Young and need advice..first home buyer

Hello everyone just thought I would introduce myself names James a 22yo currently living at home with my parents. I have been trying to do a bit of research and have found this forum to be very helpful but I thought I would just put forward a few ideas that I have just to get a few different opinions as it can be hard to get a non biased opinion when it comes to real-estate.

So my situation, I currently have saved up 50k in the bank and I?m looking to try and see if maybe I can invest that money in some way thats better than just sitting in the bank. I am currently getting paid around 52k a year and am in the process of finding out through a mortgage broker my borrowing capacity.

Basically long term all I really want is somewhere to call home, a beach house at phillip island and a garage at one of the two. At 22 years of age this is very much a pipe dream but I was hoping that maybe with some advice from this forum I might be able to put myself on the right track towards achieving this goal.

I will add this link its a block of land (have been told that they would sell for 200-210k) that I have been driving past for the last few months as its just around the corner from my favourite beach, I know that buying land can be a bad investment as it doesn?t generate any income but is there a way in which I could possibly buy this land and still be able to buy a house or an apartment or something to move into as a PPoR a few years down the track? or am I dreaming with that idea?

http://www.realestate.com.au/property-residential land-vic-surf beach-200796715#

I still have much to learn so if I sound a bit clueless please stick with me.
 
Not doing too bad mate. I bought my first property a few months prior to 22 and I certainly didn't have 50k to my name so you're doing pretty well on that front.

Find out from the broker how much you can borrow. Stay with your parents as long as you can stand each other to save more then go get yourself the first home buyers grant. Buy using IO with offset account, and the more you save the lower your repayments get, making saving easier. In time the property will go up in value you can tap into the equity to get your philip island place and watch the big car race.

DONT buy the block of land unless you're going to build on it straight away.
 
Welcome to the forum

Make sure you share your dreams and goals with your broker to make it possible for them to map put how to get there from a lending point of view.

If you start with the correct structure with the end goal in mind, you may get there much faster

ta
rolf
 
22 , 50 k . Great start .

I wouldn't be rushing in for the beach house at this stage .

I'd be looking that towards the end of the next crash . We bought our weekender around 18 months ago . Waterfront , north arm cove . Had been on the market for around 4 years along with most of the properties in the area . We paid close to half of the original asking price and considerable under replacement value.

I'm not that familiar with where melbourne is at the moment , though obviously the central unit market has potential issues with over supply .

I always look at places that are being put down by a large group as those areas have often been underperforiming , hence my expectation that they might over perform in the near future .

Everywhere I have bought has been put down by some segment here , eg Logan and rocky iand hobart n last cycle or a general dismal by many of upmarket areas as worthwhile of investment . We're currently siting on a 50 % gain in a four year period in mosman .

From that view point the first place I'd be checking out is Frankston which polarises people around here . Bit like mt Druitt and Logan , but it's by the bay so it has more going for it than those. Logan is more central , but mt Druitt is in the middle of nowhere and is currently a stand out performer is sydney .

I'd read up as much as you can about melbourne and maybe pm a few of the key posters down there . People are often prepared to say more via a pm than on forum , in particular if they're still buying . Most people are happy to share more details where anyone can see what they're doing .

Cliff
 
Thanks for the advice I really appreciate it, can be all a bit daunting when it comes to making the right decisions especially knowing where I am now and where I would like to be but thanks defiantly taking it all onboard.
 
22 , 50 k . Great start .

I wouldn't be rushing in for the beach house at this stage .

I'd be looking that towards the end of the next crash

+1

Some good advice here - it worked for me. Its such a big boost for a starting investor to catch a rising market after the end of a big crash. I would recommend learning as much as you can and saving more until the right moment.
 
Well in general what everyone has said about the beach house is correct

However I reckon certain parts of the island will boom in the next couple of years
Especially cape Woolamai. It's one of the most preferred rental locations on the Islabd. Reasoning? It's the best surf ... (Subject to opinion)
Also they have a nice new retail centre with a bar and a kebab shop!

On your income I reckon they will say you can borrow about 300.
I would look for something under 300k. You will need 3 bedrooms to get a 5% yield. 4 bedrooms and your laughing

5 years ago it was smiths beach ( best performer australia wide?) and now it's cape woolamais turn

Cowes is in a bit of strife - oversupply issues
 
I?m looking to try and see if maybe I can invest that money in some way thats better than just sitting in the bank.
You could consider a First Home Savers Account if you don't already have one. They are a somewhat restrictive, but they offer government contributions (17% on first $6000 deposited each year) and reduced tax rate on interest earned. You have to save at least $1,000 each (financial) year over 4 before withdrawal so if you opened one before June 30th this year, you could potentially withdraw as early as July 2016 (after a final $1,000 deposit).

https://www.moneysmart.gov.au/managing-your-money/banking/savings-accounts/first-home-saver-accounts
http://mebank.com.au/personal/bank-accounts/first-home-saver-account
 
However I reckon certain parts of the island will boom in the next couple of years
Especially cape Woolamai.

This is one reason I was looking at that block of land, Im worried that in the long term if I decided that I would like to buy a place down there I might be priced out of it, especially a house as close to the beach with views like that block.

