Is My Plan Unrealistic?

Ok, so I've been doing the usual and reading a decent amount of Real Estate and Property Investing. It seems it is essential to build a plan, so you have something to aim for and to keep yourself on the right track.

I thought I might post up my current situation with my partner with details of our financials and where I want us to do/be in the future.

Myself (23): Apprentice Plumber ($36,000) & Operate Machinery Weekends ($15,000-20,000).
Partner (20): Retail ($35,000) & Bookkeeping for her father ($10,000)

So Annually, we both earn at least $90,000 yearly put together.

Our Debt
$33,000 @ ~6.50% Loan.
$293,250 @ 5.66% IO Mortgage.
We have no credit cards, own our car etc.

We are currently paying off the $33,000 loan with $500 a week going into it (want it cleared in just under 2 years). Trying to clear this one asap! We are currently living at my partners parents house so while we are out of our house with tenants we can afford to pay this much.

Our Property:
Location: Camden
Specs: 4 Bedroom, 1 Bathroom, Single Garage
Size: 720sqm
Price: $345,000
Current Rent: $325 per/wk (Market is $350)
Next 10 Years: +4.5%

We were looking for our PPOR when we bought this home, and since we bought it our plans have changed and we want Investment Properties. Otherwise we would have bought in a different area.

We have to move in for a 6 month period to satisfy the FHOG then we will most likely be moving back into the place we are at now. Get new renters in after we fix the house up a little and put the rent up to market value.

I want us to have the oppurtunity to buy another IP in the next 2 years. I know that westpac give 95% LVR to existing customers of 6+ Months but isn't there more risk with borrowing this sort of money and paying MI?

I am after peoples opinions, help and guidance. Are we looking into IP too soon? Currently I have great motivation to get into real estate and begin our IP journey but when I look at our funds, I can't see how we can do it?

Sorry in advance for the long post, and all the information is all over the place!!!

Regards,
Andrew (Confused Soul :rolleyes:)


P.S. Our Plan is to have 10 IP's by 2016...
 
I am after peoples .... help and guidance. ...

Ummm..... don't think you need these things really.... you had a plan, you're executing it, might need a few things changed here and there as you go along, but it all sounds pretty ok to me! :)

As Bill.L said - I think you won't be doing that machine operator job too much longer :D

Cheers,

The Y-man
 
I think you're doing great, Andrew. A few things you may want to consider:

1) Relationship - relationships can break down. Pretty soon you'll probably be earning a lot more than your GF and you may want to consider whether you're happy to risk having to split everything with her 50-50 if you break up.

2) Income protection - particularly as your job is one where a physical injury is "not unlikely", you may want to look at getting income protection insurance (if you don't already have it). Yes, if you're injured, you can maybe get workers' comp and/or Centrelink, but the amounts of these are nowhere near as much as income protection insurance, if you're on a half-decent wage (as you soon will be).

Borrowing 95% is viable, IMHO, provided you can afford to hold the negative cashflow. If you are put in a situation where you have to sell to get rid of the negative cashflow, then you could take a big hit if the market hasn't been kind. My blog entry "Should I wait to buy again, or pay LMI?" may be helpful in clarifying your thoughts.
 
Hi Andrew,

Can I suggest that in a year or two as a fulltime plumber you should be earning slightly more than $36k.

bye

Yes, in 2 years I will have finished my trade. I started late in the industry. 2 years ontop of Night Tafe and I will have my License. So it won't be long before I am on some decent money.

More risk for whom? I would have thought the lender & the MIer :p

Nah, just do it Andrew while the passion will propel you forward.

Thanks Propertunity, I hope this motivation and passion stays for a while yet!

Ummm..... don't think you need these things really.... you had a plan, you're executing it, might need a few things changed here and there as you go along, but it all sounds pretty ok to me! :)

As Bill.L said - I think you won't be doing that machine operator job too much longer :D

Cheers,

The Y-man

Thanks Y-man. I don't really enjoy the operating job at the moment but it brings in some good extra income. I can't wait to have my weekends back!!!

I think you're doing great, Andrew. A few things you may want to consider:

1) Relationship - relationships can break down. Pretty soon you'll probably be earning a lot more than your GF and you may want to consider whether you're happy to risk having to split everything with her 50-50 if you break up.

