Timing for an off-the-plan loan

When would you expect to acquire finance when buying off the plan? I thought (perhaps naively) that I could acquire a loan immediately once I'd signed the contract, or that banks would be able to project savings and future finances. Apparently none of these things are true. You can only acquire finance about 3 months (at most) from settlement. That's coming a lot closer for me. But it's still not here. I almost feel like I haven't done anything because I don't have that mountain of debt people keep warning me about. Ah well, more time for me before the guillotine falls. 

Time off work

It's been wonderful. I've been sleeping in and getting to things I've left undone for too long. I've watched tv series and movies and applied for some more jobs. But this time is quickly coming to an end and I cannot be happy about it. It is so nice to have a moment in which to take stock of your life. I am going to miss it awfully. 

Home loans

I was speaking to a friend about home loans. We were discussing the benefits of guarantor vs larger deposit.

IF you have that 20% deposit, this is probably not going to be very useful for you.. But if you're like me and not quite there then it might be.

I have approximately an 88% deposit at the moment. As I'm buying off the plan and trying to save (the no job thing is putting a bit of a damper on that) more for my deposit, I'll see what I end up with. But for now, lets use what I've got.

So, I can either pay LMI, which will be a few thousand dollars, or my darling mother has offered to guarantor my loan. This guarantee can be limited or it can be unlimited. If you're getting someone to guarantee your loan, I would recommend that you limit their guarantee. Then they're not exposed to the extent of your debt, it'll just be your property and everything else you might own that's on the line...

So, the point is, your parent can guarantee a portion of the loan, mostly your difference of deposit (to 80%) plus a little more for bank security. This is a great option for those without 80% as it will (potentially) save them that LMI - good huh?

Time

Obviously I have a lot of time on my hands. And I'm finding it hard to fill. You have so much identity tied up in your work. I mean they tell you that, but you don't really know until you're without it. I was offered a job from a past employer. He likes my work, but I don't know how stable the organisation is. But at this point does it matter? I need the job. Any job really and this will be a good one. But I don't know about salary, conditions, anything really. But he's pretty ad hoc by nature, so that's not unusual. But I'm still freaking out a little.

Employment

As anyone who has bought a house will know, the banks want to see employment. They want to see genuine savings. They want to see stability. 

I was made redundant today. 

It's a little terrifying. I need to be employed. I need that stability. I am so worried. 

I have an option for a job, but I'm not sure how stable it is as it's a small firm which has just started. I want something more than that. I just can't afford to be picky at this stage. 

Pffffff. This is stressful. 

Just a little reminder...

Property Spruikers

I found a nice little video on ASIC's money smart about this. Here is the transcript https://www.moneysmart.gov.au/tools-and-resources/videos/video-property-spruikers-seminars-investigated

Investment Choices

So, I know I'm buying a house at the moment, but if I wasn't do you want to know where I'd be putting my money?

I'd put 10k aside for emergencies and then I'd put the rest into a share portfolio.

I know shares seem risky and hard to figure out. I know they make headlines - "Investors lose thousands!" etc. But what they don't tell you is that if you bet on the good horses, then you make money.

For example: I bought 4 different shares. 3 were great choices, 1 wasn't. I'm still on top. The good choices are making me 9-14%, the bad choice lost me $300. Now I'm not playing with big money (I don't have it). I'm just putting in a thousand here and six hundred there. I read Motley Fool and the Barefoot Investor. I like Barefoot better but can't subscribe due to tight finances for the next 6 months.

Now don't just rush out and buy whatever. Always research, always make sure it's a good bet, and most of the time that wins through.

I would highly recommend it. It beats the 1.95% you can earn in "high interest" savings accounts, and it's a lot more fun.

Saving

So part of buying off the plan means I have some time to save some more for a deposit. BUT this is hard. Like really hard. I know people say that it's difficult to do but man did I underestimate that. You do grow into your salary. It's not fun. It sucks, like when I was actually poor. I don't want to save this hard but I want to get ahead early. So I guess I have to. You don't get something for nothing. It's all about compromise. So I'm sticking with my choice and working two jobs and saving as much as I can. I'm even thinking of taking a steadier third job. Sigh. Sometimes I feel so boring.

