Here is a great opportunity for you to ask your property investing questions to our property women team. The best questions will be answered and published each month. Please send your questions to rachel@propertywomen.com.au
This month Rachel Barnes answers your questions.
Q - I have $35K saved and I want to put it into my first property. What do you think would be the best option to begin with? i.e. a cheap unit, a large subdivisible block with a house or acreage or what other sort of property do you think would be a really good investment?
The best type of property for you depends on your strategy. Your strategy will depend on your emotional and financial situation.
Well done on saving $35,000! Getting into your first property will usually mean you will need at least a 5% deposit and 5% for fees. Assuming your $35,000 will be used for this 10% then you'd be able to purchase a property for up to $350,000 perhaps. However, I'd suggest you keep some money aside for unexpected events, so you might not want to spend that much.
Also with the tightening of the lending criteria, you may have to put in a higher deposit.
There are a few things you need to do before you go shopping I believe -
Get some unbiased property investing education (range of strategies from experienced people)
Find out your borrowing capacity - speak to a couple of property-wise Finance Brokers.
Find out what strategy would suit you.
List the attributes of the type of property you want.
Now you can go window shopping and you know what you're looking for!
With the right education then, you're ready to take the A-Z steps to get your first property investment underway!
Update 15th Oct 2008... The government's offer, effective immediately, triples the $7000 now payable under the existing first-home owners grant to $21,000 if new entrants to the market sign a contract on a newly built home before June 30 next year. It doubles the grant to $14,000 for contracts signed on established homes.
Q - I am a 39 year old single mum, my kids are 5 and 8 and I only work part time earning about $200 per week. My other income is from maintenance and government payments. I live in a rural town in WA and all my family is in Victoria. The cost of care for my children is so great that I only work part time so I can be at home when they finish school. My income is only just enough to cover my bills and living expenses.
Through a seperation I was left with only $10,000, which has mostly gone now through trying to setup a life for me and the kids. I am renting and would like to know how I can make my life better and safer for me and my kids. How do I get ahead and is it even possible in my situation?
I believe that anything is possible – even though it may not happen overnight!
Increasing your cash flow is probably a key issue for you to address. Have you considered running your own business while working part-time… perhaps something online that you can do from home? That would allow you to keep your current income coming in to pay the bills, but you can gradually increase your business income until you get to the stage of having the choice to work less or not at all. With additional income you’ll have more potential to borrow money to leverage your future property investments too.
The other quicker option to get into property, would be to find a suitable Joint Venture partner. Someone you can trust who has the income or equity to purchase a property, but needs someone with time available to add value to the property and share the profits.
I’d suggest you have a read through the ‘Women in Focus’ articles on our website. You’ll find many women who have overcome challenges, and I’m sure you’ll find their stories very inspiring and it may give you some more ideas.
Q - My husband and I nearly own our house ( we owe $20,000). It is worth about $470K. He is 53 years & I am turning 50 in a few months time. I have always been interested in property investing and have dabbled successfully over the years. My problem is that my husband has always held me back and thinks that at our age he doesn't want to get into any more debt. I consider myself to have 10 years working life left and would like to invest now for retirement. Can I use the equity in our home to borrow for a rental property if he does not agree??
If your home is in joint names then a Lender will require both of you to sign, agreeing to mortgage the property. The loan itself could be just in your name, but your husband would at least be required as a Guarantor so that the mortgage on your joint property would be enforceable.
You would only need to use your home to cover the deposit and fees for the proposed investment property, so from your husband’s perspective the risk of losing the home would be limited. The loan you’d seek for the deposit and fees would be best as a separate loan (and perhaps through a separate Lender), keeping the investment property isolated from your home. Other options for you might be to look at investing with someone else as an equity partner. Or of course you might be able to negotiate a no-money down deal with a vendor, so that you don’t need to use your home as security to buy the investment. No harm in asking!!
The best option of course is to show your husband the rewards of investing vs the risk of doing nothing – especially when you want to get there within 10 years. One of the difficulties for baby-boomers is that we have been brought up with a fear of debt. Overcoming that and understanding the power of leverage can be very difficult because it goes against those basic beliefs we’ve grown up with. The best way to overcome that fear is to do your own calculations and see the results. Your successful investments should be evidence of the benefits I would have thought!
It might help your husband to hear the information from someone else, other than his wife. My partner gets a bit frustrated sometimes because he’ll tell me something and I apparently ignore him, but then I hear it from someone else and take notice. Sometimes we just don’t listen to each other properly! As a man, he couldn’t attend our Property Women workshops where a finance specialist goes through the benefits of using debt wisely. However, you might consider the Home Study Course so that you can learn about investing for yourself, but you can also share the set of Audio CD's with your partner too. Men just love listenting to them in the car.
If you'd like to submit a question for the next newsletter, send an email to rachel@propertywomen.com.au Disclaimer The information, statements and opinions expressed in this email are only intended as a guide to some of the important considerations to be taken into account relating to property investment. Although we believe that the statements are correct, they should not be taken to represent accounting, taxation, legal or investment advice and you must obtain your own independent advice from an appropriately qualified professional.
Neither the publisher nor any people or organisations involved in the preparation of this material give any guarantees about its content or accept any liability for any loss, damage or other consequences that may arise as a result of any person acting on or using the information and opinions contained in this email.
