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Hey all,

Was just wondering peoples thoughts on buying a first home or an investment property? Am currently paying fairly cheap rent and have around a $20 000 deposit. Is there an ideal limit for a deposit? Is it a good time to invest or buy?

Many thanks

For such an important decision a visit to a financial planner (find someone who is recommended to you) would be a smart move. There's so many other variables to consider with your personal financial situation which I am sure you don't want to divulge in detail on here.

My 2 cents worth is, yes, now is a good time to buy. Whether $20K is enough of a deposit (seems a bit light on) depends on how much you want to spend. How much you want to spend depends on your income and so it goes on ...

In the most recent BRW listed Brompton & Thebarton as 2 of the best suburbs to buy in right now.

Thanks Hondo,

am just after peoples opinions at the moment. Will def see a professional when the time comes.

luvcricket wrote:Thanks Hondo,

am just after peoples opinions at the moment. Will def see a professional when the time comes.

At present, due to tightening of credit, most lenders will only go as high as 90% LVR, so at least a 10% deposit is required these days. No such thing as a no deposit home loan anymore.

I'd suggest speaking to a mortgage broker rather than a financial planner. At the end of the day a financial planner is a salesperson who usually doesn't have your best interests at heart. They will just try and sell/offer you the product which is going to make them the most amount of $$$. And if possible, try and find a broker who themselves invests in property- if that is the path you wish to follow.

One thing I'd also suggest is doing your homework before buying property. Read books, talk to people who actually have invested in property, study the market etc. Don't listen to people who have never invested in property, they will get you nowhere.

Also do yourself a favor and join the following forum. It has loads of information on property investment and most of the people on there are property investors and definitely know their stuff. http://www.somersoft.com/forums

mypaddock wrote:

luvcricket wrote:Thanks Hondo,

am just after peoples opinions at the moment. Will def see a professional when the time comes.

At present, due to tightening of credit, most lenders will only go as high as 90% LVR, so at least a 10% deposit is required these days. No such thing as a no deposit home loan anymore.

I'd suggest speaking to a mortgage broker rather than a financial planner. At the end of the day a financial planner is a salesperson who usually doesn't have your best interests at heart. They will just try and sell/offer you the product which is going to make them the most amount of $$$. And if possible, try and find a broker who themselves invests in property- if that is the path you wish to follow.

One thing I'd also suggest is doing your homework before buying property. Read books, talk to people who actually have invested in property, study the market etc. Don't listen to people who have never invested in property, they will get you nowhere.

Also do yourself a favor and join the following forum. It has loads of information on property investment and most of the people on there are property investors and definitely know their stuff. http://www.somersoft.com/forums

Mostly good advice but I will note one thing ... mortgage brokers are generally incented by financial institutions to promote their products, so they may not be as independent as seems.

dedja wrote:

mypaddock wrote:

luvcricket wrote:Thanks Hondo,

am just after peoples opinions at the moment. Will def see a professional when the time comes.

At present, due to tightening of credit, most lenders will only go as high as 90% LVR, so at least a 10% deposit is required these days. No such thing as a no deposit home loan anymore.

I'd suggest speaking to a mortgage broker rather than a financial planner. At the end of the day a financial planner is a salesperson who usually doesn't have your best interests at heart. They will just try and sell/offer you the product which is going to make them the most amount of $$$. And if possible, try and find a broker who themselves invests in property- if that is the path you wish to follow.

One thing I'd also suggest is doing your homework before buying property. Read books, talk to people who actually have invested in property, study the market etc. Don't listen to people who have never invested in property, they will get you nowhere.

Also do yourself a favor and join the following forum. It has loads of information on property investment and most of the people on there are property investors and definitely know their stuff. http://www.somersoft.com/forums

Mostly good advice but I will note one thing ... mortgage brokers are generally incented by financial institutions to promote their products, so they may not be as independent as seems.

Agreed. I was going to edit my post cause I knew someone would pick up on that.
But in terms of property investment if you have a good broker it makes the process a whole lot easier.

True, but finding a good one is the challenge.

Another thing the OP might want to consider is sometimes WEA run half day courses on property investment. I went to one a few years back and it only cost $60 or so and was run by a fella who had about 10 properties. There's no sales pitch ... only a first hand account from someone who has been doing it for years.

Me and Mrs.Boon upsized our house back in Feb and kept our previous as an investment. PM me if you want to talk further...

We've had a couple. The biggest thing we found was buying in the right area. Not necessarily a good area as in a "nice" suburb, but as in good area where there is a high rental need & a constant stream of people looking at renting. Usually as the suburb in which you buy, won't be as expensive, so the property mortgage should then be able to be covered by the rent. I don't necessarily mean a suburb in which you wouldn't want to live but in a suburb in which you'd be getting good gains. We had a unit at Holden Hill, which was fantastic as it was tenanted by a nurse working at the Modbury Hospital, and a house at Woodville South, which likewise was tenanted by a nurse from the QEH. The Holden Hill place had a copper at first too.

We've sold our final two places to A. Limit Capital Gains tax, due to no income as wife was on leave for a financial year, which was the same for me, and B. Pay for extensive renovations to our house in Lockleys, and a new car.

We're currently looking at starting again and getting back into the market, and we are looking at the same sort of areas as before, and also down inner south like Bedford Pk, Edwardstown or Sturt.

Keep Osborne,North Haven,Taperoo in mind as Tech Port is going to be a huge project for years to come.

Ideally you want 20% of the purchase price as a deposit as you will then not have to pay mortgage lenders insurance premiums on your loan.

The absolute best advice that I can give is to invest some coin and get yourself a copy of a book called "The Insiders Guide to Real Estate - Patrick A Bright". I used his advice when buying our home and did very well on the negotiation side of it as a result, I can not more highly recommend the book! You may even be able to find it on Fishpond!

http://www.fishpond.com.au/