Advice for Moving Out of Home

Riczter on 24/11/2013 - 20:13

I'm a big boy now and getting sick of mooching off my parents and putting up with their embarrassing antics and am keen to move out of home. But I'm really not sure where to start… I need to do some research obviously, at this stage my plan is to get a rental for now, maybe share with some mates.

Obviously buying a house makes more sense financially, not wasting money on rent, but I'm not sure I'm in a position financially to be able to, I have about 10k in the bank, earning 50k per year. Saving maybe 1.5-2k per month. But I got a 3 week holiday to Japan in February, and talks of NZ in June so there goes half my savings :/ And my car is dying a slow painful death, so will need another one soon, my bike needs $1000 work, and I want to get my wisdom teeth out, all of which costs money :( Do they still do no deposit home loans? What's the catch with these? I figure now is the best time to have a large mortgage with interest rates so low, as long as I can keep up when interest rates increase and my payments go up..

I've had a quick look at some rental prices and damn! It's not pretty :( And I would like a nice clean modern spacious place in a good location as well so that isn't going to help keep the cost down :/ I'm fussy :P

So I am chasing some tips and general advice focusing on and around the following questions:

  • Should I rent or buy? Can I buy in my financial position? What is the First Home Buyers Grant atm? No Deposit Home Loans? Pros & Cons..
  • Advice for sharing (renting) with mates? Or buying and then living and renting out rooms to mates.
  • How do I go about finding the best deal on a rental? I know 2 people in real estate, so they may be my best bet in finding a good price on a nice place, but any other tips on finding the best deal??
  • What websites to use to browse properties in WA (south of the river).
  • Best places to compromise in order to get the cheapest rent, ie: location, block size, age of the property, etc.
  • Any other tips, advice, or your own experiences that you wanna share..

Thanks

Home & Garden

Comments

        • AG_ACT on 25/11/2013 - 16:36

          No ideas. I think your credit file would get pretty thick pretty quickly…

    • May4th on 27/11/2013 - 14:10

      If you don't get any advantages for being a first home buyer; build, - tou will pay less stamp duty this way.

      the last thing you want to do when investing in property is to rush into a development when you have no building experience and have none or poor professional relationships (accountants, financial advisors, realestate/developers). you stand to lose much more than the trivial gains in stamp duty savings. leave that for later when you have more experience and capital.

      house and land packages - possibly. but these tend to be in isolated areas with limited potential for capital growth. you also have the liability of a new house which is a depreciating asset.

      • abc on 28/11/2013 - 11:55

        A new house is a depreciating asset? You've got to be kidding me. This would possibly be true if you did a knock down and rebuild. But a new house on a greenfield site no way its going to depreciate.

        IMO a new house is better value than existing as it is the "true cost" of a home. The drawback is you can't move in after a few weeks settlement like an existing home, and would need to deal with issues which will always crop up when building.

        It's all about 'short term pain long term gain', which ties into this discussion…

        • May4th on 28/11/2013 - 12:51
          -2

          it's like a new car. the minute it's sold you lose the new house shine. compare this to a 3-5 year old house no one would be able to tell the difference. you never get the 'true cost' of the home - what you pay is 'true cost' plus developer's profit margin

        • one man clan on 28/11/2013 - 13:29

          It's nothing like a new car. Brand new vs established properties (paricularly units, as that is what most city development is) have a number of pros and cons.

          Buying new, off the plan, you can often make day 1 money. People do that for a source of income; buy into a property early, wait a few years for development to finish, then sell it straight away.

          New properties also come with issues, usually in the first 5 years. Building are complex and things go wrong. If you're buying something outside that time frame, all the kinks have probably been ironed out.

        • May4th on 28/11/2013 - 13:31

          we're talking about buying a brand new apartment vs a 2-3 year old apartment. for investment purposes the latter would be more cost-effective

        • one man clan on 28/11/2013 - 13:42

          Why?

          For investment purposes, the thing that makes you the most money is the most effective. If you can flip a brand new apartment day 1 for a profit, along with the incentives that come with building a new property, that's effective.

          Of course it's hypothetical, so it's a dumb argument anyway.

        • May4th on 28/11/2013 - 13:47

          because you are paying a premium for a brand new apartment but renters will not pay more rent compared to the market rate. no investor buys a place to flip off just a few days or months down the track. the difference between a 5 year apartment vs brand new will always be much more than a 10 year vs 15 years

        • Baghern on 28/11/2013 - 15:03

          Actually that happens, its been happening for a long long time.

          Often you just have to put a deposit, ie $5k, or a small %.

          Then you sell that right a year later for 100k, before its finish.

          That's why when there's a really popular development the queues go forever.

        • May4th on 28/11/2013 - 15:09

          but we are not talking about off the plan apartments.. that's another story altogether with its own pitfalls as aforementioned

        • abc on 28/11/2013 - 15:35

          ? I'm taking about building your own home (either using a project or private/owner builder). I thought you were talking the same.

