First investment

Hi TJay,

First up congrats on getting prepared to take action! Many folk never even get to that stage.

Have you got a fixed idea of what you want to purchase? Or where? And more importantly what your long and short term goals are in property? These things will all impact upon what to buy for that first property. The best way to to start with your long term goal, work backwards from there with decisions that are likely to get you to that place.

Im not a broker but 95% loans exist but are rare these days and the extra LMI eats in so the sweet spot seems to be 88-90%.

If you are really close to the amount you need for that first and worried the market will run away from you you can get cheeky and use a personal loan or credit card to cover the last minute costs (I did for my first one many moons ago) the extra couple of $k came in handy (plus allowed me to do an immediate minor cosmetic reno which added value and increased my rent) these were paid off in the 3 months after settlement. Make sure your IP loan approvals are formally in place before your take on any high interest debt as these would impact serviceability, and make sure you aren’t over extending yourself. If you have a good salary and live in the lap of luxury for next to nix and mum and dads then you can probably tighten your belt and make some extra repayments for a little while to get it done.

PHP wrote:

…How soon can you save up for another $4-5k? There are certainly some unconventional ways to do this. One is the way knightm did during his early investing days, the credit card option. Not really advisable but if this is the only way for you to get into the property market, and the returns outweights the potential loss in a short amount of time then you can consider these options. I would be very careful though with the property to buy and ensure thorough due diligence is done.

Yep as per above its not normal or advisable but just an example of how I did it when I was particularly impatient.

The other ways include overtime, family loans/gifts, other 2nd job like night fill at the local supermarket, ask the boss for an advance (if they like you) lemonade stalls (or any other small cashflow business). The list goes on – where there is a will there is a way. Or just wait a bit longer that works too (eventually)

Of course another option is to buy a cheaper property for the first one. Reducing the purchase price reduces the deposit and stamp duty required.

• This reply was modified 9 years, 5 months ago by  BuyersAgent.

BuyersAgent wrote:

Yep as per above its not normal or advisable but just an example of how I did it when I was particularly impatient.

But by doing this way, this has helped you get where you are now, right?. So it end up to be a very good decision at the time for you.

tjay7 wrote:

All,

Thanks for taking the time to read and comment. I think I will take the option of being patient and save the extra 4-5k like everyone has advised. Unfortunately salary offers as much overtime as you like for a $0 return. There are two options I am looking at, and they are quite far apart. I’m looking at buying a 1bed/1bath/car unit in fortitude valley. Or a 3bed/1bath house in the ipswich area, most likely Bundamba. The longterm goal is to have positively geared rental portfolio, also buy, renovate, sell a little further down the track.

Tjay,

Just be very mindful of the time. That is why I asked how quickly can you save up for the $4-5k shortfall? IF it will take you a while to save this up, the market that you are eyeing on could move as well and will end up asking you to save up an additional $2-3k again. Have you considered moving to the next suburb of your current target area and maybe the same properties can be purchased at a reduced price? If you wait until you have saved $25k to buy a $250k property, when the time comes you might not be able to see anymore properties around the $250k mark and will need you to save up to $30 instead to get in.

As what most investors say “Its about time in the market and not timing the market.”

Cool!
Atleast you know where you stand at the moment. And with the right structure, strategy and advices you will be on your way to achieving your goal sooner. Just don’t stop educating yourself. :D

Cheers!

BuyersAgent wrote:

2 – I believe its about “time in” AND “timing.” Getting timing wrong can mean years of zero capital gains even if everything else is done ok. Huge opportunity cost. Getting cycle timing right speeds up a plan to access equity for multiple purchases and as such is very important.

I agree completely! This is totally right! :)