2) Income protection - particularly as your job is one where a physical injury is "not unlikely", you may want to look at getting income protection insurance (if you don't already have it). Yes, if you're injured, you can maybe get workers' comp and/or Centrelink, but the amounts of these are nowhere near as much as income protection insurance, if you're on a half-decent wage (as you soon will be).

Borrowing 95% is viable, IMHO, provided you can afford to hold the negative cashflow. If you are put in a situation where you have to sell to get rid of the negative cashflow, then you could take a big hit if the market hasn't been kind. My blog entry "Should I wait to buy again, or pay LMI?" may be helpful in clarifying your thoughts.

Thanks Ozperp.

Relationship wise, I can't see things going off the rails so much that we seperate. Next year, I am planning on GF to change to Fiance' (Sp?) ;) ....But yes, I am happy with 50/50 split atm. She does all the organising with the tenants and that, she's great :)

We have talked about income protection and I think it's something I will want to get. They say that nearly every plumber is hospitalised at least once in there career! If something happened and I could only live off centrelink payments, I would be devastated...not only for me, but for my partner and her future.

I suppose I just need to be extra careful when picking up IP's using 95% loans. In this situation, it is more then likely that the property will be negative cashflow wouldn't it? Looks like I will have to start doing some deep researching to make sure I try and minimise our chance of losing out.

Thanks for the link, I will check that out this afternoon! Other than that, off to work!!

Thanks everyone
 
I want us to have the oppurtunity to buy another IP in the next 2 years. I know that westpac give 95% LVR to existing customers of 6+ Months but isn't there more risk with borrowing this sort of money and paying MI?

Hi Andrew,

It's great that you do have a vision and plans to get ahead.


You have some great advice above and I will add a little to what Prop said in regards to 95% LVR and LMI.

The risk you take here is that your bank won't lend, or will simply place restrictions on you BECAUSE of your high lend. This all depends on your financial situation and scenario.

Have the bank or a good MB assess your situation. I would strongly advise that you do both and make an informed decision from there. You may not need to go to a full 95% Lend if you have acquired equity in your existing property.:)

Regards JO
 
Relationship wise, I can't see things going off the rails so much that we seperate. Next year, I am planning on GF to change to Fiance' (Sp?) ;) ....But yes, I am happy with 50/50 split atm. She does all the organising with the tenants and that, she's great :)

We have talked about income protection and I think it's something I will want to get. They say that nearly every plumber is hospitalised at least once in there career! If something happened and I could only live off centrelink payments, I would be devastated...not only for me, but for my partner and her future.
AndrewT,spend some time and read as much as you can in this site everything you need to know about property investing is in here and it's free,just give something back when you can,you have a plan which will change over time,once your "GF" is your "Wife",kids come into the picture,
i can't add anymore then what the smart people have already said,I was a plumber up too ten years ago,broke my r/hand three times when the Hilti hammer drill hit the reo in the slab:),shoulder r/c 2 times:),and fell off a roof a few times,plumbers have a very high burnout rate,drinking-drugs-the black dog-marrage breakdown-builders that don't pay and never did from the start all takes a little bit out of you over time///so many of my old plumbing mates are now dead,just keep that in the back of your mind at all times,my only advice is look after your partner 100%,and the rest will fall into place over time ..good luck..willair..
 
Don't count on it - you'll find that once you don't need the weekend job, you'll have some propoerty hunting and reno work take up all your weekends and more! :D

Cheers,

The Y-man

At least it will be doing something I really do love!

Hi Andrew,

It's great that you do have a vision and plans to get ahead.


You have some great advice above and I will add a little to what Prop said in regards to 95% LVR and LMI.

The risk you take here is that your bank won't lend, or will simply place restrictions on you BECAUSE of your high lend. This all depends on your financial situation and scenario.

Have the bank or a good MB assess your situation. I would strongly advise that you do both and make an informed decision from there. You may not need to go to a full 95% Lend if you have acquired equity in your existing property.:)

Regards JO

Thanks Jo. It would be great if we can build enough equity through our current property to enable us to get a loan at a lower LVR %.

May I ask what MB stands for? We will have to get someone to assess our sitauation just to make sure we're not getting in too deep too early! Thanks!

