Hey guys, its my first post, please bear with me.
I’ll tell you my current situation.
I am currently in my final year at high school and am looking at doing a business/commerce/economics sort of course at uni. I have just finished paying of my car. And I will probably need to have a fee paying course as my UAI might be to low for the course. which means i will have to pay for my 15000-19000 fees each year for 3 years. My parents are nice and are willing to help me with that.
I have bought many investing books lately, most focusing on property investment.
When I have been paying off my car it has been a constant $400 taken out of my account by my mum. And I havent even noticed it leave each month. So saving 100 dollars a week now is easy.
I would like to get into property and am looking at around the 250,000 mark. How would I go getting finance. As I have no security(would my car count), I am not 18 yet(though 11 days and i will). How much deposit would I need to save. and what income would I need to satisfy the bank people to let me borrow for the 250,000 home.
I’m sorry if this is like a life story to you guys. I’m jsut giving you lots of info, which i hope will help in you helping me.
Can’t wait for your replies.
Hey im a beginner like u, im in first year at uni doing a law/commerce degree (commerce is driving me insane, but thats another subject!)
Well what ive gathered over reading a lot of posts on this forum and countless books along with a few seminars, is its usual for a deposit to be about 10% but then theres all the other costs needed to get you going (tax, maintenance, starting costs, etc.) That will probably inflate the deposit by a few more thousand.
Make sure you educate yourself fully before jumping in the deep end. Surround yourself with people whove done it and keep reading as much as possible! But get some more info from the guys on here, their info is invaluable. Peace
Hey im a beginner like u, im in first year at uni doing a law/commerce degree (commerce is driving me insane, but thats another subject!)
Well what ive gathered over reading a lot of posts on this forum and countless books along with a few seminars, is its usual for a deposit to be about 10% but then theres all the other costs needed to get you going (tax, maintenance, starting costs, etc.) That will probably inflate the deposit by a few more thousand.
Make sure you educate yourself fully before jumping in the deep end. Surround yourself with people whove done it and keep reading as much as possible! But get some more info from the guys on here, their info is invaluable. Peace
thanks sweet for your advice. Hmm your doing commerce/law. which uni is that at, what uai do i need to get in. I have been looking at the bus/com/eco courses. but i dont know like after i finish. They go for like 3-4 yrs. I need to know how much i will be making when i finish. I know you might not be the right person to ask as you are still in first year. do you have any advice for that.
If you want to get a loan on your own for an investment property, I dont know of any other way than having a full time job.
You may investigate the option of your parents guaranteeing the loan for you, I am unsure how that works.
My suggestion for you if you are thinking of investing in property:
First, get a book called “The Richest Man in Babylon”. This is probably my favorite all time book, and has some really good basics in it. It sounds like you are already putting some savings basics in place, which is good.
Read property investing books by Steve McKnight, Peter Spann, and Margaret Lomas. This will give you a reasonably rounded view of different property strategies and basic investment knowledge.
Start going to home opens, asking agents questions, watching how they respond. Learn to read what an agent is telling you between the lines. Learn to look at what makes a good value property, watch what they are selling for. If you walk into 50 properties you will have a pretty good idea when you see a good value property (unless you are in Perth, in which case you could walk into 10,000 properties and not find a good value property!)
This will give you a good grounding, and is worth doing over your uni career so you know exactly where you are headed.
As for how much you are going to earn when you get out of uni, do a google search for Hayes, they release average income reports each year for each sector, this will give you a rough idea. As an idea a graduate accountant can probably expect only about $30,000 per annum for their first year.Thanks coopranos. I already looking at the ‘TheRichest Man In Babylon” in ebay and planning to buy it in a few days.
Ah, I found about that Hays thing. I see it says an unexperienced graduate would get 37,500. Then an assistant account(dont know what that it) gets 45k for up to 2yrs, 50k 2yrs-4, 60k 4yrs+.
How would I move up to the next level. like not in experience in time(like 2yrs-4yrs), but to different titles, where i get more and more money.
About going to home opens, how could i do that. Will they take me seriously?, won’t I seem like a little kid to them.
G’day,
Good on you for getting into the game mate. My knowlege of property investing is not huge but I can pass on what I do know. Please check anything I say with other people as I am not an expert.
