Hi all,
This is my first post after reading the forums for quite some time. I chose my user name because both I and my 19yo daughter are completely new to PI'ing, and are hoping to benefit from the wisdom of all the 'old hands'! Also, you know how babies babble on? Well, that's me! I have never been able to perfect the art of saying what I want in fewer words!
So, the story is that I'm helping my daughter get into property while she is young. She is keen, but needs a helping hand, and I've always thought that property would be a good idea, and have talked to my kids from early teens about all the kinds of things that are possible if they have their head screwed on the right way, and the importance of saving etc. You might wonder why I'm not doing something myself, but as a SAHM (Stay at home mum) for all their childhood years, I'm only now just getting a little business going where I can earn some money. My husband is not a risk-taker by any means, and doesn't see property as stable enough to invest in. We just have different ideas, and I'm a can-do type person (perhaps too much so!), so I believe it's quite a do-able wealth creation method, and even more ideal when one is young!
Bit of background: We live in a smallish 4-5K country town, and daughter has just started a business (with lots of mum's help!), so we need for it to go ahead quite well (done our research, and there's no reason why it won't), and quite soon, so that she can have something concrete to show the bank in 3-4mo time, and hopefully get finance. Her projected earnings before tax will be around 1K/week, increasing hopefully to around $1400 by about 6mo.
Daughter has had her little fling, had part-time work, and spent as much as she's earned (except savings of about $1500), and is now seeing that she should be doing sensible things with her money, and buckling down to working hard to get somewhere.
So seeing as she's keen, we've started to look around town for possibilities. There is this nice little house/block in town close to school and hospital, about 2900m2 with a little oldish brick/tin roof 2bdrm cottage on it. It's been on the market for nearly 2yrs. They started off wanting over 200K for it, then have dropped it several time and now asking 160K. The owners don't live there, they bought it at a time when cheap properties were being snapped up by investors. The RE agent said it hadn't turned out too well for them. They haven't even bothered renting it - no idea why (we check out the inside this afternoon, so might have more idea then?), and they just come from the city to tidy up the garden every so often. They are getting tired of doing that, so just want to be quit of it, apparently.
So, at her projected income, in 3mo time, daughter should be able to borrow that amount (we will be able to be guarantor for her), and will receive the FHOG of $5K (that's the current figure for established homes?). She can live in the house for 6mo, then rent it out (about $200/wk), and shift back home. Then when she has a little more cash, she can subdivide it into 2 or 3?? blocks (haven't looked into the costs of this yet in our town). Obviously then value would increase - probably only marginally, though(similar long narrow block of 1200m2 sold for $60K a few days ago), and she would have a little more equity, and hopefully a little more in savings.
The plan would then be to hopefully get finance to build duplex/triplex (probably transportable/kit style - there are a few of these around town, and they look great) on each of the blocks. Then sell what will easily go, and rent the rest, and use one for her PPOR.
If she can't get finance for the homes, she can keep the house/block as-is as long as she needs, as rent will almost cover bank loan.
I know this all sounds pretty general, and not really specific, but as it is, how does it hit you? Can you see glaring flaws or troubles that I haven't thought of?
This is my first post after reading the forums for quite some time. I chose my user name because both I and my 19yo daughter are completely new to PI'ing, and are hoping to benefit from the wisdom of all the 'old hands'! Also, you know how babies babble on? Well, that's me! I have never been able to perfect the art of saying what I want in fewer words!
So, the story is that I'm helping my daughter get into property while she is young. She is keen, but needs a helping hand, and I've always thought that property would be a good idea, and have talked to my kids from early teens about all the kinds of things that are possible if they have their head screwed on the right way, and the importance of saving etc. You might wonder why I'm not doing something myself, but as a SAHM (Stay at home mum) for all their childhood years, I'm only now just getting a little business going where I can earn some money. My husband is not a risk-taker by any means, and doesn't see property as stable enough to invest in. We just have different ideas, and I'm a can-do type person (perhaps too much so!), so I believe it's quite a do-able wealth creation method, and even more ideal when one is young!
Bit of background: We live in a smallish 4-5K country town, and daughter has just started a business (with lots of mum's help!), so we need for it to go ahead quite well (done our research, and there's no reason why it won't), and quite soon, so that she can have something concrete to show the bank in 3-4mo time, and hopefully get finance. Her projected earnings before tax will be around 1K/week, increasing hopefully to around $1400 by about 6mo.
Daughter has had her little fling, had part-time work, and spent as much as she's earned (except savings of about $1500), and is now seeing that she should be doing sensible things with her money, and buckling down to working hard to get somewhere.
So seeing as she's keen, we've started to look around town for possibilities. There is this nice little house/block in town close to school and hospital, about 2900m2 with a little oldish brick/tin roof 2bdrm cottage on it. It's been on the market for nearly 2yrs. They started off wanting over 200K for it, then have dropped it several time and now asking 160K. The owners don't live there, they bought it at a time when cheap properties were being snapped up by investors. The RE agent said it hadn't turned out too well for them. They haven't even bothered renting it - no idea why (we check out the inside this afternoon, so might have more idea then?), and they just come from the city to tidy up the garden every so often. They are getting tired of doing that, so just want to be quit of it, apparently.
So, at her projected income, in 3mo time, daughter should be able to borrow that amount (we will be able to be guarantor for her), and will receive the FHOG of $5K (that's the current figure for established homes?). She can live in the house for 6mo, then rent it out (about $200/wk), and shift back home. Then when she has a little more cash, she can subdivide it into 2 or 3?? blocks (haven't looked into the costs of this yet in our town). Obviously then value would increase - probably only marginally, though(similar long narrow block of 1200m2 sold for $60K a few days ago), and she would have a little more equity, and hopefully a little more in savings.
The plan would then be to hopefully get finance to build duplex/triplex (probably transportable/kit style - there are a few of these around town, and they look great) on each of the blocks. Then sell what will easily go, and rent the rest, and use one for her PPOR.
If she can't get finance for the homes, she can keep the house/block as-is as long as she needs, as rent will almost cover bank loan.
I know this all sounds pretty general, and not really specific, but as it is, how does it hit you? Can you see glaring flaws or troubles that I haven't thought of?