I was thinking and tell me if this is a stupid idea but to buy the land and put a 20k deposit on it then use the rest of my savings 30k to put a deposit on a little unit in ringwood or croydon and rent that out for a few years until I can either afford to move into it or buy another unit to live in myself.
 
Speaking as a not-so-old fart ... you are young and there is a whole world to explore. Why tie yourself financially to a block of land in an area that you may, or may not, end up living in another 5 years.

Personally - don't buy the block of land - if you can afford two purchases - buy two well researched rentals and stay at home for as long as possible.
 
Hello everyone just thought I would introduce myself names James a 22yo currently living at home with my parents.

So my situation, I currently have saved up 50k in the bank

At 22 years of age this is very much a pipe dream but I was hoping that maybe with some advice from this forum I might be able to put myself on the right track towards achieving this goal.

Good on you for having a decent savings base behind you! I would say that your dream most definitely isn't a pipe dream, just that you may have to adjust your timeline. ;)

Welcome to the forum and hope to see you sticking around and learning lots.
 
I was thinking and tell me if this is a stupid idea but to buy the land and put a 20k deposit on it then use the rest of my savings 30k to put a deposit on a little unit in ringwood or croydon and rent that out for a few years until I can either afford to move into it or buy another unit to live in myself.

I would say it's a silly idea. As others have said - vacant land is a liability. You have to pay rates, interest etc for something that does nothing (plus mowing the grass)! If you want to invest, do so in a proper rentable dwelling and once you have got some capital growth from that, use the equity to help fund that next house you want to live in for yourself. Stretching yourself with a vacant land albatross around your neck would set you back.
 
my first purchase was a block of land.

For me, it provided the inspiration and impetus to purchase my own place and from there investment properties.

That said I spent 12k, not 200k......

It probably wasnt a great investment cashflow wise, but mindset changing wise, it was right up there with spending less than you earn, savings 10% of your income, etc.

Technically vacant land isnt income producing, however think outside the box. can you move cheap storage units on? can you rent to a farmer (if its big enough) etc. Can you subdivide and sell off part? Will any of your surfie mates pay to crash there?

Could you stage a rock festival there?
 
Thanks for the input lots to think about judging by what everyone's said I think I might ditch the idea of the land, I don't think I would be able to sub divide it and make money that way and its defiantly not big enough for a rock festival so might have to rethink my plan just thought being so close to the beach would make it a good investment that and I would love to build a little shack on it but maybe something to look into in a few years.

In terms of buying an investment for someone like me whose currently living at home would it be better to look for an investment that I could eventually move into or to buy a rental and hopefully take out another loan in a few years time? also taking into account my budget it likely to be about 350k would it be better for me to buy something cheaper say in the 300k range and have a bit of a buffer to take out another loan later or to spend the 350k and get something a bit better in say a better location?
 
In terms of buying an investment for someone like me whose currently living at home would it be better to look for an investment that I could eventually move into or to buy a rental and hopefully take out another loan in a few years time? also taking into account my budget it likely to be about 350k would it be better for me to buy something cheaper say in the 300k range and have a bit of a buffer to take out another loan later or to spend the 350k and get something a bit better in say a better location?

the reality is all of your thoughts are valid and you can make a case for any of them .....

Comes down to personal preference.

Cliff
 
With the block of land thing- if you had 100k cash you could quite comfortably buy the block and transport a house from another location - so you can get an income stream - then pull out equity made for next purchase

Having said that - surf beach isn't where I would be doing it

As for spending 300 or 350. Buy the best thing that you can. Personally on that budget I would overlook melbourne for Brisbane and possibly some parts of Adelaide and buy a house or unit/ townhouse in a really good location but whatever you are comfortable with
 
...might ditch the idea of the land...

...buy the block and transport a house from another location - so you can get an income stream - then pull out equity made for next purchase...

If you are set on the land, strongy1986 makes a good point also.

I was considering this for sometime with another location for my block which has a house at the front. Vacant and straight blocks are much easier. Buy the house for a nominal fee, sometimes $1.00-$10,000 (if it's just a basic timber teardown) and a few Vic companies quote $40-50K, inclusive of police escorts etc and insurance. Something else to consider.
 
I just thought I would update this thread and ask a few more questions I hope no one minds first big investment want to be as well informed as possible.

I have spoken to a mortgage broker and now know how much I have to spend to purchase an established house I have max purchase price of 400k but if i buy off the plan I can afford to spend up to 450k.

With that being said I have once again found another block of land but this time its close to were I am living at the moment in Croydon North 500sq with a slight slope. I was thinking that if I got the land for a good price considering its been listed for a while and built for a good price that it could fall within my budget and offer some capital gain.

People have told me that It can be hard to get a lone to build as a first home buyer I was wondering if there is any truth to this? and is building a good idea for a first home buyer or is it safer to just stick to established properties? only reason I ask is that In the easter suburbs at the moment it can be hard to find a house that isn't a unit for under 400k.

http://www.realestate.com.au/property-residential land-vic-croydon north-200673411
 
So you have roughly $42,700 take home income (after tax, medicare), $820 per week.

5.8% interest rate (5 year fix), $420 per week interest for a $375k loan (presuming $450k purchase + LMI/costs - $50k deposit - grants), that's over half your take home pay on interest alone before taking into consideration council rates, building insurance and other costs of home ownership that may arise, not to mention actually living or paying off the principal.

Seems risky if you ask me.
 
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