- Fay RobertsMember@fay-robertsJoin Date: 2014Post Count: 2
Good Day People! Was looking for some advice…
I read Steve Knights book and came to have a look… I currently RENT and do not own property (but I did buy a unit in 1992 so am not first home buyer)
My children go to a school – nr Noosa Sunshine Coast QLD – and the area near the school is V expensive. (starter prices $550K+). As I have a horse I am prone to a little acreage, but the prices are scary.
In a nutshell, I have saved $180K, am a single mother, self employed and earning approx $110,000pa. No super, no shares…. just climbed out of a totally broke and in debt situation in past 2 years. I have cleared all debts, but have a 6 month period where I obtained defaults and bad credit history. I now have $Zero debts, no credit cards etc.
ANZ have said "maybe" to a mortgage due to the bad debt scenario.
They have basically said if I give them every single penny I have in the world (the entire $180K), I can look at buying approx $600k house. This does not sound appealing – just a big debt for me to pay off and no reserve funds for improving my business, or decorating house, buying furniture… etc.
So I asked my aunty who is in Victoria if she would go guarantor with her $400-$450K house (she is 83yrs old), and she might do.
Question: 1) should I buy a doer-upperer to the value of auntie's house and use my cash to do it up and get equity in 'the house of my dreams' for me and kids, then release auntie's house and use the equity to start investing?
2) should I study an investment strategy (per Steve Knight), forget the dream home for me and my kids just rent my family home while I invest /renovate/ flip properties, hoping to be successful enough to buy dream home later?
I am currently renting at $500 per week + $70pw to keep the horse in agistment 20 minutes up the road! Kids are 9yrs and 11 yrs. Do not want to commute more than 15 mins to their school. Can not change school (it's an independent school and I'm committed to the style of education)
My heart wants the big plush house with horses everywhere, my head says I'm a nutcase and should be smarter for my future!
Thanks you listening folks! Keen to hear your thoughts….
FayMatt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142
I think this is really only a question you can answer…
From a purely financial perspective, you’ll do better over the long term renting where you want to live and buying investment properties on the side.
Having said that, from an emotional perspective, there is a great sense of security and comfort being in a place that you own… eg. You don’t have to worry about leases expiring and those pink walls that you don’t like, you can paint them green
I guess my only advice at this stage, if I can offer it, is if you take the PPOR route, just make sure that you don’t mortgage yourself to the hilt trying to afford your ‘dream home’. It’s a really quick way to ensure you can’t sleep at night.
MattAdrian CahillParticipant@adriannqldJoin Date: 2003Post Count: 128
Hi Fay, I might suggest looking a bit at your personal strengths and weaknesses. Maybe even go a little further and do one of those free Myers Briggs.
Also have a good look at your: What and why. What do you want to achieve and why.
This can really help clarify your purpose and choose a stratergy that fits that purpose and your individual circumstances.
Steve's 0-135 used a lot of Vendor Finance. Vendor Finance is something Im in to now (although not deeply) and it can really work, buying 135 and CF+ can really work, and it works easer if it fits your style and purpose. A strategy that doesnt fit your style will take more work as you will naturally hit more resistance.
Best of LUCK.
(Location Understanding Connections Knowledge)Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
While I don't know your situation or the reason you found yourself with defaults – I generally don't like the idea of using family guarantees to get around bad credit history issues.
Depending on the size/nature of the defaults you might still be able to get a loan but you'll need to contribute at least a 20% deposit as LMI won't approve it.
JamieTheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271
If you have had defaults – it makes it easier to get a loan if the LVR is under 80%.
You can still get a loan if its in LMI (over 80% LVR) territory however that it dependent on a number of things (and this also applies to under 80% LVR loans) such as default type (utilities vs financial institution) amount of default (over $1,000 or under), date it occurred and how long it took to pay it and of course the reason.
If you have had a default then you cannot go over 90% LVR and the application would need to be strong (good servicing, limited unsecured liabilities, existing customer, etc).Fay RobertsMember@fay-robertsJoin Date: 2014Post Count: 2
Yes – the bad debts are pretty bad and I understand the mortgage is going to be a problem. All the defaults were a result of moving several times in a year (bloody rentals) and having no income whatsoever that year. They were all put on my credit report in the same 6 months and cleared in full as soon as I 'discovered' I had them. (I had no idea – they all have long stories) They are the worst kind… to financial institutions and for large amounts (over $1000, under $5000). There are 3 defaults.
It is likely I will not be able to get a morgage even with 20% down (this is what I have been told), and it kinda makes me mad that I have nearly $200K just sitting around and I don't know what to do with it – meanwhile I am looking at moving Yet Again this month, because the landlords wish to move into my current rental. The idea of using everything I have to get the 20% / 80% ratio and the fact that properties are particularly expensive in this area is what is giving me restless nights. I shall end up with $Zero savings in the bank and one great big mortgage, unless I use auntie's house. Hence I thought, maybe buying a $300K unit/house, renovating and selling might be the interim answer, until I have gained a substantial deposit. Such was this thought that had me pick up a steve knight book a few weeks back and start looking into what is involved. Unfortunately, I am looking at investing to make short term profit so I can afford a family home, but when I came on this forum, I noticed most people have family homes all paid off before they invest, hence I feel I bit deflated at my prospects.LalibellaParticipant@lalibellaJoin Date: 2007Post Count: 116
Congratulations on saving so much on one income. That's impressive by itself.
I'm not sure most people are mortgage free before they start to invest. I would think otherwise.
Your lifestyle has backed you into a corner somewhat. Entirely your choice but wanting horses, independent school and limiting your driving time/Kms has severely narrowed your options at present.
Only you can answer…what do you want most ?Mark CoburnParticipant@mark-coburnJoin Date: 2006Post Count: 181
Well done on saving your deposit. Your credit issues are properly handleable without handing over your life savings.
If you delay buying your PPoR and invest first, your ability to continue buying (serviceability) is going to let you grow your wealth much faster. Once you take the luxury of moving into your own home, you holt your ability to save and it often takes 5-10 years before there is enough money spare to buy that next property. The outcomes are as different as black and white. On your income and with your savings you could do very well in as little as 4-5 years. I think you just need a plan and to set the wheels in motion.