Hi guys,
Long time reader, but this is my first post. I'm a 24 year old male with no dependents.
I work for a publicly listed property company and have recently purchased an apartment in one of the projects I work on. I have never previously owned property but managed a small development site (on a profit-share basis) for a private investor which we sold after receiving DA.
I've paid a 10% deposit (profit from previous deal) on a $511k 2 bedroom apartment in the Brisbane inner-north which will settle in mid-2013. As I am working on the project, I'm aware of its progress and am tracking it closely.
I currently have an additional $35k cash deposit which is sitting in an account ready to go for the purchase of my PPOR. I have also received confirmation that I am still able to receive the FHOG.
My current borrowing capacity is about $400k (as per my broker's advice) which gets me a property in the $420k price range (assuming a 95% LVR). My salary is current $80k – likely to increase to $110-$120k in about 6-12 months.
My question is – do you think it is worth buying something between now and 2013 given that I have a substantial amount of time to liquidate if I'm advised that I cannot settle the off-plan purchase AND the PPOR?
Are there any other considerations that I should be aware of?
As they say the best time to get into the market was yesterday and the next ‘best time’ is today. Personally I would want to take advantage of opportunities that are available in the current climate. I’ve mentioned this before in other posts but asset size is what determines the return on the investment and if you want to create assets for wealth you need to build the size of the asset as big as possible as quickly as possible to benefit from compounding growth. Hope this makes sense. You could go for a second opinion on your borrowing capacity.
Very risky – Don't stretch yourself too far. What happens if you don't have enough cash to settle in 2013?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Very risky – Don't stretch yourself too far. What happens if you don't have enough cash to settle in 2013?Just as well all lenders have a servicing calculator… you would obviously need to factor in the whole picture.
My idea of risk is more like the unforeseen circumstances – job loss, sickness, change in bank policy, drop in values etc. All this can happen – even if you can service now you may not be able to in the future.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Spot on Terry and good advice.
Walking to the corner shop is risky, if you want opportunities in life you gotta step out but don’t be silly about it.
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