- This is my first post here so will combine my query with an introduction.I am 39 years old and live in Canberra, ACT. I've lived here for two years. I just recently (Oct 2009) bought my first property, which is my home – a two bedroom unit for 265k. I loaned extra to pay out my car which had 20k still owing taking my total mortgage > 290k with the additional fees and such. Ouch.I have a pretty good full-time job in the P.S. My income at the time of seeking my loan approval was 51k and now is 61k (I got promoted), and am single. I don't have any savings because at the time I was renting and paying off my car I just couldn't save. The purchase was accomplished by way of splitting the loan in two, and paying IO on the larger part of the loan and IO&P on the smaller part – the smaller component being secured against my folks' home – of which they own outright.My query is do I have any potential prospects for investing in property given my circumstances?I guess I have been bitten the IP bug due (partly) to looking at the suburb where I bought my home, where the recent final quarter 2009 median unit prices increased by 9.3% (apparently) from the time I purchased. I just sat and mused over how that kind of capital growth across a number of IPs could amount to a good degree of wealth in the longer term (studying for five years in university and working in jobs, many of which were casual, has virtually got me nowhere over the years). I have commenced reading and researching which led me to this forum.Just a few details about the unit I bought:
- It was originally advertised at 275k of which I bargained down to 265k, though the sellers were looking to reduce anyway as they wanted a quick sale;
- The unit is an older style type so I have opportunities to undertake some cosmetic renovations which I have already done at very little cost, and more to follow;
- I was eligible for the FHOG and managed to use 9.5k to pay toward the IO&P component of the loan (the other 4.5k I used to by some badly needed furniture ie: fridge, lounge etc);
- My repayments are making very little impact on the principle currently so am trying to figure out ways to put more money into the mortgage.
I have a variable home loan which cannot be fixed nor the repayment frequency changed for the five year term. The lifespan of the loan is 30 years, the current arrangement for five years.Due to the fact that I had to loan extra to pay out the car I understand I have very little equity at this stage (and that is given the 9.3% median unit price increase as a gauge). I currently owe 282k on the mortgage, due to, as mentioned above, taking out extra to pay the car loan out in addition to various fees for legals etc.Funny enough, now having put the above in writing, it has helped me reflect on my current circumstances and my inherent limitations. I guess at this stage I need to hold fast to my home and get to work at reducing the mortgage while continuing to educate myself re IP.It has taken me so many years to get where I am now that I do not want to continue the same old as I always have ie: "doing the same thing the same way over and over and over and expect a different result". I have to say I don't mind my job (which most people can't say), but I doubt it is going to secure my self-funded retirement or allow me to ever go on a holiday some time down the track.I guess one area of strength in my favour is my job, it is secure and there is plenty of opportunity for promotion and mobility.I am thankful for any further advice anyone can provide (even if that advice is don't bother with IP because your situation does not lend to it at this stage).Kind regardsSteveHello Steve,
thanks for sharing your story, I grew up in canberra and think of it fondly. Congratulations for getting your first property, not only that but successfully completing a small renovation on a small budget. It’s great you enjoy your job, as you can plan based on it. I can only speak of what I would do in your shoes. I would work on personal money management, so I you have to choice of either hammering that loan down so you have some equity in the loan (and lower repayments!) or you could aggressively save for 20% deposit for IP. You could do both so that in a year or two you can comfortably get a investment property with 20% deposit (could be a mix of refinance of your house and savings)
anyway that’s what I would do, your in a great position steve, enjoy it!
Hi Joanne
Thank you for your reply and advice. Canberra is not a bad place at all. Moved here from Sydney for work. I live in the north side of Canberra though travel frequently to the south to go to Southern Cross Health. I looked at a few properties down there at the time when I was seeking but they were generally higher priced yet smaller and / or older. I think this one was kinda lucky because the full FHOG was about to expire and this was only a walk away from where I was renting so only had to move stuff across.
Thanks again for your advice, encouragement and kind words.
Steve
hello Steve,
Yes good you got in early and got the grant. I went to Steve Mcknight’s book launch of the revised 1 to 130 property book and he was having a challenge of making $250,000 in 18 months from real estate. I am looking at a few ways of doing this, one of them is to work with my carpenter brother in canberra on buying a place and doing it up and selling it. We were thinking to lower end of the market ie: Kambah area. As I haven’t lived there since 1993. I need to do more research to become more confident about the value of areas.
I guess the key is to remember to have fun with it, and enjoy the learning of investing.
kind regards
Joanne
Welcome on this forum, try going through the threads and make yourself comfortable. You first post is very interesting and I hope many newbies will find it helpful. It is nice to know about your invested properties. All the best.
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Fat Loss for Idiots ReviewThanks marx and Joanne. Been reading through a number of threads and find some very interesting and others entertaining.
Joanne I'd say Canberra has changed dramatically since 1993. Your plan sounds great though. There's an interesting article in the current API magazine about a recent profitable project development in Scullin. Not sure if it is this magazine or the other, but it lists a few hot spots to keep an eye out on in Canberra currently, and surrounding suburbs.
Joanne I'd say Canberra has changed dramatically since 1993. Your plan sounds great though. There's an interesting article in the current API magazine about a recent profitable project development in Scullin. Not sure if it is this magazine or the other, but it lists a few hot spots to keep an eye out on in Canberra currently, and surrounding suburbs.You must be logged in to reply to this topic. If you don't have an account, you can register here.
