Help!

[TonyY]

Hi guys,

I'll start off with a few things just to give you background knowledge of where and why I choose to invest in property. Any advice will be MUCH appreciated.

I am 21 years of age. I have a property built in Craigieburn, Malcolm Creek/High lands area. It was built in late 2009, so around about when I was 19 years of age. I do live in the house with mother/brother. I left school mid year 12 and have been working ever since, though I have a fear. I don’t want to spend the rest of my life paying off this mortgage. I pay interest only at 7.16% the loan stands at $319,000. I'll come up with a few figures soon as I finish explaining a few more other things. Now at a young age working hard to pay off a mortgage is depressing as it holds me back from quite a few things. I do get some sort of income support through mother but only to a LIMIT.

For the past 2-3 weeks I have been reading up a lot on investment opportunities and the wisest way of investing in my situation is property. At the moment I can't do much as I'm first directly attacking my private debts and C.C. debts. Once that's all cleared in makes sense to me that having non-deductible debt out of the way will be to my borrowing advantage and some finer cash flow.

Dimity, I don’t stand in a place to take a big risk as I basically am the husband, the wife, and the brother… the “man of the house” as we say. I will take my steps VERY warily. Hopefully early next year the family and I are moving out to a relative’s house so we can rent out this property to save us from struggle. We will only be paying $500 p/m at the relative’s house, compare that amount to how much interest I pay… BIG SAVINGS. I’m considering the tenant to full fill the payments of the interest on the loan, if not close to it. It won’t hurt if I top up a hundred or so.

I’m planning to kick start in investing soon as we get to rent out this property. Then supposedly the property I am living in now will be an IP. Now let’s look at some figures. The loan I took out is $319,000 at 7.16% variable. House built for $355,000 as I had the 10% deposit and the extra costs, stamp duty etc… keep in mind I was also eligible for the first home buyers grant. I don’t know how much the property is worth now, but I will get it revalued also I have been hearing in the neighborhood, houses are well worth over $400k. Apparently I got a big bargain with the house as the builder did feel guilt in the end as he sold a property he built just around the corner with basically almost the same size/features as my house for $420k. The new Craigieburn is in fact looking much better as there are much more developments promised to happen soon enough.

Now, all you guys are all I basically have at the moment, so consider yourselves as my right hand man  just as Tom Cruise says “Help me… Help you”. What I will be doing next I have no idea. I’m still getting the idea of investing in property. There are so many different strategies, ways etc… I’m actually really stuck. How important this is to me only I will know.

Any advice will be much appreciated, thank you for your time.

 

[BuildingBlocks]

Keep reading here for a few months, it will help you find your direction.

Also put some thought into your career path. I am not sure what line of work you are in but I would expect you to have opportunities to increase your income quite a bit over the next 5-10yrs, which will make things much easier.

 

[Lawry]

Hi, as BuildingBlocks says, keep reading, there is a wealth of information on this forum, get to know the search feature, and ask lots of specific questions before you make your next move. Lots of friendly people here who will help.

 

[travelbug]

I don't get it. You're writing a "help me I'm in trouble" post and you are 21 with a property.

How many people would love to be in that position? millions

Once you move out and rent it you are on your investment journey. You said yourself- the rent will help pay most of it.

Play your cards right and you could be retired by 30.


As others said. READ everything- books, forums, magazines. This will educate you on how to move forward. Choose a strategy that suits you and GO!!!!

Also this is posted in the wrong section. See if mods will move it.

 

[skater]

I don't get it. You're writing a "help me I'm in trouble" post and you are 21 with a property.

Likewise, I don't really understand why you want help. The only thing that I can tell from your post is that maybe you are not earning a lot of money, and for some reason you are supporting your family.

Now, bear with me, because I don't really understand why you are supporting your family. If your mother doesn't work, then she will receive some kind of financial support from the Government as well as extra payments for your Brother (if he is still a dependant). If he is not a dependant, or even if he is and is receiving Youth Allowance, then he sould be giving you some small financial contribution, and your mother should be giving you a whole lot more than your Brother.

Crikey, there are countless single parents out there that are paying full market rent for their properties. It sounds to me that your mother has a really good deal going, while you are struggling financially.

 

[Ed Barton]

Likewise, I don't really understand why you want help. The only thing that I can tell from your post is that maybe you are not earning a lot of money, and for some reason you are supporting your family.

Now, bear with me, because I don't really understand why you are supporting your family. If your mother doesn't work, then she will receive some kind of financial support from the Government as well as extra payments for your Brother (if he is still a dependant). If he is not a dependant, or even if he is and is receiving Youth Allowance, then he sould be giving you some small financial contribution, and your mother should be giving you a whole lot more than your Brother.

Crikey, there are countless single parents out there that are paying full market rent for their properties. It sounds to me that your mother has a really good deal going, while you are struggling financially.

i think fat Tony (anyone called Tony automatically becomes fat Tony with a coarse voice) is asking what sort of strategy to employ. is that right FT?