          Building your own home means you are the developer and take on all the risk. There is no way this becomes a depreciating asset…

        • May4th on 28/11/2013 - 16:36

          i was probably a bit unclear about all this. i was talking about buying brand new vs established properties. as for building yourself,or buying a so called 'renovator's delight' and doing some DIY, it would be a great option IF you know what you are doing.. however unfortunately a lot of people don't and rush into it thinking they will save a lot of money but end up getting burnt. it also requires a lot of capital for planning approval fees, builder deposits etc all the while you get no income in construction so it's not so suitable in the first home buyer context

        • AG_ACT on 29/11/2013 - 09:26

          My income is about 5k higher than OP, and purchased a $750,000 property using the strategy I proposed to OP 2 years ago. I knew absolutely nothing about the building process, but the hardest part for me was convincing a bank to give me as large of a loan as I needed.

          I haven't noticed any pittfalls so far… but I'm always happy to learn new things, maybe I've missed something. Would someone please enlighten me as to what I might expect to go wrong?

          I did notice a few advantages so I am hoping they aren't going to be washed away by the pittfalls; namely
          *Because my block didn't settle for 2 years, I had some time to build up my deposit a bit.
          *I know a lot more about the structure of my house
          *(I percieve) I saved some money by doing landscaping, window furnishings and a few other simple things myself
          *I got warranties for everything
          *I get a few tax advantages - only approx 15% benefit, but still it's better to pay 85% of expenses than 100%
          *I have left over paint of every single colour on my walls (anyone who self manages tenants will know how valuable it is to be able to touch up marks on walls)

        • one man clan on 29/11/2013 - 10:11

          Where do you live? Because I'd be surprised if it's in an eastern seaboard capital. It's probably fair advice, but limited.

          What's the rental yield? Investing in shares and waiting till he's ready might be a better option.

        • AG_ACT on 29/11/2013 - 10:26

          I'm in Canberra. Real estate quoted $700-$750p/w; I'm currently getting $800ish furnished

        • Weezle on 30/11/2013 - 00:19

          If you're going to give advice, at least know what you're talking about. Land has an infinite economic life, so it does not depreciate. That is why property doesn't (in general) depreciate. Sure, they may depreciate when a bubble bursts but in general they don't depreciate over time, if anything; they appreciate.

        • May4th on 30/11/2013 - 18:22

          of course land doesn't depreciate. but a new house will. what's not to get?

        • ilostnemo on 30/11/2013 - 18:46

          Hmmm

          Did you have a gun with you when convincing the bank.

          On a $750,000 loan the repayments are around the $4,500 mark a month.
          You either had a huge deposit or have a good imagination.

          My mate who is on $76,000 was told he could borrow $300,000

          Loans staff don't get convinced, your figures go in to a calculator and if they fall within their parameters, you get approved.

        • AG_ACT on 01/12/2013 - 19:42

          I'm guessing I probably don't have anything too dramatic to be concerned about; Anyways, to answer your questions ilostnemo:

          No, I didn't have a gun, but I did have Rental offer letters from DHA (the hardest thing to get), rental estimates from 5 different agents, Stat Decs from 2 people willing to move in.

          My deposit was not significant in % terms (a few percent over the banks minimum 20%), but yeah, in $ terms, it was quite high. I think you misunderstood $750,000 house for $750,000 loan, my repayments are nowhere near that high.

          Your mate either really pissed off the lending manager, or lives like a king… put the figures into a mortgage calculator (like mortgage choice/Westpac/ Commsec etc) and see what you come up with… or better yet, go speak to a lending manager. I know amounts vary… maybe even 5-10% but 300,000 on a 76,000 income for a rental property returning $750 a week is less than 40% what most lenders will offer.

          Perhaps convincing was not the right word, how else would you put "producing a multitude of documents to satisfy the lending managers every concern, and getting them to match the other banks in terms of using 80% of the rental income to calculate my borrowing capacity" in one word?

        • AG_ACT on 01/12/2013 - 19:43

          I think when most people say property, they are talking about both the house and the land. While I agree that land doesn't depreciate, houses certainly (even the ATO agrees).

        • ilostnemo on 01/12/2013 - 22:18

          Providing the necessary documentation.

          The banks wouldn't care about the stat decs, as us humans chop and change our minds on a daily basis.

          Anyway my hat goes off to you, you saved $150,000 on a $50,000 wage, that's awesome going.

    • JohnHowardsEyebrows on 30/11/2013 - 12:08

      Your great fallacy is assuming property prices can only go up. Mortgages are already unsustainable in a good market, let alone a bearish one we're in now. As soon as our economy gets shaky, they'll go down.

      Tread carefully with the property bulls, OP - most of them don't understand the economics of it all.

  • telljoolz on 25/11/2013 - 15:44

    While staying at home is definitely good advice while saving, I feel I should also point out something that I didn't consider when I first started thinking about getting a house.

    If you have been working in a junior position in your career for a little while now, but you know that the work is stable and you know that you have strong opportunities for career advancement, you will not be on 50k for long. As your pay increases you will be able to pay off that loan faster than you originally calculated. Your lifestyle may not necessarily be constricted by that mortgage that originally seemed so burdensome. Obviously it depends on how confident you are with your employment situation.

