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First property(investment)/low income

Discussion in 'Finance & Banking' started by Aussiegirl89, 2nd Sep, 2016.

  1. Aussiegirl89

    Aussiegirl89 New Member

    Joined:
    2nd Sep, 2016
    Posts:
    1
    Location:
    Victoria
    Hello,
    It's my first time posting here. I am actually just looking for advice on whether buying my first property is a good idea at the moment.
    I'm 27 and employed in my family business with a wage of $26,000 p/a, I have $55, 000 in savings and on average have $200 left over from my $500 wage each week. I have been wanting to get into the property market for a while now and feel like this is the right time. What I am after is a brick three bedroom which seem to be selling between $260,000 and $280,000 at the moment depending on location, to rent out. Average rent coming in for a property like that is roughly $280 per week in the areas I'm looking.
    Should I keep saving longer? Or buy now?
    My parents are happy to go as guarantors so I can avoid the LMI
    Thank you in advance
     
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  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,703
    Location:
    Sydney, Australia
    Hi @Aussiegirl89 - what are the prospects for your family business? Are you comfortable that the business will continue to be able to pay you that kind of wage and won't go out of business leaving you with a cashflow problem?

    Is there the option to increase how much the business pays you to give you more security?

    @Corey Batt how does she go for serviceability on those numbers?
     
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  3. Hodor

    Hodor Well-Known Member

    Joined:
    17th Sep, 2016
    Posts:
    121
    Location:
    hodor
    Well done on saving so much.

    Only you can assess your risk profile and when is the right time to start, your deposit shouldn't be a limiting factor on your ability to invest in property. Serviceability will more likely be a hurdle, so lie Simon suggested get in contact with a good mortgage broker who can go through your options.

    For what it is worth I like getting started as soon as you can afford a reasonable investment, nothing like getting skin in the game to learn and making some money is great motivation.

    Can I ask what your long term goals are? If you are looking at multiple properties increasing your income for serviceability will be a must.

    If your parents can go guarantors and you are happy to do this (I wouldn't be) then look at a 90%+ costs capped loan if you can and avoid the LMI still. Then put your extra cash into an OFFSET account (not redraw). This will have the effect of keep the interest the same now, yet in the future offer you more options and maximum deductibility. Planning now can save $1000's in the future.
     
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  4. Corey Batt

    Corey Batt Finance Strategist Business Member

    Joined:
    12th Apr, 2016
    Posts:
    22
    Location:
    Adelaide, SA
    Quite a few missing variables, but it is potentially possible to borrow circa the amount required for that purchase on that income level, but you would need to get it verified by an investment focused finance strategist who can weigh up your options and look at your complete financial situation.

    Lender options will be layered between weighing up serviceability, what if any lender is being used by the parents providing the guarantee, if there are any other personal liabilities etc.

    You've got a good base of savings - of all things the main limitation is based on income. I would be thinking long and hard about whether being in the family business is the best thing if you're earning less than minimum wage currently.
     
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  5. Gockie

    Gockie Member

    Joined:
    19th Nov, 2016
    Posts:
    5
    Location:
    Epping NSW
    Agree with Corey.
    I feel there's a good chance you could earn more by working elsewhere, so explore that option. This will greatly open up your ability to borrow for investing, plus it should greatly accelerate the amount you can save.

    Edit: I just noticed, slow thread. I wonder how she went...
     
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