Help with my Personal Finance

**siggy_freud** · 04-06-2013, 05:48 PM

You could have a difficult time qualifying for a 200k home loan at your current salary. A 250k house at 3.75% over 30 w/ $50,000 down payment is a $925 per month payment, before taxes and insurance. 30% of your reliable (countable) monthly salary (before) taxes is ~$825 a month or so. Banks generally aren't inclined to give loans that will exceed 30% of your monthly income in payment.

Edit: Just noticed you said 34k AFTER taxes. If this is true you might be able to qualify, though it will be close. You'll want to buy it as the primary residence and NOT as a rental to get the best interest rates. Whatever you end up making an offer on have it inspected properly by someone with an eye towards rental so they're aware and up to speed on all the codes and regulations for renting out rooms. Ensure that the HOA (if one exists) allows it as well.

**MakeWaves** · 04-06-2013, 05:55 PM

Siggy in Australia interest rates average 6%

I'm buying as an investment property because I'd receive around 300 - 350 per week rent. Taking rent into consideration, & I'd be prepared to pay 300 weekly out of my own pay (so 600 - 650 per week) to build equity fast.

**lorraineb** · 04-08-2013, 01:58 PM

If the tenant isn't paying the entire mortgage and you are making a monthly profit after all other related house expenses (upkeep, property taxes, etc), it isn't an investment property -- it's a liability.

**GenWhyJ** · 04-08-2013, 11:02 PM

Wow 6% is expensive

**GenWhyJ** · 04-08-2013, 11:06 PM

Originally posted by lorraineb View Post

If the tenant isn't paying the entire mortgage and you are making a monthly profit after all other related house expenses (upkeep, property taxes, etc), it isn't an investment property -- it's a liability.

Obviously she meant if you aren't making a monthly profit it's a liability but I don't think she gets what your saying?

I think you mean you are aiming for either a neutrally or positive geared investment where the tenants rent make the mortgage repayments

BUT you don't mind paying an additional amount from your own pay, in order to build your equity faster - does this sound more like what your trying to get at?

**mgkimsal** · 04-09-2013, 05:52 AM

Originally posted by GenWhyJ View Post

Wow 6% is expensive

Keep in mind it's somewhat relative. Australians are getting 3-5% savings rates in all the banks over there. I'm pretty sure you can get CD-style investments over there paying 5-6% without too much fuss as well. Home loans at 6% don't seem out of whack in that environment.

**greenskeeper** · 04-09-2013, 06:06 AM

at 21 I'd be looking to move out on my own.....gotta live in the real world at some point.

**BMEPhDinCO** · 04-10-2013, 03:46 PM

Originally posted by MakeWaves View Post

Annual income: 34,000 after tax
Interest from savings acc: 50 monthly
Other: 70 - 100 a week, eBay

Weekly expenses:
112 car loan repayment
40 petrol
75 board to parents
100 groceries ( I have severe food allergies so I'm unable to reduce this amount)
50 entertainment
250 savings account
Whatever's left over just stays in my bank account as a buffer for direct debits / unexpected costs (which is around 53 a week)

Monthly expenses:
30 Internet
50 phone bill
65 nominated charity

Quarterly expenses:
110 union fee
150 (approx) electricity bill (household bill is usually 300 which I split 50/50)

So you have around $38,240 every year after taxes (I wasn't sure if you paid interest taxes out of that $50 and self-employment taxes out of that $70-100 so I just chose $70 for the whole year, giving you that "up to $30" as taxes). That gives you around $3,186 every month.

Your expenses are $ 39,208 (weekly added up * 52 weeks) + $1740 (monthly *12) + $1,040 or a grand total of $41,988.

I'm missing something here.... you said you can SAVE $250 a week, but yet my math shows you go in the hole $3748 each year.

I admire wanting to buy a house, but unless you can come up with AT LEAST $300 a month on top of the entire mortgage, I wouldn't consider it for yourself right now. I do like your plan of putting down 20% - although I think you should aim for $150k or less, not $250k for your house.

Also, your entertainment is a bit high at $200 a month - reduce that easily to get your house faster.

**jpg7n16** · 04-10-2013, 04:54 PM

Originally posted by BMEPhDinCO View Post

Your expenses are $ 39,208 (weekly added up * 52 weeks) + $1740 (monthly *12) + $1,040 or a grand total of $41,988.

I'm getting total weekly expenses of $430, for annual total of $22,360.

Not sure how you got to 39,208. That's likely the issue.

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I'm also not sure about the prospects of buying a rental property that you'll likely hold for several years, based on a budget accounting for living at home with the folks. What if you need to move out? Will your budget still support it?

And your figures only account for the positive side of rentals (rental is occupied with a responsible paying tenant) but,

What if it's vacant? Can you afford the full payment in additional to your existing expenses? Where is your repair budget going to come from? What upgrades would be necessary in order to make it rentable? Where does that money come from?

I like the thought behind getting your money to work for you, just not sure that rental real estate is the most practical avenue at that stage of life.

**MakeWaves** · 04-10-2013, 11:38 PM

Originally posted by jpg7n16 View Post

I'm getting total weekly expenses of $430, for annual total of $22,360.

Not sure how you got to 39,208. That's likely the issue.

--------------------------------------------------

I'm also not sure about the prospects of buying a rental property that you'll likely hold for several years, based on a budget accounting for living at home with the folks. What if you need to move out? Will your budget still support it?

And your figures only account for the positive side of rentals (rental is occupied with a responsible paying tenant) but,

What if it's vacant? Can you afford the full payment in additional to your existing expenses? Where is your repair budget going to come from? What upgrades would be necessary in order to make it rentable? Where does that money come from?

I like the thought behind getting your money to work for you, just not sure that rental real estate is the most practical avenue at that stage of life.

Yes my annual expenses equate to 22,000 give or take 500.

As for living at home it's just my mum & I. No father or siblings. I pay my own way financially & only see my mum 4 hours a day or so, so it's like having a flat mate really. I think she would rather me stay!

I figure if I put a deposit on a house by 23, I'll rent it out for 2-3 years (say the rent is 300 p/w on a 250 k apartment) this is somewhat standard in the areas I'm looking at. That's 14400 rent a year which should cover the repayments. BUT I intend on still putting the 250 p/w I was saving for the deposit on the repayments as well to build equity faster.

Vacancy rates are less than 1% but I have a 5,000 emergency fund separate from my current savings

Help with my Personal Finance