    • Riczter on 25/11/2013 - 15:52
      +1

      My employment situation is… different. I'm on good terms with the manager and he runs his own business, big business, small margins, minimal staff but he plays fast and loose, always toeing the line when it comes to ethics and legal issues. I should be earning more now, I mean I'm filling 3 or 4 roles (Admin Manager, IT Manager, Accounts Manager, Storeman), but there's just not enough money in the company to even consider asking for a payrise. There's incredible potential for huge earnings in the future, but there's just as much chance that the whole company could go under the way he runs it. I've got great perks atm, free fuel, phone, flexible hours, etc, so I'm very interested to stay and see where it takes me, but it is reasonably high risk, so I gotta have a backup in place.. I've got 2 old employers that would take me back in a heart beat, as well as the potential to expand my own business so I am in a pretty good employment situation currently, but it's definitely not a situation I would call 'stable'.

      • humdingaling on 25/11/2013 - 16:26
        +1

        "stable" is what banks look at when they lend you money
        potential is always just potential until it is realised

  • [Deactivated] on 25/11/2013 - 16:05

    I think people need to remember that some parents PREFER their older children stay at home until the younger ones are ready to move out as well. I know my parents were pretty upset when my older brother moved out and after I moved out my older sister moved back in with my mum which works mostly for my sister I know, but my mother wouldn't want her to move out either.

    • Riczter on 25/11/2013 - 16:09

      That's a good point I didn't think of that. Little bro will be pretty bored once me and sis move out :/

  • teyc on 25/11/2013 - 16:48
    +3

    Given that you're on OzBargain, I suggest you start adopting the OzBargain mindset. Firstly, having fun does not have to cost money. Land freebies, use discounts, scrimp and save as a challenge. You should remember this - having fun means not living by other people's rules. If you have a pad of your own, you still can throw parties, as long as other people supply the alcohol.

    Secondly, every choice has a trade off. For example, if you have to buy mortgage insurance because of your lack of savings, it'll cost you the equivalent of a free overseas vacation every few years.

    Thirdly, do your own homework. Sooner or later in life, you will need to be able to run your own numbers. As a few other oldies here have pointed out, your current goals in life are in conflict with the possibility of you owning your own home. The way house prices are going, you need to bump up your earnings and savings significantly before contemplating ownership.

  • rong818 on 25/11/2013 - 18:51
    +3

    If you are 100% sure you will buy a place in the future, you might want to research into the First Home Saver Account. Basically I put $6000 into it every year, and the government will co-contribute $1020 to the account. Interest earned in this account is also taxed at a lower rate.

    The bad thing about this account is like superannuation, so you can't withdraw it unless it is used for down payment.

    Info here: http://www.ato.gov.au/Rates/First-home-saver-accounts/

    Read the T&C carefully though, as some restrictions/conditions apply.

    • Riczter on 25/11/2013 - 19:05

      Researched this just a few weeks back. Very good bank account. I think the best one offered is by ME Bank. I'm going to open mine june next year so the funds will be available July 2016.

      Restrictions are that the money isnt available until 4 financial years. And if you don't use it for your first home it goes to your super. Can't be used for anything else. There's some good info on it either here on ozbargain or on whirlpool, do a quick search on 'first home saver accounts' and you will find it. Highly recommended!

    • May4th on 27/11/2013 - 14:28

      however keep in mind the 17% return is only on the contribution, i.e. not a recurring return. so if you were to keep the money in your account for a long time, like 8-10 years, then the gains from the govt contribution may be offset by the low interest return of 3%

      • Riczter on 27/11/2013 - 14:39

        In 8-10 years when (you would expect) the cash rate has gone up, would the interest rate on this account not have also gone up?? I thought the interest rates on the FHSAs were usually quite competitive..

        • May4th on 27/11/2013 - 14:55

          the best you can get nowadays (large banks don't offer FHSAs anymore) is 3% from mebank. You can get much better investment returns if you put the money into shares, or an offset account

          so only a good option if you are sure you are going to buy a house that YOU LIVE IN in the next 5-7 years. Longer than that the benefits don't really outweigh the costs

        • Riczter on 27/11/2013 - 14:56

          Did not know that, cheers. But it would still be worthwhile doing it to get those co-contributions from the government from Jun-14 to Jul-16 right? Just not worthwhile to leave it in there long term.. right?

        • May4th on 27/11/2013 - 15:07

          yep. technically it's only 2 years and 2 days that you need to keep the money in there for, so the most efficient way is to make an account Jun 1st 2014 say, put in 6k every financial year and buy a place after July 1st 2016

          keep in mind you can put the money towards your mortgage, so you are not restricted to buying at a certain time if you have enough for deposit

  • Third_Gear on 25/11/2013 - 19:55
    +12

    You are young and have expendable cash - rent somewhere with some friends and have FUN.

    Rent doesn't have to be expensive for a nice place if you share I guarantee the instant freedom will be worth it. You'll have plenty of time to save dough but you only get to be young once. Become a penny pincher when you're in your 30's… and if you never buy a home so what…

    An idea though is how about instead of investing in a mortgage why don't you think about doing something most people only ever dream about but NEVER actually do. Invest in yourself and build that business idea of yours… the world is already full of enough people who play it safe and we need more youth out there creating more small businesses in Australia.