Terms in a contract

Warning - Rant ahead

I have had some frustrating and somewhat aggravating instances lately where the other party to a contract or while negotiations for a contract, has not listened to the terms agreed or has tried to make me do something outside the terms of the contract.

After being a 'nice' person for a number of years I have finally had enough. I will not be nice to you if you try and bully me into a corner. I will not be nice to you if you ignore our agreement and try to get money out of me faster. I will not be nice to you if you stop showing respect for me or try and take advantage of me. I know what I am entitled to and I know my obligations. If I am not obliged to undertake a task and you request it "under the contract", guess what? I read the contract. And if it's not there, you can jump. If we've agreed to something and you change it I will not let it slide. I am sick of people assuming I will be fine with it when they try this. If you try this I will stand tall and scream back at you (mostly this is figurative) - You cannot do this. It is not allowed. Stop trying.

It damages the relationship, but why would you want to be working with or dealing with someone who shows so little respect for you? I certainly wouldn't. So I will be watching you carefully, and if you work with me and negotiate fairly and stick to our agreements, we have no problem. I will go out of my way to help you out. If you don't and you assume you can take my compliance for granted - you've got another thing coming.

Rant over.

Take a Chance

The Property Club (The Property Investment Group)

I know I've been talking about this mysterious 'Property Club' for a while now. So I had a random thought this morning. I should link it. So, here: http://www.propertyclub.com.au/

That's what I mean.

Then  I started reading up on them.
http://www.abc.net.au/news/2014-08-12/high-flying-investment-club-sued-by-couple-over-$1m-in-loans/5665976

http://www.whocrashedtheeconomy.com.au/blog/2014/08/the-investors-clubproperty-club-embroiled-in-emerging-australian-subprime-crisis/

And stories like that came popping up.

I'm not very keen on them anymore.

Any thoughts?

I'm buying it!

The townhouse I inspected turned out to be part of a large complex that had plenty of units available. The townhouse was out of my price range but I talked to my broker and figured out my finances and I have bought something in the same complex. It is so much more than I thought I'd spend. I have so much more of a deposit because settlement isn't until December. It's looking up ladies and gents!

I will move in in December.

Into a 2 bed, 2 bath, 2 car space ground floor unit with a swimming pool and grounds and a BBQ area. It's very exciting. And it will be mine!!!

Reading Up

I'm currently reading Paul Do's book "I Buy Houses". It relates mostly to investing in housing and since I'm intending on turning my live in home into an investment I feel like it's something I should take into account when considering my options.

I wanted to put in a particular quote that I just read which resonates with me. It's in a section entitled 'watch out for hidden agendas' and explains my property group to a T.

"Watch out for hidden agendas"
Although real estate spruikers explain that it is the land that appreciates while the building depreciates, they do not explain why they only spruik new townhouses and apartments...the reason is that the developers pay them a marketing commission for each property they sell to their clients.

He suggests that you balance their advice with your own due diligence and a real estate agent's advice on the established units in the area.

Food for thought.

House Hunting

I keep forgetting how influential the actual feel of the place is once you're house hunting. I went to see some townhouses today and now I really want a two bedroom place that's way out of my price range. They do have an option that is in my price range but I will have a look and see how I go with the figures. I need to talk to my broker tomorrow.

No stamp duty and a $10,000 leg up from the government is a wonderful thing.

But this is crazy. I'm buying a house! Well, not a house, but something that will be my own. My partner came looking with me. He complained about the size of the oven. I told him we could amend that. He got so excited. So was I. Not renting will be a really nice change. But it's a little intimidating - all that debt. But there's never been a better time to do it. May as well jump huh?

Oh, and by the time I finally got the agent on the phone, all the ones I wanted in the complex I was talking about in my last post were gone. Sigh.

Is it the one?

I think I've found it! I think I've found the unit I want to buy!

I am inspecting tomorrow, more details to come.

