澳洲Australia property Invest Advice - General. | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hey guys,

I just wanted to start with saying that I've always been interested in money, since a very young age. But thought that because I wasn't born into money I was pretty much doomed to a life of the low to middle class citizen.

I've just had my 21st birthday and I'm 3/5'th's of the way through my double degree in engineering and business. I'm in an odd financial situation and was pretty nochalante(?) to it all. My mother passed away a little over 2 years ago, she left me a house in Melbourne (My PPOR) with an $80,000 mortgage, and not much else - the house would sell for around 350,000 in the current market. I always thought that she was hard done by, being a single mother, etc. But the more that I look at her expenses and the way she handled her bills, the more I see that SHE was the reason that her finances were the way they were.

I've struggled with these mortgage repayments along with the bills that go with them while I've been at uni with the same view that - wow life is expensive, work hard, get a good job, specialise, then continue up the company's ladder. Continually thinking that, when I graduate and earn some DECENT money, everything will be better and then I can invest. I can afford the repayments now on my current income comfortably as I have done since beginning uni.

3 months ago I started reading, and I don't mean 10 minutes here and there, I mean hours on end, day after day, everyday. I've read so many books about investing, touching on the psychology, mind set, all the way through to proven and effective ways to achieve returns on your money through the stock market, and property investment. The books that have really got through to me were the Rich Dad Poor Dad series, as well as The Richest Man in Babylon, they also made me take a hard look at my mother's finances and her financial position when she passed. My mum was exactly like Robert's poor dad, and I was headed straight down that path as well. But no more, I've taken charge, these last 2 years of uni could be a very good platform into the rest of my life and opportunities are constantly passing me by when I have the mindset of a slave.

All she left when she passed were headaches and I know that from getting through these last 2 years I do not wish that upon anybody. I've taken charge of my expenses, my budget and I've been beginning to see small instances where I can make money that other people don't or choose not to, albeit small amounts.

An example; I was on a basketball trip to Asia, and in my travels I noticed at a market an item which I had bought previously on ebay. I knew there was a demand for the item and after asking the price I instantly bought 50 of them. Netting a profit of around 400AUD in a little over 2 weeks of 20 minutes work here and there.

I've been taking the advice of these novels by paying myself first, and putting 10% of my earnings away into a high interest bank account where they continue to grow.

As of right now I have,

An $80,000 debt on a $350,000 house
$4300 in cash

And like everyone, I want to maximise every bit of it.

I do not have the constant stream of income at the present time to fund a home loan on an investment property. The term escapes me at the moment, but I've also looked into borrowing above what the I would actually need for the house to cover the interest repayments, but I view this as WAY too much risk in my situation.

The stock market and business analyst books I've read seem to contradict each other to the point where I am just totally confused. Some say to stay in it for the long haul, some say to cut your losses at 10%, some say to average your losses when you hit 10%, Some say to invest in blue chips and reap the dividend rewards.... You get my drift.

I've come to these forums to ask for some advice, what would you do in my situation.. I want to make my money work for me, but I'm really unsure as what would be the best way to do it at the moment. I'm leaning towards the stock market, but I don't want to be one of those amateur's I keep reading about who think something is going to happen, but the opposite actually occurs and then your up **** creek. I understand that losses are apart of the stock market but only when you understand a lot of the factors and THEN it goes against you.

Sorry for the wall of text and spelling and grammar, I had no time to proof read it :) Thanks guys.  

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It sounds to me that you might become a successful businessman. Does your mum deserve a little credit? A single mother would struggle to buy a house today. What she has left you is a very good start in life for you. Equity is one thing you need to buy an IP, the other is an income. I would concentrate on finishing your degree (if that's what you want to do) and getting an income before you take any further steps. In that time you will be studying the IP markets and learning heaps.

A little story... (and I don't think this will happen to you):
I know a couple who were engaged to be married, they had a child each and one on the way. He inherited approx $100,000. They got married and decided to purchase a house at approx $120,000. Great idea, except that they only paid the minimum deposit. They also bought a good s/h car each, a motorbike for him and one for the kids, a big TV, etc. Eventually the money ran out. Mortgage payments being similar to rent payments, and new toys fading, the gloss had worn off. Not long after, couple split up and mortgagee auction sign goes up. To me thay should have put the entire $100,000 on the house.  

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alex9050 said: ↑
I've come to these forums to ask for some advice, what would you do in my situation..Click to expand...
I would get a border to help pay some bills and continue to save at least 10% of your income until you finish your degree.

How many years of Uni are left? You should be able to get some engineering work experiece towards the final years of your engineering degree - that will give you some income and get some contacts.

Enjoy your last few years of Uni while you are young. On graduation, try to get a job that will pay your HECS debt.

Don't be tempted to sell the house or get into consumer debt - you are in a very good position from which you can invest when you get a regular income(when your servicability improves)  

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Hey guys,

I'm not going to get into consumer debt - complete stupidity the way I look at it.