    Or if your job isn't as stable as most this could be a good chance for you to even consider moving overseas for a while. Go live in China.. Japan.. Thailand.. Maybe hit up Canada for a winter and work the slopes. Whatever really.

    Just don't piss away your youth constantly thinking about your retirement years mate as you never know when your next foot out the door could be your last. Life can change direction very quickly…

    You have so many options available to you and sitting here thinking about a mortgage.. pfft.. BORING! :) Good luck with whatever you choose to do as it seems like the OZB community has given you a lot to consider.

    • Windows7forever on 25/11/2013 - 20:10
      +3

      Inspiring read :)

    • Dollarsandsense on 25/11/2013 - 23:07
      +3

      Great post I have dropped ship a few times for one way adventures with no set return date:
      17 - off to uni
      21 - off to Aus
      25 - off to Canada/ Alaska
      28 - off to Sth East Asia

      I have always had the mindset that with the right attitude these sabbaticals won't set me back in my career. Without these trips I wouldn't have had the experiences and could be worse off financially as I would have been bored, frustrated and blown money on other junk.

  • boab88 on 25/11/2013 - 20:35
    +2

    Definitely move out and move in with friends. Living at home your missing out on an important life experience! Best years of my life were student halls and shares just after uni. You learn about yourself and living with others and have an awesome time.

    Once your in a relationship you then think about getting a place to yourself and mortgages not before!

    • Dollarsandsense on 25/11/2013 - 23:13

      I love thinking back to Uni days. Living happily on nothing and having so many great times. As u say once Uni was over those shares were great, suddenly you and friends start earning money but are still living like students so you feel rich!

  • nikey2k27 on 25/11/2013 - 21:45

    Rent cheep dump in place u want or share with mates. I rent for now then look at your life in few year if must move out of home. I got kick out at 18 year old. i live in some dumps but help me to save now i live in nice place and have good lots of saving for it. i have travel around world 16 time now 9 of those benign eup.

  • OBone on 25/11/2013 - 22:18
    +1

    Stay at home as long as you can is the best advice here. You'll be much poorer if you don't.
    But when the time finally does come to move out, don't just go out and buy all new stuff.
    There's plenty of people on gumtree giving away furniture and appliances that will tide you over. And I've scored some good stuff myself for cheap on ebay.
    A nephew of mine just about furnished his first place from council clean ups!

    • Riczter on 25/11/2013 - 22:22

      Yeah I'm quite looking forward to see how well I can furnish my house from gumtree and road verge collections. Sounds weird but I think I would get a sense of satisfaction in furnishing a whole house starting from just my TV, Bed and Computer and starting off with dodgy stuff then upgrading it whenever I see something better in gumtree, and finally getting new stuff whenever theres a particularly good deal on ozbargain :P

      • OBone on 25/11/2013 - 23:04
        +2

        That's the spirit!
        I just wish I'd had these options when I first left home with my girlfried (now wife).
        We moved into a 2 bedroom flat we'd just bought with little more than airbeds to sleep on, an ironing board to eat from and a couple of folding camp chairs.
        We made extra payments along the way and it only took 7 years to own in spite of the very high interest rates of the time (try 17.5% of the Paul Keating era).
        Those were the days!

  • jason101 on 26/11/2013 - 09:00
    +6

    My advice is a little different to others, but my strategy worked well for me. About 15 years ago I really wanted to move out of home (I was 20), I was in pretty much the exact the same position as you. I decided to buy the junkiest unit in the best area and RENT IT OUT for 12 months. This was so I could get an appreciation for the costs of home ownership while still earning rent on the property. I thought that if I struggled paying, rates, strata, water rates, maintenance costs and the mortgage etc while still getting a rental income, I would never be able to afford to actually live there but if I could manage it all well (and still save more than the rental amount I gained in that year - then I could easily afford to live there). I was working in real estate at the time, this didn't give me any special advantage other than knowing (fact) that property is a good long term investment. So I stayed at home for the extra 12 months. After about 12 months things were going ok and I liked being a property "investor" so I sat at home for another 12 months. So by then I was 22-23 and I thought - why not borrow against the value of property #1 and buy another property to rent out - so I did this. Fast forward another 2 years and I'm still sitting at home with my 2 rented out properties (now 25) and now being told basically "get out", my days of mooching were over! Now with 2 properties rented out and bills under control, even on a modest income I was ready to buy a slightly nicer apartment, property #3 (with my then girlfriend, now wife - hint: 2 incomes makes everything allot easier) and I could actually afford to move out and NOT have massive mortgage stress which would take 75% of my income. So I did this. As life goes we started a family and needed a proper house - enter property #4 (same deal - borrow against the equity in the last property - keep collecting rents on all 3 and move into property 4)….Repeated this strategy a few more times. Everything seems to be going ok. I'm not trying to be a hero but I think this strategy can work for anyone in your situation. On reflection I didn't always buy the right properties, choose the best loans, structure things the best way etc - but it still worked out. The worst thing I believe anyone can do is NOTHING.

