Looking for a bit of general feedback on a good way to proceed in my situation. Am all ready to launch into buying first IP (I am 47yo). Finance all set to go with investment split on my PPOR but my job may be in doubt after March 2014 (20 people already laid off). Difficult to decide whether to keep looking for IP or wait until next year when I may have a better idea if I will still have an ongoing job. My instinct tells me to wait til next year, but on the other hand am wanting to leap in while Brisbane market seems quite low, and in case it decides to move up too much. Surely any market increase would be gradual so it wouldn't make too much difference buying now or next year, or am I wrong in thinking this?
Job in jeopardy - buy 1st IP now or not
- Thread starter COLJP
- Start date
What will your financial situation be if you do get laid off? How easy would it be to find another? Do you have savings to tide you over? Will the IP be cashflow negative (taking into account the impact of having no salary income to offset, and timing of cashflow), and if so can you make payments and eat at the same time even if you have no job?
Only you can answer these questions.
Well, if you look at the current Sydney market, apparently it's something like 5% in the last 3 months. Might not last, but.....
I would say SIT, unless you have enough cash buffer to see out a protracted period of unemployment - say 12mths.
depending on what youare looking to buy, that may not be a lot of money woth many places being near cash flow neutral.
Unlike most males, Id say pay more heed to your gut feel than your head,BUT balance that with logic too
ta
rolf
depending on what youare looking to buy, that may not be a lot of money woth many places being near cash flow neutral.
Unlike most males, Id say pay more heed to your gut feel than your head,BUT balance that with logic too
ta
rolf
And after 4 months? Even if you bought now and it spiked in the next couple of months, if you lose our job you won't be able to refinance. In which case not buying the IP and having the deposit sitting as cash would be much safer.
It's probably worthwhile to go look into the job market now. Look at ads, talk to people, contact a few recruiters. Get a feel for the market and how long it'll take to find another job if you lose this one.
Thanks for the feedback and advice folks. Will play it safe for now and see what the next few months brings, which is what I was leaning towards anyway. Good to get some outside perspective as a sanity check. All much appreciated. Meantime, will definitely be dusting off the CV and seeing what's out there again.
Like Rolf said if you dont have a 12 month buffer in place then proceed with caution. In saying that if the IP is tenanted and the holding costs are minimal then you would be ok but a nice buffer will give peace of mind either way.
Also may be a good time to speak to a financial planner particularly in regards to personal risk insurances such as income protection. You may have some in your super but it is usually inadequate in both $$$ and wait times which can often be 90 days.
Buffer plus correct income protection and you could proceed with relative confidence.
Also may be a good time to speak to a financial planner particularly in regards to personal risk insurances such as income protection. You may have some in your super but it is usually inadequate in both $$$ and wait times which can often be 90 days.
Buffer plus correct income protection and you could proceed with relative confidence.
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Do the maths
If you bought a 400k prop int only repayments. Your payments would be about 20k a year.
Say you get 400 a week in rent, then your already covered repayments
So including other expenses you might need to cover between 5 - 10k for a full 12 month period
Just pay a smaller deposit or make sure you have the buffer left in cash
I would do it but I guess when your older finding another job quickly isn't so easy
Even if you can't get the job you want there are always low paying part time jobs that can do the trick. It just depends on how many other financial commitments you have
If you bought a 400k prop int only repayments. Your payments would be about 20k a year.
Say you get 400 a week in rent, then your already covered repayments
So including other expenses you might need to cover between 5 - 10k for a full 12 month period
Just pay a smaller deposit or make sure you have the buffer left in cash
I would do it but I guess when your older finding another job quickly isn't so easy
Even if you can't get the job you want there are always low paying part time jobs that can do the trick. It just depends on how many other financial commitments you have
But if you can get a really good cash flow positive property which makes you $100 - $200 per week after all expenses and is easily tenanted. Then now is a good time to buy that no matter what. I've managed to get a couple of those, but you have to rent room by room, get the property at a low price, do substantial renovations and self manage to make it possible.
Smart move, well done.
If you think your job could be at risk you definitely need to update the cv and start looking around quietly. I work in the IT industry, where there is little job security. I can tell you, it's better to jump than be pushed.
There will always be investment opportunities, so don't panic about missing out.
Definitely build the warchest up a bit (as the others have suggested, you want to be able to survive for 12mths from your savings).
Imagine if you bought an IP, you lost your job, and then your IP had a vacancy, and you only had enough money for your own living expenses for 4mths, but zero money to ride out a few months of not receiving any rent on the IP. Catastrophic.
Imagine if you bought an IP, you lost your job, and then your IP had a vacancy, and you only had enough money for your own living expenses for 4mths, but zero money to ride out a few months of not receiving any rent on the IP. Catastrophic.
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