I already had work experience over the last 2 summers which pays decent. Which is how I've been able to save the amount I have over the last couple of months.

I have 2 years of uni left, and no HECS debt - I'm on a full ride scholarship.

So what about any investments now, with the small amount of money that I have? Or would you guys suggest to just keep saving - then wait until I finish?  

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keep saving.. build up a nice cash buffer.  

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I think your mum deserves a 'high 5' for leaving you a house with such little debt on it! It must have been incredibly hard for her raising a child, paying off a house, doing everything all by herself. She did well with the resources at hand.

Re your savings: you could look at an online high interest saving account, you could try managed funds, or put half your savings into blue chip shares.

I like WillG's advice...take in one or 2 boarders to help with bills etc. This may be your best bet to make some more money.

Is it feasible for you to move out, rent with friends/a 1br or studio by yourself? Then you could rent out your mum's house & voila, IP #1 under your belt.  

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do everything you can to hold onto the house

finish your degree

keep reading / researching about investing and business

you sound like a smart kid, I think you'll be very successful in whatever you put your mind to.  

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OK here is 2 quick tips with reasons provided.

1.) Take savings out of high interest account and put into PPOR mortgage.

Why?

$4,300 invested in the interest bearing account (lets say 6%)

Profit after tax (lets say you earn under 37,000 and pay 15% tax and the interest you earn doesn't push you into the 30% bracket): (4300*0.06)*0.85 = $219

The second and better way to do it, put the $4,300 into PPOR mortgage where their is no tax implications: $4,300 * 0.075 (using 7.5% as the interest rate, which is probably what you are paying on the mortage) = 4300*.075 = $322

So you are $103 better off per year by putting the $$$ into PPOR mortgage vs puting into interest bearing account.

2.) rent out house and rent yourself.

Living in the house currently costs you per annum

80k * 0.075 (7.5% Interest) = 6,000
Council rates = $1200
Water rates = 600
Insurance = 700
repairs = 500

= Approx $9,000 p.a

Now if you rent the house and take into consideration all expenses in relation to doing that that will cost you approx 11,500 P.A per annum (includes management fees, repairs, insurance, water rates council rates, vacantcy, but you are receiving $18,200 in rent

So you are receiving $6,700P.A in free cash flow P.A, pay tax on that @ 15% = $5695 P.A

Rent @ 240 per week is $12480 P.A and we minus the cash flow after tax from that which equals $6785 (actually more because i over estimated the expenses, they are higher in my excel spread sheet then i listed on here)

So renting your place and renting yourself on real conservative figures is saving you $2,215 P.A


So in total my reply has just saved you $2318

Time to deposit my fee into my account :p

Regards,

RH (im young like urself brother so best of lucK)  

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Thanks heaps for the help guys.

Now that I have some advice on my actual situation, what should I do with my savings?  

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Do you have an offset account or redraw facility?

If you have offset or easy redraw I'd dump it on the mortgage and continue to pay that down till you have finished your degree and go from there.

If paid funds aren't easily accessible, I would keep them in the bank at that level and put any future savings on the loan. You need a buffer in case something goes wrong.  

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CJProperty said: ↑
Do you have an offset account or redraw facility?

If you have offset or easy redraw I'd dump it on the mortgage and continue to pay that down till you have finished your degree and go from there.

If paid funds aren't easily accessible, I would keep them in the bank at that level and put any future savings on the loan. You need a buffer in case something goes wrong.Click to expand...
Totally agree, this is good advice. But I also like Ridin-high's advice.  

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Alex, what happened to your sister?  

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alex9050 said: ↑
Thanks heaps for the help guys.

Now that I have some advice on my actual situation, what should I do with my savings?Click to expand...
are you serious, did u even read my post  

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Good on you Alex! You have a fantastic mindset and are pretty well destined to be wealthy so long as you keep your current mindset.

I started off a little like you.
Reading reading reading until I decided to place my $40,000 which I'd managed to save over a three year period into an 85% property loan.
Four years on (7 if you count the saving) I'm well on the path to financial freedom and have accumulated multiple properties wihtout any of my own money. I'm doing very well but am only a small fry when compared to some other investors.

There are many here who started with nothing and have now achieved financial freedom from property investing. They were just like you and me in the beginning.

I would keep your savings in an offset account/redraw account against your home loan and keep it as a buffer, just keep buying good value property whenever you can afford to do so. Thats my advice.  

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Graingrower said: ↑
Alex, what happened to your sister?Click to expand...
She still lives with me, but the more I speak with her the more I find she is unwilling to do anything even slightly risky. The more I read the more I talk with her, the more I find I'm going to be on my own.

And ridin, I did read your post but your option is simply not available to me at the moment, but thank you for giving me a different outlook on what I could possibly do, it's all very helpful.  

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So is the property in your sisters name as well or have you bought her half out?  

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Graingrower said: ↑
So is the property in your sisters name as well or have you bought her half out?Click to expand...
The property is joint.  

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