without actually paying off any of the actual loan,
so when you shift out later you can redraw the extra funds you have put in
(say, for a deposit on your new home),
and the whole original loan stays tax-deductible.

Best of luck.
Caroline

 

[Ed Barton]

If you don't see yourself in a very serious relationship, one in which the pair of you intend to spend your life together, then I very stongly suggest that you DO NOT live together in your PPOR. You could purchase an IP in your name, and so long as she does not contribute to the mortgage, then the property should be completely yours.

living together at all (rental, ip, or tent, it doesn't matter) is what will make your relationship a marriage like one and dictate whether she can get half.