Start now, or save for a year?

Hey everyone, me once again, but this time with a far more general question about deposits etc - it needs a bit of a back story.

I'm 26 and married, my wife is 6 months pregnant with our first child and we've just moved back from 2 years in London, and currently staying with my parents while we get back into the swing of things. My wife's parents have recently bought a brand-new investment townhouse in Brisbane, and they'd like us to move in there at a reduced rent to help us out with everything (they're good folks). They're happy to only charge us $200, while the market rent for the place would be at least $340 per week. They're happy just claiming the deductions.

The thing is, when we're ready to buy our PPoR or first IP, they're also more than happy to go guarantor (?) on the property to enable us to borrow up to 95% LVR (if you can still get those loans).

So my question is basically this - do I use the next 12 months at reduced rent and save like crazy (conservative estimate should be able to save close to $20,000 in 12 months) and use it as a deposit to buy, OR, should I take them up on the offer of guarantor and purchase an IP earlier? If I do purchase an IP, I would then pay them the full $350 p/w rent as I would feel uncomfortable owning a property but paying cheaper rent to them. So it would cost an extra $150 per week.

My gut feeling is to take advantage of the cheaper rent and build up the savings, but that might just be the old "save until you can afford a deposit" mentality. Affording the repayments (I/O) loan isn't a problem, the serviceability is 100% fine.

I'm also thinking that if I get into the IP sooner rather than later, I will pay an extra $7,800 rent in 12 months. But if my IP's capital increases by anything more than that amount, then I've made a profit in net worth. Also, gotta keep in mind I've got a little one on the way, so realistically I would probably stick with the cheaper rent for a least a couple of months after the wife pops (that's how child birth works, right? A little pop and then a bundle of joy? :rolleyes:)

Anyway folks, sorry about the rant! Let me know what you think!
 
Have you got a job and any savings history?
I would probably save but depends if you can time the market.
What are you thinking of buying?
Have the prices of those properties been stable or dropped in value in 2007/8 and increased in 2009 or have they been stable?
 
You might run into some problems with a guarantor and a 95% loan. It's not a not a very comfy combination. You'll also need to show that you've saved at least 5%, as opposed to getting a lump sum or selling some assets.

I'd generally suggest working towards a 10% deposit plus purchase costs.

Also have a discussion with one of the brokers on the forum. There may be factors which might make a difference.
 
Thanks guys - the saving part was more or less my thoughts as well. Thank the lord for in-laws, eh?

I do have a stable job, but at the moment no real savings. I also have zero debt which is great, and cars etc all paid out. So I would need to sit down and save the 10% anyway.

I'm not sure about the house prices, to be honest haven't done a massive amount of research on the market. I guess while I can, I'll sit and save as much as possible, and move into the market in a year or so. Might take advantage of it as much as I can. I'm interested in property in Emerald in particular (where the in-laws are from, done a bit of research out there) for the high yields, but I honestly haven't done vast enough research into any particular area for buying: I think that's a whole other thread!
 
Come along to the next BIG meeting (last Tuesday of each month) at Jindalee.

That way you can build some contacts with investors and property people so that you have a base of knowledge and some people to call when you are ready to buy.

First visit is free and you get to network with investors and the like and listen to an expert speak on their area of knowledge, great deal I reckon.
 
Welcome back to Oz - the transition from 0 degree days in London to summer in Brissie must be nice :)

If it was me, I'd try to get into property investment asap. However, it sounds like you'll have to opt for your favoured option (save for a year while paying cheap rent) by default because you don't have any savings.

Either way, it's great that your in-laws are being supportive in whichever option you choose - cheap rent or going gaurantor are both a big help.



Cheers,

Jamie
 
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