Steve McKnight puts it like this: you need three things to invest in a property: 1. A property; 2. A deposit; and 3. Finance.
– Re: 1. Properties, you do need to get out and talk to agents and scour the internet sites like realestate.com, and you do need to develop the skill of calculating which deals are worth pursuing. Becoming an expert in a particular locality is a great thing and often the best deals are found close to your home. Of course people will react differently to you due to your age, but are you going to let that stop you? Check out the local paper and walk through a few open home inspections, and for all the agent knows you have a big inheritance in the bank and plenty of knowlege about how to spend it. All the same ask plenty of questions and keep having a go, just like you have tonight by posting this topic. Finding properties is a function of the time you invest, and being a young person you have plenty of time.[chill]
Re: 2, Deposits, You generally require a Loan to Value Ratio (LVR) less than 80% to avoid the need to take out Lenders Mortgage Insurance (LMI). Put another way, you need a deposit greater than 20% of the value of your purchase to avoid LMI. LMI is a cost which you pay for and recieve no benefit for, as it only covers the risk to the bank of you being highly leveraged, with no ability for you to make a claim yourself should your investing go wrong. Having a high LVR on your credit file also puts a limit to gaining further finance. So let’s say you have $10000 saved up for a deposit, you could then go and borrow $40000, and this would take you to an 80%LVR with the value of your property at settlement being $50000. In other words, take your deposit and times it by 5 and that is the maximum value of the properties in your price range which most lenders believe you can afford (or take your deposit and times it by 4 and that is the maximum you can borrow).
Re: 3, Finance, You would need a taxable income to get a loan in your own name. Generally if you divide your annual taxable income by three and times that figure by ten, that is the maximum loan that most lenders consider that you can safely service. So if you were earning a gross income of $37000, your maximum loan most lenders would see you able to service would be about $123333 ($37000 x 10 / 3), remembering that this would also require a deposit more than about $30833 ($123333/4) to keep your LVR<80%. Using different types of trust structures and focussing on cashflow positive deals, one can overcome these lending limitations, but the need for a 20% deposit on each deal becomes paramount in order to keep one’s credit file under the radar.
So in answer to your question re the $250000 property, in order to avoid LMI you would need a deposit over $50000 and you would need a taxable income over $60000 to borrow the remaining portion.
Heavy duty hey! [crying]
I’m 32 and still have not yet entered the market myself, but my wife and I do earn over 140000 a year in our jobs, and have about $185000 tucked away for deposits.
You will be doing much better than us in 14 years time I am sure. One day at a time increase your knowlege, clarify who you are and what you want to be, and be persistent, and you will have access to more opportunities than you can presently imagine.
Good luck with your studies, too. I envy people who choose financial studies early in life. My experience of the workforce is that one can earn a lot more money, if the job relates to the management of money. My studies were in health sciences, and really have very little to do with how I earn money today. I earn a good wage by working enormous loads of over-time in the job I do – social worker for a govt department. Bet too that your career in the end will differ greatly from the path you originally choose to study. Main thing is, spend less than you earn, get that money compunding for you and be of service in the field you choose to pursue, and you’ll have no dramas buying <edited>loads of property, with all the knowlege you will persistently gain in the next few years.
cheers, David.Hi,
Hope you don’t mind a bit of extra advice.
So you are looking at incurring a near 60k debt for a degree with an uncertain prospect of employment. All your friends are rushing off to uni and it is going to be great?
If you are looking for a serious alternative I would get/keep your job or find another job in a related field. Work for a year and then start your course part time. There will probably be help from your employer toward fees etc.
Depending on your level of commitment you will probably find that you can knock over the degree in near to the same time while working. If entry is a problem look for courses that you qualify for eg distance etc that will credit toward a degree at your “best” school. Transfer in during the last year if your really think that it is important.
Remember you can study commerce and law subjects from most faculties.
As for the investing, start as soon as you can but you are going to need cash so start saving that deposit.
cheers
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Thanks David and DLPP. Both of your replies helped me. I’m just wondering with the part time thing with uni. The course of just commerce is 3 yrs full time. And 6 part time. That means i’ll be 24 when i get out. Is it really difficult to get a job after uni? How do the fees work for part time?(i guess its the same,hmm).