FT stick around, ask questions and contribute.

it's certainly admirable that you are taking care of your family. just don't let them take advantage of you.

 

[TonyY]

Sorry, I didn't make it clear enough. My mother does get gov. Benefits also brother is on youth allowance, all together my mother earns 1400 a month, I earn 3300. It's not so much the struggle "help" as in what will be a good strategy to use etc...

It's just tuff ATM due to my debts. But once they are all out the way and once I get tenants in then yes, my investment journey will begin. I will continue to do as much research as I can. Every spare minute I get I'm reading. I'm thankful that at this age I do own a propety but as I said it does hold me back from quite a lot, but they are sacrifices I have to make to get somewhere in life I guess. Thank you guys. If I have any questions I'll make sure I ask.

 

[TonyY]

Also add that my mother contributes all her money. She uses it to pay most of the expenses, she barely uses it on her self... But once again, if I could only choose a right strategy I won't be afraid to use it.

 

[DaveM]

I am just perplexed at how you got a loan of $320k when you were 19 and on a salary of less than $40k. And why you would have taken on such a liability on a salary that would have obviously left almost nothing left each week.

What is done is done, how much are you paying in mortgage vs how much rent can you get for the house?

With a small income, I dont really believe that

the wisest way of investing in my situation is property

. You will get little tax reduction, and unless you are buying neutral or positively geared, its only going to further detract from your available cashflow. You may also be at the top end of what you can borrow based on income/expenses.

 

[travelbug]

, but they are sacrifices I have to make to get somewhere in life I guess.

Hi, google Nathan Birch. You will get a lot from his journey. He bought his first property at 18 (only because no-one would let him buy sooner. He worked many jobs to save his deposit.
Everyone said he was mad. Things like why are you not having a life, enjoying yourself etc. Well he made his first million$ by age 21 and now (at 26) does not need to work.

Things will get better for you soon then you are well and truly on your way.
Well done and keep looking ahead. Set some goals and go for it.

 

[TonyY]

Appreciate for all the above replies.

What is done is done, how much are you paying in mortgage vs how much rent can you get for the house?

Hi dave,

ATM I'm paying $1,220 fortnightly, that figure is only temporary, till December because of previous late payments. Normally I'd pay the interest only which is about $1900 p/m. I could possibly get $1400-$1600 p/m for rent. Also Dave I got my loan through a broker. Not in the same line of work when I was 19. In December my wage will go up $300, guess that's a positive.

Hi, google Nathan Birch. You will get a lot from his journey. He bought his first property at 18 (only because no-one would let him buy sooner. He worked many jobs to save his deposit.
Everyone said he was mad. Things like why are you not having a life, enjoying yourself etc. Well he made his first million$ by age 21 and now (at 26) does not need to work.

Things will get better for you soon then you are well and truly on your way.
Well done and keep looking ahead. Set some goals and go for it.

Sounds very interesting travelbug, I'll look into it now, also thank you for the feeback I know it can be done, I just want to do it right and need some moral support and a few good ideas


Thank you all for the feedbacks

As soon as my investment journey begins I will make another thread and keep everyone updated on how its going, I have a feeling its going to be one hell of a ride...

 

[Macca]

Hi Tony,

Take the time to read and think about financial compounding, it is the secret you are looking for. Once you "get" that, it is much easier to be patient because you know what happens next.

With wealth accumulation it is a series of steps and plateaus not gradual incline. You have taken the first step when you bought the house, now you Have to cross the plateau.

When you move into the cheaper house and rent yours out then you have reached the next step. Study up on your options in the meantime while accumulating a deposit, I would aim at doing something about a year after the cheaper rent starts.

In the meantime, Patience is required

 

[DaveM]

ATM I'm paying $1,220 fortnightly, that figure is only temporary, till December because of previous late payments. Normally I'd pay the interest only which is about $1900 p/m. I could possibly get $1400-$1600 p/m for rent. Also Dave I got my loan through a broker. Not in the same line of work when I was 19. In December my wage will go up $300, guess that's a positive.

Given you have a sizeable equity in the property, I would probably move out like you are saying, refinance the property to a lower rate (you can do better than your current rate), put the equity into an offset account.

When you are able to financially, look at your options for another well performing IP, or if the current one is not performing, sell and buy 2 less expensive better performing ones. As the house is your PPOR it is CGT exempt for 6 years after you convert it to a rental.

 

[TonyY]

In the meantime, Patience is required

I'll try my best as I was pretyyyy keen to smash up an IP next year

Given you have a sizeable equity in the property, I would probably move out like you are saying, refinance the property to a lower rate (you can do better than your current rate), put the equity into an offset account.

When you are able to financially, look at your options for another well performing IP, or if the current one is not performing, sell and buy 2 less expensive better performing ones. As the house is your PPOR it is CGT exempt for 6 years after you convert it to a rental.

I like the sound of that idea Dave. I am in need of BIG research then