    • pyramid on 26/11/2013 - 10:48
      +2

      Sorry but your plan looks bit scary to me…So you are paying home loan on 4 properties by rent income of those for 4 home…I guess its bit risky business considering what will happen if you don't get renter for few months for one of the property…Also you are putting all your eggs in one basket….

      • altomic on 26/11/2013 - 15:19

        google "Alan Bond"

        • humdingaling on 26/11/2013 - 15:26
          +1

          first thing that came up besides wiki

          Infamous businessman Alan Bond still getting over wife's suicide

      • jason101 on 26/11/2013 - 21:40

        The odd thing is the more property you have the lesser the risk that 1 tenant not paying rent, or not being able to rent 1 property out will substantially affect you. Ie with 5 properties, 1 bad egg only results in a 20% loss in income (and usually only for a short term) In property, time heals all wounds, my motto is "never sell anything". Eventually bad decision will turn out ok in real estate as long as you are not forced into a sell position. I'm not trying to preach here but if you keep your loan to valuation ratio under 70-80% across your portfolio once your up and running with 2-3 properties it's less likely you will ever be in a forced sale situation as most well purchased investment properties will be neutrally geared somewhere near that point. Ie if you are alive or dead, working or not working the mortgage will still be paid. You don't need to earn mega bucks to achieve this ratio - buy and wait, the market will eventually deliver the ratio to you. You might have to wait 12 months or ( as SE Queenslanders know) you might be waiting 7-10 years but it will happen.

  • p1 ama on 26/11/2013 - 10:52

    Hey man,

    I absolutely get your current situation.

    My first piece of advice is to either get rid of the bike or get rid of the car. You'll make a few bucks but on top of that, you don't have to double up on rego, insurance and all the maintenance costs. I reckon you can probably go full time on the bike, unless you're doing something where you need a car (e.g. to carry stuff…etc.) - it's just not very economical to run both.

    Secondly, your holiday plans are a little at odds with moving out. I know holidays are important, but if you go on yearly holidays…etc. you'll find it pretty hard to move out any time soon. So maybe just enjoy the holidays that you have coming up and go a few years without holidays (or go on roadtrips around Australia :P) for a while whilst you save up and pay off your mortgage.

    Thirdly, have you thought about buying a house now and renting it out for a few years whilst you live with your parents? It's a good idea because it allows you to use the rent you are earning to pay off the interest and you should be able to attack the principle with your savings. Interest rates are great at the moment.

    Should I rent or buy?

    Buy, there's no reason to rent when you are still able to live with your parents and everything is fine there, renting will get you stuck in that cycle because you just can't save up enough to buy.

    Advice for sharing (renting) with mates? Or buying and then living and renting out rooms to mates.

    Renting out rooms is okay, but don't do it with mates because that's the primary reason behind most arguments. If you can, buy in an area near a university and rent out the rooms to university students, they're generally pretty good.

  • Riczter on 26/11/2013 - 11:07
    +1

    So a few people now have suggested I BUY first, just a cheap place, as an investment property and rent it out for a year or so while still living at home. Then after I can either move into there or BUY another place using the equity from the first.

    How much does mortgage insurance add to that equation? Would Mortgage insurance make it a bad investment?

    Should I be waiting until I have 20% of the purchase price saved in the bank first so I can avoid having to get the mortgage insurance?

    • humdingaling on 26/11/2013 - 13:59

      if your stretching to make 20 and have nothing left over to pay for other stuff then 20% is not worth it
      http://www.yourmortgage.com.au/calculators/mortgage_insuranc…

      i bundled my LMI within the mortgage itself….it was the better option for me as i didnt have to stretch to make 20% to had enough money for other expenses like furniture/stamp duty/legal fees/utilities-connection fees/reno etc
      they all come at the start and they all require funds

    • ilostnemo on 26/11/2013 - 14:11

      You're in Perth

      Easy buy a unit in this complex 46 Rutland Ave Lathlain 6100

      • Riczter on 26/11/2013 - 14:21

        Nice Location. What kind of rent could I expect to receive on a place like this, does anyone know?
        http://www.realestate.com.au/property-apartment-wa-lathlain-…
        EDIT: Ah it says on the page $360 pw. The water & Council rates, that's per year right??
        EDIT2: Just researching as I go, looks like rates are paid by the landlord, not the tenant, quarterly. So lets hash this out.
        Unit for sale for $379,000
        Market Rent = $360pw
        Rates & Strata = $2164 per quarter = $166 per week which if you subtract from rent gives you around $200 income from rent per week.
        Lets see how much the interest on the home loan would be..
        Commbank's calculator is showing $1875 per month interest only repayments which leaves a shortfall of $233 per week after rent and rates which would have to come out of my own pocket.

        Doesn't seem like a profitable investment, am I missing something?

        • ilostnemo on 26/11/2013 - 15:36
          +2

          Dafuq

          Strata is quarterly
          Rates are yearly

          yeah you are missing something, a calculator hehehehhehe

          Disclaimer, I own a unit in the complex.

