Hi everyone, Im Andrew. First of all I would like to say this forum is great, i have learnt so much from it. Also I finished steve’s book and it has really got me infected with the property investing bug.
Back to my question. I am an 18 yr old uni student who currently is unemployed, although i am seeking casual work.[
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1)I would like to start investing in property and want to know if i can use the equity my parents have in one of their 2 investment prorperties(one is cash flow +ve and the other is cash flow -ve)? I do not want to use the equity from the family home.2)Also would i be able to use the FHOG as a deposit?
3)How long must i live in the property to qualify for this grant?
4)Can anyone offer me any other tips in finding property that satisfy the 11 second solution? I have been doing some searching on realestate.com.au and comparing property values with their rent. I do this by finding a certain property in an area (eg 3 bdrm brick house with garage) and then looking a similar property in the same area that is for rent.
Any help provided is greatly appreciated.
Thanks everyone.
Andrew[]Andrew some quick answers where I can.
1) Yes. Depending on the exact situation but it can be done quite easily.
2) Yes. But it depends on the parents equity input. You will also need to consider other purchase costs.
3) There is no minimum. Check the Office of State Revenue or your states equivalent website for the requirements. You will find that you need to live in it during the first year. There is no min time frame specified.
I think the biggest hurdle you face is your income. There are ways around this as well.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Morning Andrew & welcome aboard [:0)]
It is great to see young guys & gals getting into investing. In an attempt to respond to some of your questions:
1) Yes you can. Option one is product like CBA’s Equity Advantage, where you can use your parents equity AND income to purchase property together with your name on the title (assuming they are willing!), obviously the more cash flow +ve it is, the less additional income is needed to service the extra debt – problem is it’s fairly inflexible and restrictive for long term investing. Another method is a 75-80% low doc asset lend where your parents ‘gift’ you the deposit and you sign a declaration stating you can meet repayments. There are many more options so I’d get a broker involved asap as there will be several ways to structure this and if you go straight to a lender their preference will normally be taking security over everything, which is probably not the best solution for you guys.
2&3) You can only get FHOG for owner occupied as you seem to know, and there is plenty of debate about what constitutes an owner occupied status – one night upwards. The pro for getting FHOG is the $7,000, the con is that you won’t be able to set the loan up as an investment loan with rental income that contributes towards serviceability, again see a broker. You can always have this as an investment loan and pick up an O/O house later on – if you living at home at the moment paying minimal rent I’d suggest go down the investment loan route and stay put.
4) Keep looking – where do you live?
Hope this is a start.
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MelVPA good to see you have got involved in the Real
Estate investment vehicle at such a young age.
Keep it up. Just don’t put too much pressure
on yourself, do the best you can and go with your
heart. Where you from / which uni / what doing
at uni?
Mortgage Hunter… are you related to Shaun Hunter
have a good one, all.Hiya Mel,
Is there any change if one was to use a non family member for there equity ?
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MichaelHi Michael,
Always depends on the deal ie lower LVR &/or more security then less issues basically. If you are both going on the certificate of title of an investment it doesn’t matter who the applicants are or who’s putting up the cash provided you can show that all parties receive a benefit from ownership of the investment, ie a split of the income. I am less clear on O/O between unrelated equity partners, maybe Simon can shed some more light….[
]Cheers,
MelVPA
I’ve just started out in property investing and haven’t looked back since. I started young while at Uni with no equity and after 2 years have several IP’s. It is possible!
Hope this information helps:
1) You can use your parents equity, or alternatively some of their savings if they don’t want to draw on equity in thier properties. You just need enough to cover the deposit and borrowing costs.
2) Home owners grant is available if you “intend” to live in the property within 12 months of settlement. The conditions don’t state how long for, read them carefully.
3) Oops, answered that above.
4) Can’t help you here, if I find any they’ll be bought before I tell you about them. []
Also, since you’re unemployed the banks might not want to help you out because of your lack of income. To avoid this you can put your parents as 1% owners in the property, hence accessing their income as security for the banks (all they have to do taxation wise is claim 1% of all income and expenses). If you find something cash flow positive then there shouldn’t be a problem paying the bills anyway.
Good luck, hope this information helps!
CheersTar Muchly Mel [^]
Hiya Mel,Is there any change if one was to use a non family member for there equity ?
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MichaelIt can be done. Depending on the relationship and the evidence of a clear benefit to the person putting up the equity I would consider the NAB.
If no then we need to look outside the square for a lender who will accept a third party security. This which may cost a little more.
Be very careful about who goes on title as this may very well kill the FHOG entitlement for this and any subsequent purchase.
You can take out an investment loan factoring in rental. Then if you change your mind after settlement you can apply for the FHOG direct to the OSR. You need to be comfortable with your change of intention though. Make sure this decision occurs after the settlement so you can’t be accused of telling lies to your bank [
]I do have mainstream lenders who will take room rental into account. I did a loan for a student where she rented out the two rooms for $100 pw each as well as living there herself and getting the FHOG…Prob get more in Sydney. Just some food for thought.
All the best,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985
Mortgage Hunter… are you related to Shaun Hunter
have a good one, all.LOL [
]I started my business in the Hunter Valley and the name was a local play on words!
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hi everyone, thanks for all your informative relpies. I will have a look at CBA’s Equity Advantage loan.
Melanie i live near liverpool in NSW. Sach im at UTS studing engineering, maybe i should switch to something that is closely realted to real estate.[
]I would like to use the FHOG asap because i fear the government may withdraw it in a few years. Also the later i use it the less it will be worth due to infation.
I will see if i my parents want to help me out with the deposit, and in return i help them find better investment properties than they currently have(they are looking for property atm too).
Good work VPA – you sound like you’ve got a plan – go for it!!
I’d also touch base with a local broker, they are generally free and more opinions help.
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Mel
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