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.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….
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.
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 = $250000Closing 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 = $2855.00Mortgage details:
Loan P&I = $250000.00
Interest rate = 7.5%
Term = 25 Years
Weekly mortgage repayments = $360.58
Total repayments for life of loan = $468750.00Annual 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 = $4213.70Summary:
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 = $1.29This 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….
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..
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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