          Also sales rep is dreaming, look at the past sales, you'd probably get it for around $320,000 at a guess

        • Riczter on 26/11/2013 - 15:58

          Hey I'm new at this alright! I didn't know rates were yearly so lets try those figures again.
          Say we get the unit for $340,000
          Rent 360pw = $18,720 pa
          Rates & Strata = 3784.48
          Rent minus rates = $14,935.52 pa or $1245 per month

          Interest only loan repayments on 340k loan = $1683 per month.
          Shortfall = 438 per month or $101 per week. That's much more manageable!

          But there's other costs involved right?
          Like Insurance.
          Who pays electricity and gas, the tenant right?
          And theres always general maintenance and other incidentals.
          Still, sounds reasonable..

          You own a unit in the complex ey? Any tips for me if I were to go down this route. Any hidden traps to be aware of??

        • ilostnemo on 26/11/2013 - 17:26

          Insurance is included in the strata.

          Electricity tenant pays

          ok with your example lets call it $100 a week, so your loss is $5200 a year
          This is where you and the ato form a relationship,

          Hello $5,200 deduction, Hello Refund (depending on your tax records)

          Just buy it, would be my advice, 5km from the city, casino on your door step, views of the city and kings park (not sure of your placement) close to train station. secured premise.

        • bluedufflecoat on 27/11/2013 - 10:14

          Other ongoing costs:

          • Real estate agent - as much as they don't do much work, it's best to get someone in between you and the tenant as they deal with the tenant issues, not you.
          • Water supply and parks cost (annual)
          • Landlord insurance, if you need it… probably best to have. If it doesn't cover your installed items (e.g. dishwasher, lights, toilets), then you will have to add home and contents insurance
          • Body corporate - depending on what sort of property and how much maintenance is needed. If there is some garden area, then gardening expenses will be high, in addition to the building insurance. Also, there may be additional levies, for painting, etc… The body corporate fee could be very high.

          Assuming you are buying a $340k property with a loan for $340k, you have to also factor in: Loan Mortgage Insurance. Don't forget other "establishment costs", like
          * loan application fees (some lenders waive this)
          * valuation fees (this could also be waived)
          * loan account fee (ongoing)
          * conveyancing (your lawyer)
          * stamp duty (could be tens of thousands of dollars, and you won't qualify for FHOG if it's still applicable because it's an investment property.

    • jason101 on 26/11/2013 - 21:59

      If you are buying in an environment of low, non existent or modest capital gains, you may be best waiting and saving, if you think the area you are buying into is on the rise, you may wish to consider taking a higher risk, but hoping it will pay off with faster capital gains. If there are gains occurring in your chosen area you may not be able to secure the same property in 12-24 months without paying allot more.

      • Riczter on 27/11/2013 - 00:48

        An ideal situation would be to somehow get the inside scoop on planned future development in a particular area and get a place in that area for cheap, then sell it off after the development and make a nice profit… Anyone know anywhere that is about to be developed?

        • May4th on 27/11/2013 - 14:47

          everyone would be rich if it was that easy. planning is a mine field, many people have been burnt by inside scoop on planning only for it to fall through

    • iSamurai on 27/11/2013 - 19:27

      Bear in mind that your stamp duty will be $5-10k higher if you decide to buy as an investment property. You also wouldn't get other grants that'd require you to to live in the property if you're eligible. You should also check out the threshold on stamp duty concession. Iirc it's 520k in qld then goes up pro rata up to 600k or somewhere in that region.

  • thepigs on 26/11/2013 - 11:24
    +3

    well my life went like this:
    1. rent and have fun until you're about 27.
    2. find a girl with a job who knows how to save money. move in with her and save money.
    3. get married have a kid. your wife will want to buy a house to put the kid in.
    4. work like a bastard for the next 40 years, until your eyes and hands don't work anymore.

    • Riczter on 26/11/2013 - 12:31
      +1

      It's number 4 that I've got some issues with… :P

      • thepigs on 26/11/2013 - 12:54
        +1

        no. 4 is the only part that's guaranteed ;) And being out of home while you're young and carefree were some of the best times of my life. You can always move back.

  • tonka on 26/11/2013 - 12:11
    -1

    Set up a van in the parents back yard to get that autonomy.

    Stay there until there is no other option or forever.

    If you need a change rent a room off someone else for a while maybe near the beach.

    Keep the van to run back to, plan on returning to the Van.

    Save and invest your dollars, buy your unit/house and rent it out.

    If you do live share accommodation make sure you follow Sheldon's example with a comprehensive roommate agreement.

    • tonka on 26/11/2013 - 12:13

      Better still, get a job where they pay your accommodation like a fly in fly out.

  • Forfiet on 26/11/2013 - 12:33
    -1

    …..i have a house…..

    • Riczter on 26/11/2013 - 12:35

      Cool story. Needs more dragons.. Or info. You selling, leasing, sharing, offering, or just bragging?

      • Forfiet on 26/11/2013 - 12:48

        A little bit of part A and little bit of part b :) (especially the bragging :P )…… seriously like others have said stay at home for a little longer or at least wait till after you have gone on holiday to really start planning.

        I think your earnings might be over the threshold but have a look at the governments HOMESTART program while your thinking about moving…..

  • rekabkram on 26/11/2013 - 13:53
    +2

    First thing you should do is sit down and get your budget in order.

