Where to buy in melbourne with $50k in the bank?

D

DrInvestor

Hey guys,

I'm a newbie and would love your insight into property investment in melbourne!
I'm 19 (so very new at this) and have a little over $50k in the bank making a little over 30k a year while being a full time student (studying commerce). I'm luckily/unfortunately on a health care card so im exempt from stamp duty. With all that in mind I most likely won't be able to borrow over $300k.

I've mainly looked into the bayside area since I'm from there. But with the amount I have I'd only be able to buy a house down towards Frankston. I don't won't a property with large negative cash flows because I wont be able to maintain it when interest rates increase.

Could you please provide some insight or tips on what I should do being as a young investor?

Thank you!!
 
DrInvestor said:
Hey guys,

I'm a newbie and would love your insight into property investment in melbourne!
I'm 19 (so very new at this) and have a little over $50k in the bank making a little over 30k a year while being a full time student (studying commerce). I'm luckily/unfortunately on a health care card so im exempt from stamp duty. With all that in mind I most likely won't be able to borrow over $300k.

I've mainly looked into the bayside area since I'm from there. But with the amount I have I'd only be able to buy a house down towards Frankston. I don't won't a property with large negative cash flows because I wont be able to maintain it when interest rates increase.

Could you please provide some insight or tips on what I should do being as a young investor?

Thank you!!
Click to expand...

Welcome to the forum, and congrats on having $50k at 19!

First step would be to chat to a reputable mortgage broker to see what your borrowing capacity is. A $50k deposit may mean $300k to spend for one person, $500k for another and $100k for someone else so you need to know exactly what you can spend.

You then need to decide what's important. At your age, you should want something which is good for long term growth (not regional) and will increase in value over the next couple years so you can recycle equity. Definitely stay away from anything negatively geared.

As for areas, I have no idea about Melbourne.

Good luck!
 
There's two things you need to have in order to borrow money for a property. A deposit and an income to afford the loan (rental income counts, but isn't enough).

Honestly $30k income doesn't leave you with much. Even if your costs are low, and you've got no debts, you're probably looking at something under $200k - $300K.

$50K is a good start. Given that (as an investor) you need a 10% deposit and stamp duty is about 5%, you can simply divide your deposit by 15% to see how far it will go. In this case your deposit limits you to purchase prices of $330k or less.

These are some very basic parameters. The deposit calculation is usually quite accurate but you need to verify the affordability estimate with a broker. A budget of $300k for Bayside of Melbourne does suggest you're looking at the cheap end of Frankston. It is possible to get a 1 bedroom appartment in some parts of Metro Melbourne inside this budget though.
 
As mentioned see a good broker to find out what your borrowing power actually is before you start shopping.

I just bought a brand new unit in Drouin which is turn key with aircon, curtains , drive ways and landscaping for $245,000 and will be rented out for $250/week.

So for you 245k minus your deposit will leave you at 195k @ 5% interest only, you would be paying $187.5/week on the mortgage plus 5% of that for a property manager and allow another $20 a week for any other costs.

With all that you would be around the $216/week, or $34/week in the bank, nothing record breaking but it all comes down to your strategy. Mine is looooonnnnng term so to me buying a property in a growing community for under $250k is a bargain because I'm going to be holding it for 10 year minimum. Work out this and you'll be better prepared to take the first step.
 
jippa3000 said:
As mentioned see a good broker to find out what your borrowing power actually is before you start shopping.

I just bought a brand new unit in Drouin which is turn key with aircon, curtains , drive ways and landscaping for $245,000 and will be rented out for $250/week.

So for you 245k minus your deposit will leave you at 195k @ 5% interest only, you would be paying $187.5/week on the mortgage plus 5% of that for a property manager and allow another $20 a week for any other costs.

With all that you would be around the $216/week, or $34/week in the bank, nothing record breaking but it all comes down to your strategy. Mine is looooonnnnng term so to me buying a property in a growing community for under $250k is a bargain because I'm going to be holding it for 10 year minimum. Work out this and you'll be better prepared to take the first step.
Click to expand...

Your $20 for other costs sounds optimistic to me. I've got a near-new 2-bed unit in Frankston South and last year paid $500 insurance, $435 water, $1300 rates, $295 LL insurance, total $2530 or around $50p.w. (+$1300 maintenance which shouldn't apply on a brand new unit)
 
strongy1986 said:
That's a pretty stupid comment

Lots of people would of turned 300k investments into 450 ones in that time frame
Click to expand...

I don't think there's many things selling for $450k today which you would've gotten for $300k 4 years ago. Things that are $450k were probably $350-380k 4 years ago.
 
i would suggest to buy a NEW townhouse (preferably in complex of 4) in Melbourne metro area, (closer to transport would be excellent). may need to extend a budget by 10-50K

you may consider to buy new and live there for 6 months (FHB grant)
and
rent it out.

buying new means less maintenance cost
Buying in complex of 3-4 means less strata fee
Buying closer to transport means will get good rent and possibly easy to rent it out quicker
good deprecation value for few years to come.


if you need more info, please feel free to PM me.
 
Tony3008 said:
Your $20 for other costs sounds optimistic to me. I've got a near-new 2-bed unit in Frankston South and last year paid $500 insurance, $435 water, $1300 rates, $295 LL insurance, total $2530 or around $50p.w. (+$1300 maintenance which shouldn't apply on a brand new unit)
Click to expand...

No worries Tony so even if we used your example he would still be running pretty close to a neutral position which is hard to achieve these days, is that fait to say?

Just trying convey that even if you are on a tight budget, there are still properties out there for you.

Ill never forget this story I was told by a great mentor of mine. Its like getting on a train, the train will keep moving regardless if you're on it or not so the best thing to do, is to get on it. Even if at the start you're running for it and have to grab the hand rail to pull yourself on, at least now you're ON and from here you can make your way through the carriages to find a seat and start the journey to where you want to go. That's what this first purchase will be DrInvestor, it was for me.
 
zfan111222 said:
your only 19 and ur already buying a house?? wow go rent
Click to expand...

I'm feeling some jealously here.. Who are you to tell somebody to "go rent"?!

Congrats on saving that sort of money at your age. Keep reading and don't jump into things without having the proper knowledge and complete understanding of what it is your doing and trying to achieve. Speak to like-minded individuals that can guide you accordingly.

Goodluck.
 
jmillar said:
Welcome to the forum, and congrats on having $50k at 19!

First step would be to chat to a reputable mortgage broker to see what your borrowing capacity is. A $50k deposit may mean $300k to spend for one person, $500k for another and $100k for someone else so you need to know exactly what you can spend.

You then need to decide what's important. At your age, you should want something which is good for long term growth (not regional) and will increase in value over the next couple years so you can recycle equity. Definitely stay away from anything negatively geared.

As for areas, I have no idea about Melbourne.

Good luck!
Click to expand...
Thank you!!
Wow can't believe you're 22 and already have 4 properties. Well done!!
Are all your properties local? Do you have any good forum posts or articles you recommend me reading?
 
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