All Topics / General Property / Student loan or property

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  • Profile photo of zerotaxforeverzerotaxforever
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    @zerotaxforever
    Join Date: 2006
    Post Count: 11

    My 21 year old cousin has a insurance policy coming due soon to the value of $12,000. He is a uni student and needs to pay for his fees, however my Aunty and I are are suggesting that instead of it getting used up and then thats it, maybe investing it into property or other for the future. My Aunty is willing to invest some equity and take it in her name to save first home owners grant also abilty to gain hex. She has the ability to lend $250,000 to $ 270,000.
    This is where we need your help as I am afraid to give advice as it is family and dont want to steer wrong.
    What is the best way of going into this with minimal risk?
    Suggestions on types of properties ?
    Thankyou for your advice in advance.

    Profile photo of kinkso0o0okinkso0o0o
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    @kinkso0o0o
    Join Date: 2004
    Post Count: 61
    Originally posted by zerotaxforever:

    My 21 year old cousin has a insurance policy coming due soon to the value of $12,000. He is a uni student and needs to pay for his fees, however my Aunty and I are are suggesting that instead of it getting used up and then thats it, maybe investing it into property or other for the future. My Aunty is willing to invest some equity and take it in her name to save first home owners grant also abilty to gain hex. She has the ability to lend $250,000 to $ 270,000.
    This is where we need your help as I am afraid to give advice as it is family and dont want to steer wrong.
    What is the best way of going into this with minimal risk?
    Suggestions on types of properties ?
    Thankyou for your advice in advance.

    Cool.

    My first step is to work out how much your cousin can afford to put into a loan on a fortnighly/monthly basis.

    eg He can afford to pay no more than $500 per fortnight towards a loan.
    Is the aunty just leanding the money and your cousin is paying it all off or is she helping in paying it off as well?

    From there you can work out the rough loan size and therefore you then have a set amount you can spend on a property.

    I wont go onto what i would suggest next cause i need the info for step 1.

    Cheers,

    Damon

    In theory, there is no difference between practice and theory, in practice, there is….

    Profile photo of zerotaxforeverzerotaxforever
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    @zerotaxforever
    Join Date: 2006
    Post Count: 11

    Firstly thankyou for your advice, I really think in the situation they are in that they need the property to pay for itself as they are both in the position of not having cashflow. My Aunty has equity sitting there doing nothing and in the mean time is frightened she will not have enough to retire one day as she is single and just gets the bills paid.So the answer is zero monthly contrabution I think they will have enough for a morgage of about $270,000. and they need a pretty risk free property cos they cant all of the sudden top money up into it even for maintenance.I was thinking a city flat in Brisbane newish. wether thats enough money to start up.

    Profile photo of kinkso0o0okinkso0o0o
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    @kinkso0o0o
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    Post Count: 61
    Originally posted by zerotaxforever:

    Firstly thankyou for your advice, I really think in the situation they are in that they need the property to pay for itself as they are both in the position of not having cashflow. My Aunty has equity sitting there doing nothing and in the mean time is frightened she will not have enough to retire one day as she is single and just gets the bills paid.So the answer is zero monthly contrabution I think they will have enough for a morgage of about $270,000. and they need a pretty risk free property cos they cant all of the sudden top money up into it even for maintenance.I was thinking a city flat in Brisbane newish. wether thats enough money to start up.

    Based on what you’ve said, im not sure Property is the right way to go based on their risk profile.

    Lower risk = lower returns.

    But anyhow, we’ll run through it anyways.

    So, your aunt and cousin can afford to put $0 in per month.

    For the cost of a property worth $250K see below.

    Jaffa’s Solution:
    Rent = 470
    Occupancy rate ‘3 Weeks’ = 94.23%
    Solution = $221440.00
    Asking price = $250000

    Closing costs:
    Deposit 0 % = $0.00
    Legal fees = $800
    Stamp duty = $880
    Mortgage app fees = $475
    Mortgage insurance = $0
    Valuation fees = $0
    Other borrowing costs = $400
    Clean up costs = $0
    Inspection costs = $300
    Other costs = $0
    Total closing costs = $2855.00

    Mortgage details:
    Loan P&I = $250000.00
    Interest rate = 7.5%
    Term = 25 Years
    Weekly mortgage repayments = $360.58
    Total repayments for life of loan = $468750.00

    Annual costs:
    Management fees 7 % = $1612.16
    Letting & advertising = $0
    Body corp fees = $0
    Rates = $800
    Utility rates & fees = $0
    Insurance = $350
    Miscalanious costs = $0
    Land tax = $300
    Maintenance 5 % = $1151.54
    Other ownership costs = $0
    Total annual costs = $4213.70

    Summary:
    Total annual rent = $23030.80
    Total annual mortgage = $18750.00
    Total annual costs = $4213.70
    Total annual cashflow = $67.10
    Total funded costs = $2855.00
    Risk free return = $114.20 bank interest rate of 4%.
    Annual Cash On Cash Return = 2.35 %
    Cashflow Positive Weekly = $1.29

    This is courtesy of http://www.jaffasoft.com property calculator.

    So, its a rough guide, but as you can see for a property where you need to put 100% boorwed funds down, you’ll need at least $470/week.

    Now, this assumes you only have 3 weeks vacant a year and only 5% maintenance costs.

    Hopefully this gives you an idea of what your aunt and and cousin need to do.

    Cheers,

    Damon

    In theory, there is no difference between practice and theory, in practice, there is….

    Profile photo of corectbussinescorectbussines
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    @corectbussines
    Join Date: 2006
    Post Count: 3

    Hi,

    It is very usefull to have information about the different types of loans to start a bussiness…but what are you gonna do when you’ll need a loan because of a lawsuit?..It is well known that everytime a lawsuit is gonna cost you a lot and it’s a thing you cannot afford to take care lately…so, maybe it’a better to have also some information on this issue, checking http://www.lawsuit-loan.org/ …you never know when you’ll need it..

    Profile photo of zerotaxforeverzerotaxforever
    Member
    @zerotaxforever
    Join Date: 2006
    Post Count: 11

    Thankyou to everybodies suggestions I found them a property in north qld $160,000 bringing back $280 which will pay for itself so they are going to get that. Thanks again

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