    Ask your parents if you can see their bills and if there are 3 people in the house assume that you will need to pay roughly 50% of what they spend on gas/electric/water since although 1 person uses less than 3 service charges still apply.
    Factor in content insurance (house and contents if buying).
    Rent/mortgage repayments (add in rates if you choose to buy).

    Basically work out how much it is going to cost you not to live at your parents. Working out a budget isn't fun but it's one of the more important things to do when growing up and taking a step like this.
    Work out your food and transport expenses and virtually everything that you need money for, budget for it including gift giving, going out and so on.

    You will be shocked at how much it will cost. Expect if you rent that your household bills+rent will cost you at least $20,000 a year that's all bills+rent+insurance aside from your spending money and savings.
    If you buy a house things will be even tighter.

    The thing that I wished I had done before moving out of home more than anything is save like a madman… Don't screw up any financial commitments but be a huge Scrooge to everyone and save every dollar you can.
    Keep in mind that getting a house isn't the only expense in moving out, it's everything the house needs.

    Fridge, freezer, furniture, appliances. Does the house have air con or heating? Does the house need work? Do you have any outstanding debt that needs to be covered before you move out? Moving costs+bond.
    Rent has it's place and is brilliant for those that can't afford to buy a house but it's an absolute trap once your in it. Going from small amount of board to large bills and rent means that savings dwindle not only because you need to buy things for the house but because you don't have as much to save. Buying a house is a bigger financial burden and more than likely you won't own that house for another 30 years if you want to stay there and your money will be tighter because of the added costs.

    At the end of the day you'll ignore all sound advice that contradicts the perfect house that you find but my main advice is to work out what your budget will be and seriously try to stick to it for at least 6-12months before moving out. Keep saving through holidays and Christmas because guess what when you move out you can't not pay your electric bill because you overspent on Christmas.

    The plus side of it all is that you will have an idea of how it is to live week to week and if you succeed then you'll have a sizeable deposit or savings account for furnishing the new place.

  • frinik on 26/11/2013 - 15:08

    Educate yourself. Everybody in in a different situation.
    Do what you think is best for you.
    Don't force the buy, if you can't service the loan you'll foreclose and lose everything. Although it feels like renting is dead money, that may not always be the case.
    http://www.youtube.com/watch?v=s8GjDRT2MI0
    Theres a lot of other videos out there, but itll help you form your own opinion.

  • [Deactivated] on 26/11/2013 - 16:28

    Australian houses are so overpriced, I can't wait for the housing bubble to burst and bring some sanity to the housing market, maybe then houses will be affordable and actually be for living as opposed to being some monopoly asset to make your greed for riches a reality.

    • ilostnemo on 26/11/2013 - 17:35
      +5

      I've been hearing this for years, so glad I didn't listen to these people.

      • jason101 on 26/11/2013 - 22:12
        +2

        I know I'm jumping on the bandwagon now, but when I was 20 my "Manager" told me that the housing bubble was about to burst so he was waiting it out. The funny thing was that he would have been on $60k per year back then, I think I was on about $35k (15 years ago) and houses in the area we worked in were worth about $60-70k to buy outright back then (Outer suburbs Adelaide Circa late 1990's)…… I look back I think WTF was that guy on, he could have saved hard and paid off a mortgage in 2-3 years….BTW I still know of him through friends who are still with the same company and he still lives in a rented house and still thinks property is over priced.

        I look back and think I was nearly as stupid - at the same time $70k would buy a basic house in my (then) area, I spent $25k on a car … WTF was I thinking !!

    • tsunamisurfer on 26/11/2013 - 19:20

      Metroplex is one of my favourite Transformers so I shall refrain from being nasty.

      If you were born in 78, I expect you to be mature, sadly I am wrong.

      If the Housing bubble burst in Australia, there would be many many more negative effects on top of 'prices becoming within your reach'.

      Property is an investment vehicle, please deal with it.

      Everyone is greedy, everyone wants more, just because you've hit your wealth ceiling does not invalidate wealth creation for other Australians.

    • jason101 on 26/11/2013 - 22:18
      +1

      With SMSF's now being allowed to borrow 50% to buy property, I don't think the bubble is going to burst anytime soon. Small super funds are sending property prices into overdrive. Plus if there is a bust all the property nuts (like me) will jump in buy up squillions in real estate and prices will normalize.

  • tsunamisurfer on 26/11/2013 - 19:28

    Please see http://www.ozbargain.com.au/node/124081 and http://www.ozbargain.com.au/node/124262 for the reasons why the OP cannot afford to buy property.

    • Riczter on 26/11/2013 - 19:46

      The first link has a typo and should be http://www.ozbargain.com.au/node/124228
      Also, cut me some slack its coming up on christmas!

      • tsunamisurfer on 27/11/2013 - 13:00

        Sorry to be on your back.

        Please understand, whether it is Christmas or Thanksgiving or Lunar New Year, your Lender won't care.

        If you burn money on these luxuries :

        • Your saving history suffers.
        • You have that hundreds or thousands less to pop into deposit.

        There is nothing wrong with wanting nice stuff.

