New Adelaide chap...

Hi all

Been looking as a visitor (Passive i know) for quite a while now but have decided to get active, register and start learning more.

A little on my story.

Im a brit who moved to Adelaide over 2 years ago now. Have been working on a work permit now for the same company and will be able to apply for permanent residency in March. I live in my own home purchased last year in Hallett Cove. I live with my partner who is an Ozzie which helped us greatly with our purchasing power as my residency status affects my borrowing power afaik.
Over the past year or so i have done a lot of reading about property investing, from various authors. I plan to start our portfolio soon after March next year and go from there, however making the transition from reading about it to doing is always the toughy initially. Myself and my partner are always researching areas fairly local to us as we feel its the most sensible thing to do to start off with.
My initial feelings are to star of with a lower prices unit nr the City Center first as the initial outlay will be cheaper then maybe focus on some coastal suburbs down south.

I've also been trying to further my knowledge with seminars however i only seam to be able to find "free" ones which are OK to some extent but i know the real reason behind them.

Our brief situation is:

My Income (29 yrs) $55,000
Partners 27 (yrs) $38,000
PPOR Purchace: $306,000
3 Bedroom, 1 Bathroom, Double Garage
700sqm Roughly
Loan (P&I) Half fixed/Half Vari $ 267,000 approx
No other dept. Cars paid for etc

Currently i wouldn't think our house is worth a lot more in value however all the similar sized houses in the area seam to go for around $350 and a block of land next door to us is on the market for $320 and its smaller than ours! :confused:

I now have a conundrum. We currently pay more of our loan than we need to just while rates are low but my query is, do we try and pay down the loan as much as we can and have the house revalued in march to see if we have enough equity to buy a $250-280k unit nr the city, or try and save money in an account for a deposit instead?

I also have the advantage at work of learning from my Boss as he is a mega Entrepreneur which has allowed me to recently start my own side business along side his, which hopefully when up and running should allow me to save more for to get the ball rolling. :)

Any hints/tips and advice would be great.

Thanks for reading :)
Welcome to SS Comper, always great to have another Adelaide member aboard (we're way outnumbered here! :D).

As long as you're saving extra money, it doesn't make much difference whether it's in a cash account or on the loan (agree brokers?) when it comes to getting your next loan. There are a couple things to consider though.

Paying it off the loan will save you more interest than you'd get in the deposit account so you'll be better off. However is this house at HC going to be the one you live in forever, or will you be looking to upgrade in future years? If you are going to move again, then you'd be better off putting the extra payments you're making into an offset account which you can withdraw out again and put on your future PPOR loan when you buy it. That way you could keep this HC property as an investment and use all the extra cash you've been paying on it now to decrease your future non-deductible PPOR debt.

For now, it would be best to keep the money going into this loan though instead of using it as a deposit for the unit near the city, as you want to borrow as much as you can on that whilst paying off as much as you can (into an offset) on your existing non-deductible PPOR debt.

Hope this helps and good on the two of you for starting out on the investing path so young. :)
Thanks for the reply Steve, yeah i can see Adelaidians are outnumbered :)

To be honest were pretty happy here for a the foreseeable future, we don't have much inclination to move atleast for 5 years +, we even got solar panels fitted through a friend in the industry which is saving us a fortune now! $18 bucks last quarter :D

So yeah we might just as well pump any extra into the loan to give is more leverage later down the track. I may well use any pay rises and spare money to pay it off too. I even put Rudds Stimulus Package on the loan, how boring!

We do love out home so the idea of paying just that house off seams to be sensible to us.

Thanks again!
Getting an Offest account attached to your PPOR mortgage will give you a lot more flexibility in the future. I would look into it if I were you. It sounds like you are pretty good at being frugal. People with bad spending habbits can get into a pickle putting money into their offset/lines of credit and then spending it on "rubbish" later down the track.

I like the idea of the unit close to the CBD as your first step. Cheaper entry point and high demand by renters.

Yeah were pretty good with spending, if we have a goal we'll go for it. Small spending like house things, Sofas Tv's etc we buy using money I make on the side.

Fortunately we have a mortgage adviser that is a close family friend, she helped us hugely on our first purchase (especially with me trying to learn about the ozzie way of life too) :), we up for review in July so i might ring her regarding the offset account, sounds like a good idea.

I like the idea of the unit close to the CBD as your first step. Cheaper entry point and high demand by renters.

Yeah thats my thinking, start of with something manageable and learn from how that works and apply it to the bigger ones down the track.

Look up Rob Williams posts, he specialises in inner city units around Adelaide and I'm sure would be more than happy to offer advice when the time comes. Though you'll have to catch him in between media interviews of course! :D

*ducks Rob's shoe hurtling towards him*
Quick update on my progress.

I've been researching and learning more about property since my last post here. I've also been to see quite a few units dotted around the city. Some up north and some down south nearer me. Having narrowed our search down to a few, we finally decided on a unit down south near us thats very close to the sea.

Having talked with our finance broker extensively, moving our PPOR loan round a bit to release more equity and getting a nice valuation on our PPOR were a few days from settlement on it :)

I'm sure its not the best unit out there as I still have a lot to grasp but I managed to get the price down from 220k to 193k much to the agents disgust but with rent of $220 a week its not that bad I don't think.

Thing is now, I've been attending seminars and still reading loads, but as most of the equity is out of the PPOR i'm unsure of what else I can do from now and the next purchase which could be some time away before we save enough for another....

I'm hoping to search for some either 0Ve or +Ve style props next to try and balance out any negatively geared ones we have (I think this one will be -Ve but not by too much). My goal is to have 10 props not including the PPOR by the time i'm 40, (29 now) with the majority putting cash in my pocket rather than the other way round.

You guys got any other tips for us while we wait for the next. We will try to pay down the home loan more ( 2 components, both variable one, IO one P&I)?


PS, Rob you wont like where we've bought..can you guess where it is :D
But thanks a million for the advice, very valuable.
I would highly advise getting an offset account, it does give you the flexibility of some fast cash on hand for a deposit if you see a little gem of an investment property come up. If you are not 100% sure on being able to hold the money then you could work out on average what you save each week and get that put into your offset account, then get the rest of your wage put into another account with another bank - and use this as your spending money. Just dont give yourselves access to your offset account unless you have to go phsically into the bank to do it.

I split my pay into a few different accounts etc, it helps us manage the budget automatically.

1. into Wife savings account
2. into My savings account
3. balance into offset #1
4. into offset #2
5. into commsec cash management account

nb: i have 2 offest as i split loan 50/50 a couple of years ago.
Good advice thanks. I have opted for an Offset account to be set up but just cus the settlement period was a little on the short side especially with the Christmas period. We just got the loan sorted the simplest way. The offset will come soon I hope. I may get my pay put into that account then.