Buying a home/unit vs renting

[Zarkov]

I earn over $45 000 a year and have zero debt and I still cant get a loan.

I wanted to get a house for $170 000.
At 8% the fortnightly repayments would be $605.24.
Being that I earn over $1100 a fortnight I really dont see the problem.

I hate the world. It is gay and full of gay stupid people and worse ultra conservatives.

I don`t know crap on the subject to be honest but 600 out of 1100 is over half.30% of your income on rent/repayments is considered rental/mortgage stress so you are probably in their no go zone.
I know it sounds stupid but the number crunchers don`t see past their coke bottle glasses and spreadsheets.

Let the guy who can actually pay back his loan rent while the chuckle head who over extends with millions of dollars worth of investment properties gets what ever they want.

I agree with you there.Now I pay more in rent than I would loan repayments and I am in a similar situation to you.I make a good wage,I`m single,debt free,no dependants,a good continuous work history and do you think the stupid fcuks here will even give me a credit card??!Not on your life.
The interest on loans in Japan is unbelievably low and I know I could pay it back but...I digress....

 

[TrentZor]

mike - ive always adhered to the 80% LVR rule but seems if i the wife might be preggers soon im back to one income. Should i be sticking to the 70% lvr rule now that im intending to increase the size of my portfolio?
In your opinion 3 properties in 7 years is that going too slow? or is that reasonable on my salary/situation?

Katie - yeah i bought my 2nd IP last year (as stated in another thread). And i have PM'd you for the MBroker contact details.

Now i just got to find a "good" accountant who can get me all my tax back.. GRRRRRRRR

 

[kindred]

I might go for an apartment or unit at 100k. As long as I have room for my weights I'm happy to be at the very bottom of the property ladder.

 

[kindred]

And know my second question what is the breakdown of costs? I imagine you would need to pay council rates but what else? The interwebs doesn't seem to have the answers for me for items i can use to break down costs.

 

[Ben]

In your opinion 3 properties in 7 years is that going too slow? or is that reasonable on my salary/situation?

On a quarter of a million a year I reckon you could move heaps quicker mate.

"zero to $10m in 10 years or less" by peter spann is a book worth it's weight in gold, check it out.

 

[MikeW]

mike - ive always adhered to the 80% LVR rule but seems if i the wife might be preggers soon im back to one income. Should i be sticking to the 70% lvr rule now that im intending to increase the size of my portfolio?
In your opinion 3 properties in 7 years is that going too slow? or is that reasonable on my salary/situation?

ceffo,

I just use 70% as a rule of thumb. It really comes down to your cash flow and how much you want to tip in yourself. If you're going to lose one of those salaries soon because of the missus then you might need to lower the LVR a touch. Your call and a lot depends on how much they're yielding and how much you're comfortable tipping in.

In my opinion 3 IPs in 7 years is good going. Don't beat yourself up. I'm almost 40 and currently only have 2 IPs but they're about to become 4 once I develop one of them into units. They're worth well above the Sydney median each, but still only four all up at the end.

Cheers,
Mike

 

[TrentZor]

interesting thought there mike..

Ive been looking at some old randshack propertie with DOA approved for a duplex. 800sqm and cost of around 650k

Can somebody run the numbers through and tell me if i was to sell the property at 1.2mil for both duplexes would i still be making a profit (after building and all that other jargon) Given that duplexes cost 350k to build? I would still be 200k ahead?

 

[The Hulk]

Ceffo,

I'm doing a duplex in Sydney South right now.
Just to give you some figures so you can compare:

Bought small old house on 665 sqm a couple of years ago for 517k
Rented it out while getting a DA for duplex development.

Just about to start building in a couple of weeks.
Building will cost 340k.
Other costs like demo old house, tree clearance, water/gas mains, etc are around 20k.
Council fees about 10k.

Then, still have to do landscaping, driveways, internal flooring and blinds, etc to finish off, approx 100k.

So costs without allowing for any hidden suprises are just under 1 mil.
But there was also stamp dut of 20k or so on the original purchase.
Then there is interest holding costs during the time the property is not available for rent.

I'd estimate final valuation for the pair of duplexes to be around 1.2 - 1.3mil.

This is my first one so no real experience.
I just think your building costs (to completion) will be well over 350k, especially with compliance of BASIX, which really puts costs up.

Maybe the 1.2mil sales price you predict is lower than what can be achieved.

 

[MikeW]

Hey ceffo,

You need to factor interest costs through construction and GST as well if selling. $200K out of a gross valuation of $1.2M is only a 17% margin. Its doable, but the banks might not finance it at that margin. I'm also doing a little development in Mona Vale and the banks are only lending to 70% as they're treating it as a Commercial lend. To give you an idea of what's possible, my costs to date are $750K for land and DA and my build costs just tendered are $1.25M. If I add another $100K for interest servicing and buffer it will cost about $2.1M all up but will value at around $3M at completion. I plan on holding all three and renting them out on completion as I'll be cash flow positive becuase my LVR on those three in isolation is under 70% due to my 30% odd margin.

All good. Keep looking and working the numbers and there will definately be something you can make work. As I said, that does work but you might struggle to finance it in the current environment.

Cheers,
Mike