        There is nothing wrong with wanting nice stuff on 50K.

        It is however a great concern when one wants nice stuff and wants to achive home ownership on said income.

        Based on the above, it is my opinion that you are not ready and that it is actually dangerous for you to enter into a 30 year commitment where around 40% of your NETT income will be gone to the bank.

  • [Deactivated] on 26/11/2013 - 20:41

    wow it must suck not being a wog.
    im 23 earn 60k and live at home, i pay no board, i buy my own food sometimes, and i save the rest, i enjoy going on overseas trips and see places, i drive a very nice car for someone my age as well.
    i dont see why anyone would willingly move out.

    • thepigs on 27/11/2013 - 10:17
      +1

      you're also smokin! If I was your Dad I'd install a pool just so you'd have a pool party with all your hot friends!

    • May4th on 27/11/2013 - 14:39

      20 years from now it'll be an entirely different story i assure you

      worst thing you can do for yourself financially is to buy a flash car at a young age. money down the drain

  • hellothankyou on 26/11/2013 - 21:08
    +1

    I think I read most of the posts, and I didn't spot this so here's another idea for thought.

    Some suggestions are that you buy property and either rent it out for the first 12 months or whatever.
    Your parents are paying rent. So they are paying someone else's mortgage repayments.
    Maybe combine the two?

    I appreciate moving out and getting your freedom / independence, but if you were to buy a property and have your parents as your boarders then you have their rent coming in helping you out with repayments. It wouldn't be an investment property so no management fees. Just a thought

    • Riczter on 27/11/2013 - 00:45

      My parents have actually suggested this in the past, but I would need to be able to save up a fair bit to be able to get a loan for a house big enough (4x2) plus the repayments would be much more… Maybe a few years down the track when I am more established I would like to get an investment property for my parents to live in, and by then my sister would have moves out as well probably…

      • ilostnemo on 27/11/2013 - 01:21

        Don't go to big to soon, actually there is no reason to go big, sure you can have 5 properties and have 100,000 equity in each, or you can have 1 property and have $500,000 in that.

        5 properties equal 5 headaches, if someone says different, they don't have 5 properties.

        Those who say when the property bubble bursts, they will buy heaps more, don't realize one thing.
        Bubble Burst = Equity 0

        Have a look at the unit in Lathlain, don't get to sucked into by the view, remember 5km from the city.

        There are 3 words in Real Estate. Location, Location and I forgot the other one.

        Also owning a property equals owning a lot of tax deductions, ie mobile phone usage, (percentage) cleaning products, repairs etc

  • voteoften on 27/11/2013 - 01:54

    If you move out, either buy or sign a lease on your own and rent to FIFO workers.

  • biozet on 27/11/2013 - 10:12

    forget all this materialistic mumbo jumbo. go find yourself and save the world

  • anna10 on 27/11/2013 - 12:40
    +1

    "…. putting up with their embarrassing antics". You could start by not blaming them for acting the way they choose in their own home and show some gratitude for puttiong up w' you all these years and having a kipper in their midst.

    Kipper = kids in parents pockets eroding their retirement savings.

  • ilostnemo on 27/11/2013 - 13:44

    One other point is, if you are getting a loan for an investment property, your income goes up (rent) so you can borrow more, as the lender will add this on to your salary.

    IIRC it's about 60-75% of the rent but YMMV depending on the lender.

    • Riczter on 27/11/2013 - 13:48

      Ah cool, that's handy, cheers for the tip :)

  • [Deactivated] on 27/11/2013 - 14:23
    +4

    I am not the OP, but I just wanted to thank all of you for providing such good inputs

  • chocky005 on 27/11/2013 - 16:05

    With Budgets I found a good tool from ANZ
    http://www.anz.com/ANZ-moneymanager/default.asp
    You can add everything in there and track where your money is being spent and setup rules to put expenses into groups automatically.

    • Riczter on 27/11/2013 - 16:15

      Cool that looks useful particularly the visual reporting stuff with graphs and whatnot. Be good to be able to sort what categories suck the most money out of my bank account. Most likely will be food. Do you know if it scrapes transactions from your bank accounts automatically or if you need to enter them in manually??

      • chocky005 on 29/11/2013 - 13:59

        All automatically and like I said you can set Group rules if you have a regular payment or bills, but it picks up most and puts them in the right group already. 90% of my monthly transactions are put in the right group just need to fix the last 10% each month.

        • Riczter on 29/11/2013 - 14:08

          Awesome cheers for the info. I used to run a manual spreadsheet with excel, but this sounds sooooo much easier :)

  • ShortyX on 28/11/2013 - 14:36

    My advice in all of this is to get a decent budgeting program like YNAB (ynab.com)

    I started using it only 2 years ago but I wish I had started budgeting when I was a teenager.

  • TheMoDz on 28/11/2013 - 17:03
    +5

    And here I am, trying to move out with $50
    :/

  • kewell on 28/11/2013 - 20:00
    +1

    Geez you guys 'make my ass itch'(look it up) get out, do your own thing, make mistakes, live life, buy what you can afford but don't meander in sludge. Find a girlfriend that works also a good option. Half price house!

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