Also David with the taxable income. Can I add my taxable income to my gf’s taxable income to get a total.(e.g. mine is say 50k and hers is 40k so that gives us 90k) then we do the maths and get(90k*10/3)= 300k max lending. So is that how i can do it?add them together?
Good work DraconisV for wanting to get in the market so young.
All the replies so far are great, I hope you don’t mind me adding in a little info also.
As bravesparrow was saying there are things the banks require and they are sumed up in the accronym SLICE
Security – Obviously a property
Location – All but 1 bank/lender have postcode restrictions and what sort of LVR they will lend against certain securities
Income – depending on the bank depends on what size loan they will let you take out. Some banks have very leanient servcibility calulators while others are a lot tighter. With parttime employment as long as you’ve been there longer then 12 months most lenders will be ok with it. Plus with rental income coming in, if it’s an investment property, this will help servicing also.
Character – Basically if you have a credit issues on your craa it reduce your finance options as a lot of lenders won’t even touch it. (ie. defaults, judgments etc)
Equity – As Bravesparrow was saying you need a deposit. there are a few banks now that will let you use the equity in your parents home or investment property as deposit for your property. This is call Family Pledge or Family Equity (basically a form of security gaurantee)
LMI can be an issue however you could add up how much the LMI was and work out home much more you’d have to pay avoid paying that, and depending on the circumstance it might be worth paying it.
e.g if LMI was $1000 and you had to pay an extra $10,000 to avoid paying that it might be a cost that will get you into the market. It’s also tax deductible if investment property.Couple of things to think about.
Good luck mate.
Joshua
Investor Finance
[email protected]I don’t mind if anyone adds any info. I’m wanting more and more replies and ideas to help me along.
Hmm, regarding the income. Um, I have been working casual at Quakers Hill McDonalds since July 2003. But thats casual. How does that work with part-time. I’ve heard that casual income does not get counted as income when getting a loan.
Also with the 12 months rule. If I go part-time(at the same job) will the 12 month rule apply, like I will have to accumulate 12 months of part-time work. Or if i went to part-time, then straightaway it would be alright.Hi Draconis,
I am also a “youngin” like you, (19), and am doing a Business/Commerce degree, majoring in Accounting, I’m in my second year. I have been interested in property for a while and read a lot of the books (“Rich Dad Poor Dad for teens” for a start [laughing])
Recently, I realised that it is not feasible for me to buy a property at this stage in my life. For starters, I’m a full time student, and even though I work 2 days per week (at an accounting firm) and have a reasonable amount of savings, I just don’t have enough income.
So, what I am doing now is saving. Every month or so, I check moneymanager or choice websites to see which bank has the highest interest rate and shift my savings accordingly. At the moment, I believe BankWest has the highest at call interest rate of 6.60% calculated daily, paid monthly. http://www.abetterdeal.com.au/
I need my savings to be ‘at call’ – ie not locked away in a term deposit- so I can access them whenever I need to, which is usually just twice per year to pay uni fees. (I pay my fees up front to get a 20% discount – its about $6K per year)
Luckily, my parents are nice and pay most of my expenses (such as car registration, insurance, car services, petrol allowance, clothes) so I can pretty much save whatever I earn.
Regarding full-fee uni places, I would strongly recommend against applying for them. Why get yourself into so much debt? Even if you don’t get into your first choice uni/course, do something else for a year, and if you do well, you can always transfer.
Hope that helps
Amy
AmyWills
Thanks Amy that reply was useful,hmm. Um, so your doing business/commerce, what uni is that at?
Um, with a fee paying course can’t i get like fee-help, where its like HECS but the government doesnt help to pay it off.
I’m not 100% on this, your more trained, can you help.
Also what UAI did you need to get into your business/commerce, as that degree is on my list of course interested in and has moved up the list over the last week.
hmm, I have just looking in the UAC book and seen your in VIC that cancels out your uni. So there is UWS(university of western sydney), which as business/commerce at 65UAI. I’ll easily be able to get a commonwealth supported place. Hmm, how did you get the 20% off, can i do that somehow???
your lucky, your parent help with your expenses like insurance,rego, other stuff. I have to do everything by myself. I might be able to get some leeway with this expensive education(called UNI).Hi Drac,
Yeah I go to Monash Uni here in Melbourne, so unless you are prepared to move, then that cancels that option out. We have ENTER scores here, not UAIs but I think it works out to be the same kind of thing.