AndrewT,spend some time and read as much as you can in this site everything you need to know about property investing is in here and it's free,just give something back when you can,you have a plan which will change over time,once your "GF" is your "Wife",kids come into the picture,
i can't add anymore then what the smart people have already said,I was a plumber up too ten years ago,broke my r/hand three times when the Hilti hammer drill hit the reo in the slab:),shoulder r/c 2 times:),and fell off a roof a few times,plumbers have a very high burnout rate,drinking-drugs-the black dog-marrage breakdown-builders that don't pay and never did from the start all takes a little bit out of you over time///so many of my old plumbing mates are now dead,just keep that in the back of your mind at all times,my only advice is look after your partner 100%,and the rest will fall into place over time ..good luck..willair..

Over the last couple of weeks I have learnt alot of information from reading around here and reading a couple of books! It feels good to know what people are talking about!

Plumbing certainly can be dangerous, this year we have had a few blokes from TAFE break a wrist, an arm and also a leg! Thats just out of 10 in the class! I am certainly hoping that plumbing will just be a career that helps me achieve my property investing goals, then once I leave I have the ability to carry out a range of work on our IP's when needed!

And good news today! My partner (Occasionally known as Melissa) is going to a 2nd Interview for a Tender Admin Job and also an Interview for a Property Evaluation Assistant :) Fingers Crossed!
 
mate - my advice? f*ck everyone else's advice - the more specific it is - the more you just nod your head and smile.

have a plan in your head. make sure it's clear. maybe write it down if you're that way inclined. stick to it. you'll be more happy with a plan you stuck to if it doesn't work out, than one you didn't stick with.

prior planning prevents p*ss poor performance - PPPPPP.

remember - without a plan - you can't tell your kids how you did it.
 
mate - my advice? f*ck everyone else's advice - the more specific it is - the more you just nod your head and smile.

have a plan in your head. make sure it's clear. maybe write it down if you're that way inclined. stick to it. you'll be more happy with a plan you stuck to if it doesn't work out, than one you didn't stick with.

prior planning prevents p*ss poor performance - PPPPPP.

remember - without a plan - you can't tell your kids how you did it.

I'll remember that one. PPPPPP.

I have a plan in my head of how I want things to get done, I will have to take some time out and put them on paper and tape it to the wall!
 
Some good news I would like to report...My partner landed a full-time job with a Property Valuation company, over the next few years she will be studying Property Valuation aswell to get qualified!

:D
 
Congrats, stick with your trade, and continue to work hard.

It is uncommon to find a partner with the same investment drive as you, so my advice is to keep the mrs happy and continue saving and investing.

good luck
 
Andrew, do you qualify for FHOG if you already have a property?

I don't think you're being unrealistic, I'm 18 and aiming to have 2 IP's by the time i'm 19, but that all depends on the coming 2-3 months, maybe unrealistic.

Although as was mentioned earlier, relationships do breakdown, and considering yourselves together in 2016 would be a good idea, you don't want your 10 houses shrinking to a mere 5, or so on.

And now, i forgot what i was saying..short attention span..:confused:
 
Congrats, stick with your trade, and continue to work hard.

It is uncommon to find a partner with the same investment drive as you, so my advice is to keep the mrs happy and continue saving and investing.

good luck

It's actually funny. She seemed to have the interest in property all along, telling me about renovating and such. At the time I was stupid and was really into cars. After seeing the light, I sold my cars up and we got into our first property. Now I'm mad about property, she now tells me 'You talk about property too much!' :rolleyes: Can't win!

Andrew, do you qualify for FHOG if you already have a property?

I don't think you're being unrealistic, I'm 18 and aiming to have 2 IP's by the time i'm 19, but that all depends on the coming 2-3 months, maybe unrealistic.

Although as was mentioned earlier, relationships do breakdown, and considering yourselves together in 2016 would be a good idea, you don't want your 10 houses shrinking to a mere 5, or so on.

And now, i forgot what i was saying..short attention span..:confused:


Our current property was purchased with the use of the FHOG. We are moving in next March to satisfy the conditions and requirements.

Relationships do break down when we least expect, hopefully ours holds steady. We both have the same goals and objectives, both want to run our own show too!

Good luck with it Lil Skater. I wish I started when I was 18! I found that just by jumping on here I am learning alot of information. Piece by piece it's coming together. Currently I am reading through some more books too and API magazine. Mel can't believe it, she hasn't seen me read a book in 3 years :eek:
 
Ah i get what you mean now, mum just explained, didn't know you could do that, but great idea!

Well it's always better when you want the same things.

Haha i pop my head in every so often, been here since i was 14, but like you i have decided i really need to do some extra research, before i hit the market.

Wish you luck!
 
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