All Topics / Help Needed! / Only have $100,000 plus I rent!

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  • Profile photo of pphppphp
    Join Date: 2004
    Post Count: 2

    I moved home to Sydney and only have $100,000 so can’t afford to buy. I am paying $340/wk rent and am thinking of buying an IP with it. But it seems strange to do this when I don’t have a home of my own. Does it make sense (to get an IP)or should my first thought be to get my own place?

    Profile photo of milenkomilenko
    Join Date: 2005
    Post Count: 5

    there is an interesting article in Australian Property Investor magazine a few months ago. they did a profile on a lady from adelaide who had a number of investment properties, but still rented herself!!!

    an interesting and unorthodox investment strategy indeed, but it worked for her. maybe for you too!

    Profile photo of asdfasdf
    Join Date: 2005
    Post Count: 139

    I’m not sure which part of Syd you’re living but you could probably get a unit for $350K with your deposit. This way your “dead money” rent is going to pay your P&I loan instead and you can start to build equity in your CGT free PPOR. Once built enough equity, set up LOC and move on from there.

    Profile photo of DazzlingDazzling
    Join Date: 2005
    Post Count: 1,150

    Hmmmm, ‘rent is dead money’….

    1. Suggested Solution

    Purchase Price $ 350K
    Purchase Costs $ 18K
    Outlay needed $ 368K
    Deposit $ 100K
    Loan $ 268K (76% LVR…OK)
    Interest rate @ 7%
    NTDD Interest per year = $ 18,760
    Annual Outgoings = $ 2,500

    Total needed per year to fund purchase = $ 21,260

    Ownership ‘dead money’ = $ 409 p.w.
    Rent ‘dead money’ = $ 340 p.w.

    Conclusion ….Keep renting

    2. Alternative (Buy and live in a hovel in Drossville)

    Purchase Price $ 200K
    Purchase Costs $ 10K
    Outlay needed $ 210K
    Deposit $ 100K
    Loan $ 110K (55% LVR…OK)
    Interest rate @ 7%
    NTDD Interest per year = $ 7,700
    Annual Outgoings = $ 1,500

    Total needed per year to fund purchase = $ 9,200

    Ownership ‘dead money’ = $ 177 p.w.
    Rent ‘dead money’ = $ 340 p.w.

    Conclusion ….Buy the hovel

    From where I sit, it looks like it all boils down to your individual lifestyle standards. Just starting out, I set the bar really low, and worked up from there.



    “No point having a cake if you can’t eat it.”

    Profile photo of grossrealisationgrossrealisation
    Join Date: 2005
    Post Count: 1,031

    like the response dassling.
    and its correct.

    started granville(syd)(drossville then)39,000

    12 months later sold 95,000

    purchase before sale merrylands $85,000.00

    2 years later sold 135,000
    bought at auction prior to sale
    renovate second storey addition current value 1.5 mil
    primary residence no capital gain tax.

    As for I can’t afford to buy look at sites with potential da possible sites (but I do need to push my own barrow every so often)live in it buy next door rent it and then put a 10 unit development on it, come to me for the development funding and we’ll do a joint venture development.

    here to help

    Profile photo of AdministratorAdministrator
    Join Date: 2013
    Post Count: 3,225

    Buy a commercial property.
    One that is tenanted.
    And with some time left on the lease.
    Build relationship.
    Organise refurb/renno/touch up.
    Do this in negotiation with rent increase.
    Property value gone up.
    Rent has gone up.
    Business still has premises to occupy.
    Your loan is being payed off.
    And your receiving nice passive income.


    ‘Stay Happy and you’ll be Perfectly Fine’ – Jack

    Profile photo of gafamagafama
    Join Date: 2004
    Post Count: 118

    Good advice in the posts above.

    I don’t understand why you say you don’t have enough to buy. $100K will get you into something around $500K without LMI or more with it (Lenders Mortage insurance).

    I also have a friend who started by renting and buying investing properties. She started at age 50 and now has 3 – and her own place so I don’t see anything wrong with this approach.

    Also, don’t know if I agree that buying is “dead money”. What you’re buying is capital growth. If it costs you $409 pw to own but goes up by more that $21K a year, you’re ahead.

    Either way, I’d be buying something with $100K – and an IP is not a bad way to start.


    Your Investing and Developing Information Hub.

    Profile photo of aussierogueaussierogue
    Join Date: 2003
    Post Count: 983

    First step is to change your mindset. You ONLY have 100k. 100K is alot of money!!!!!!

    So i would approach this problem as follows – repeat I am very fortunate to have 100k cash….whats the best way to live decently and at the same time grow my asset and income base.

    Fortunes have been made starting with much much less ask the owner of this site. Your strategy should depend on many other things like your overall income, your age, your goals and your appetitie for risk.

    But i think your first goal is to understand that you dont ONLY have 100k………but you HAVE 100k……..which is a fantastic position to be in especially if you have no debts (im reading between the lines here)

    anyway good luck..

    Profile photo of DazzlingDazzling
    Join Date: 2005
    Post Count: 1,150

    Yes Megan you are correct. My post purely related to cashflows between the two situations.

    If capital issues are introduced, you are exposed to the growth (or loss) by purchasing.

    The ‘differential cost’ of ownership in the first case is $ 69 p.w. ($ 3,588 p.a.). Therefore, the property needs to grow by only 1% p.a. for you to break even with the renting scenario. If it went up by 21K in the year, you’d be well and truly in front.

    The ‘differential cost’ of ownership in the second case is minus $ 163 p.w. ($ -8,476 p.a.). Therefore, the property can sustain a loss of 4% p.a. and you’d still be ahead of the renting scenario.

    Once the capital aspect of purchasing vs renting is introduced into the equation, it makes the buying alternative look attractive I suppose. The cheaper the place, the more attractive it becomes. Of course you can always downgrade the renting side as well and rent a hovel for $ 100 p.w., that would flip flop the numbers around again. Ah, so many choices and ways to skin the cat.

    This discussion completely ignores investors ‘lifestyle standards’, and purely centres on the numbers. Once you know the numbers though, it’s easy to see what your lifestyle standard is *really* costing per annum. Only individuals can weigh up if the price is good value or not.

    Surely this is only relevant when you are starting out and have to choose between renting and paying off a NTDD debt. You have to live somewhere – right…ignoring the third option of the free park bench. Maybe Mummy and Daddy’s hotel is a fourth ???

    Surely the best solution (which many people already do) is to live in a fully paid off PPoR and carry on with their investing game. No renting, no NTDD debt and no park benches. [biggrin]

    The only difficult bit before reaching this comfortable stage is deciding if the PPoR you’ve paid off matches your lifestyle expectations. If so, happy days, if not, you need to carry on with the bunny hop process of upgrading the PPoR and incurring more NTDD (or sell down productive assets).

    I’d hazard a guess that it’s these draining and insidious ‘lifestyle expectations’, coupled with the expenses of raising a young family that prohibit the majority of the population from becoming wealthy investors, especially in the first 10 or 15 years out of school.



    “No point having a cake if you can’t eat it.”

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