Here’s a few things you need to know about uni fees:
1. If you get into a CSP (Commonwealth Supported Place), which the government helps pay for you can either:
a) get a HECS-HELP loan
b) pay it up front and receive a 20% discount – everyone gets it, you just need to fill out this form to say you are going to pay up front
c) pay a bit of it up front (must be at least $500) and get the discount on this portion, and defer the rest through a HECS loan.The HECS loan is indexed with inflation, so it increases each year. I think it is a good idea to pay it up front, my dad disagrees and says I should let the loan accumulate, but anyway…
2. If you get into a full fee place (where the govt doesn’t help you out at all) and cannot pay the fees up front, you can get a FEE-HELP loan. However, this will cost you an additional 20% and you will end up with a massive debt.
This is a handy website: http://www.goingtouni.gov.au/
Yeah I spose I’m lucky that my parents pay most of my expenses, but I paid for my car ($13,300 in cash) and I pay my uni fees without their help, plus all the textbooks – although my grandparents throw me a bit of cash each year for that sort of thing too. Oh well,
you’re lucky too coz you said your parents are willing to help you out with uni fees, plus your mum must have loaned you a bit (interest free!) for the car.g’day again,
Here is more advice from somebody delighted to finally be in a position to assist somebody on this site!!
I do not know for sure, but I assume the rate of pay is not the best at Maccas, and I am sure you are working hard and dilligently to earn what they do pay you.
Did you know that you are eligible to work casually or permanent part-time, or full-time in a government job that pays an entry-level $15ph wage (which increases every year) with double-time on Sundays and time and a half on Saturdays, as well as other penalties and allowances. It is a unionised workforce which will not exploit the fact that you are younger. Also did you know that there is a huge demand for more staff in this growing department, and that you can totally design your shifts around your uni commitments?
I wish I knew this when I left school and did the uni thing.
Make a stop at the following website and keep following your nose: http://dadhc.intranet/JV.asp.
in response to your other question, yep you of course can combine your income and savings with your life partner if you wish to maximise your buying power. The two most common ways to do this seem to be buying as either “tennants in common” or “joint tennants”. Each have their advantages which i am sure you will investigate.
best wishes, David.[rambo2]
Bravesparrow
Thanks David and Amy. Both of your idea helped alot. I think I won’t be going to a fee-paying place, im going to do the up front 20% off thing, excellent:).
Um, David that link that you put there, it doesn’t work. Can you tell me more about these jobs. Just general information.
Thanks.
Christopher.
this is becoming a really good thread! draconis is response to uni scores, i got a low 99 for VCE which is in melbourne and i got in to commerce/law, i think the lowest score was 98.5 or something…in terms of commerce only i think it was 92.5 but i dont know the equivalent UAI score, go to vtac.edu.au and it will give u the low down or else talk to your careers advisor….yeh it looks as though investing in property thru uni would b hard as we have no full time job, so i rekn it is perfect for trying to learn as much as possible and then wen we finally get our salaries we can start playing the game! cheers
this is becoming a really good thread!
draconis is response to uni scores, i got a low 99 for VCE which is in melbourne and i got in to commerce/law at monash uni, i think the lowest score was 98.5 or something…in terms of commerce only i think it was 92.5 but i dont know the equivalent UAI score, go to vtac.edu.au and it will give u the low down or else talk to your careers advisor
yeh it looks as though investing in property thru uni would b hard as we have no full time job, so i rekn it is perfect for trying to learn as much as possible and then wen we finally get our salaries we can start playing the game!
cheers
also u can access fee help which is basically the same as hecs in that u put off paying the full amount till later in the degree
Furthermore, a fee place is not as bad is made out. In both hecs and fee places ur paying exactly the same amount. Just with a fee-place u choose wen to pay. Also in a fee place u r not stuck with a massive bill to pay back in your first year of work, but u keep everything u earn as ur education was payed for beforehand.
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