Yet Another Young Investor Thread - Advice/Opinions Sought!

[iwtba061]

First time poster! I have been reading bits and pieces in this forum for the past couple of weeks and I am seeking the advice of the very knowledgeable people that live on these forums

I am looking at taking the plunge and making my first investment and would like the advice/opinions of the more experienced community so that I can make the least number of mistakes as possible

I am absolutely new to investing and have done some reading/research however it is very very hard to understand everything in relation to property investment!

A bit about myself:
- 22 years old and single
- Earning $70k
- I am still living at home and paying board. As I much as I love my parents I would like to move out some time to gain some independence
- I have about $35k in savings, and my parents are kind enough to gift me an additional $25k
- My sister is a tax accountant so would be helpful for tax advice
- My father is a carpenter and is experienced with home renovations

My plan at the moment:
- Buy a cheapish 2 bedroom apartment/townhouse in Sydney Inner West that has renovation potential ($300k max)
- Live in the property for the first 6 months to take advantage of Stamp Duty concessions and FHOG ($14k now, hurrah!)
- In that 6 months, work on renovating the place in my spare time. My father is very willing to help me out with this (no charge!)
- Possibly rent out the second room for 6 months (if I can find a tenant that would tolerate constant renovation work)
- Interest Only loan
- At the end of the 6 months rent out the IP, and either move into a share apartment or back home

My questions
1. What do you think of the above plan?
2. Should I wait another 6 months or so to save for a larger deposit and to see how the Sydney property market unfolds keeping in mind we are potentially about to enter a recession
3. What exactly would happen at the end of the 6 months? I'm guessing I would get conveyancing done at the end of 6 months to determine my depreciation etc for tax deductions? Do I need to advise the bank/ATO etc when I change from PPOR to IP?
4. Am I able to claim the expenses of renovation if I renovate in the first 6 months, whilst it is my primary residence? My sister could probably answer this but I thought I'd ask anyway
5. Are there any tax or legal issues that I need to be aware of in relation to renting out the second room whilst it is my PPOR?

Thanks in advance for your help, it is very much appreciated!

 

[craigb]

seems all down pat from me your sister should give you the legals you require. well done all you need now is to open the courage box and get on with it.

 

[yo yo ma]

1. What do you think of the above plan?
2. Should I wait another 6 months or so to save for a larger deposit and to see how the Sydney property market unfolds keeping in mind we are potentially about to enter a recession
3. What exactly would happen at the end of the 6 months? I'm guessing I would get conveyancing done at the end of 6 months to determine my depreciation etc for tax deductions? Do I need to advise the bank/ATO etc when I change from PPOR to IP?
4. Am I able to claim the expenses of renovation if I renovate in the first 6 months, whilst it is my primary residence? My sister could probably answer this but I thought I'd ask anyway
5. Are there any tax or legal issues that I need to be aware of in relation to renting out the second room whilst it is my PPOR?

1) Sounds like a great plan to get started
2) That is up to you - If interest rates keep falling, it may stimulate the market which could be a good reason to buy now?
3) Yes you should get a depeciation schedule done... You don't really need to advise the bank / ATO of anything. The bank doesn't care if is an IP, so long as you make the mortgage repayments each month.
4) No - speak to your sister but keep records because it might be needed if CGT is payable.
5) Don't bother adding to your tax return... not worth the paperwork.

Use the smallest deposit you can to avoid lenders mortgage insurance (applies if borrowing above 80% LVR). You may need to pay LMI though. Interest only is a great way to go. Use an offset account to park any spare funds as you build up equity. Also keep good records to give to your accountant / sister at tax time.

All the best with it.