Property Investment Group

So my partner is a researcher, well not technically, it's just his personality. He has found some scathing reviews online for this group and many people claiming it's a scam. I'm not surprised. I also found much better borrowing capacity through my bank and another mortgage broker than the loans they said I could obtain. So thus far they are last out of three which eliminates them from the race.

I'm out.

The Easiest Way to Save

I have found one of the easiest ways to save. I am a little obsessive or compulsive sometimes. I think most people are to some degree. For example, I like to use even numbers or numbers ending in 5, whenever I have a choice.

Do you know what I thought of one day? I thought, I can do this with my money. I can move my spending money into my savings account to make it even. I can increase it in tiny fragments, that I will never miss so that it looks pretty. And then I thought, huh, that might also save me a little money.

I also run this scheme in reverse. You know how you have $324.33 in your bank account and because your brain is lazy it says, eh it's about $300 in there. I say, well fine brain, you're exactly right it is EXACTLY $300 and I remove the $24.33. It gets saved along with my regular contribution of payments to my future self. Now it's only $24.33 right? No big deal. But if I do that each fortnight I'm paid that is $632.58 a year that I've accidentally saved.

If you do that for each transaction - or say once a week - you shave off, let's say $12.35, that's $642.20. FOR TWELVE MEASLY DOLLARS A WEEK. So if you plan to save $5000 a year all of a sudden, with this trick you have nearly $6000. It's a big deal as a total but not in those tiny increments.

Trust me - most of the time you won't even notice it's gone.

Property Investment Group

So, in researching ways to invest I happened upon the Australian Property Investment Group. If this group is all they claim, they provide mentors to young investors to assist them in choosing properties and helping them make investment decisions.

I have joined and had a call from my mentor, she seems nice. She let me know that the group allows you access to research into the best investment areas, they connect you with mortgage brokers and conveyancers to assist you in the purchase. It sounds too good to be true to me. But I guess we shall see.

Property Webinar

I just joined the 'Young Investors Club' in Australia. It is a community of young people, like myself who want to get ahead earlier in life.

I figure that if you don't plan, you plan to fail. It's not true most of the time, but there are times when thinking everything through before it happens is a huge advantage. So I'm joining a group of like minded people to pick their brains and see if I can't find some helpful tips.

Choices

Okay. I've made a choice. I am going to buy a new place in either ACT or NSW which will mean I can move in and get the owner occupier grant and save stamp duty. Decision made.

Now I just have to wait for that opportunity in the right suburb.

Love at first sight?

I went looking at properties on the weekend. It was my first bout for a little while. I found one I think is a good investment. I just don't want to jump the gun. I saw two more which are great but probably out of my price range at present. I ran the figures and the cheaper one is actually a better bet. Funny that. But figures don't lie.

Do you jump at the first opportunity if it's a good one?

Investment property

So, I have already organised my bank account to be earning high interest. I have negotiated a raise at work. Now I have to make the most of my resources by investing what I save.

I have a few thousand dollars worth of shares. Not much really, but I wanted to find out what the share market was like. Three were good bets, one was not. But I'm still working on it.

My next move is to invest in property. I don't have much of a deposit so it's not going to be a house. A unit then. But where, and in what price range?

So I went to the bank to see what finance I could get. Apparently I'm not a terrible bet, so that was encouraging. I then had my budget and I started looking at the local market. Now my local real estate market isn't likely to boom anytime soon (well at least I don't think so). But there is some demand for rental properties so there are some new developments and established properties.

I have two options. The first is to buy low and minimise my risk. The second is to buy a little higher for a possible better profit and rent but at higher risk. I'm a little stuck with this choice. I want the small risk. But I also want the potential for a better investment. So I'm letting the decision marinate at the moment to see what I end up with.

In the meantime I'll run all the numbers and do as much research as I can and hopefully my brain will sift it all down into a concrete decision. Any comments/ideas are welcome.

Investing while you're young with no money is a good strategy

To all those young investors or investor wannabes or those who think it's just too complicated for them.

I'm here to tell you:

1) The world of investing is not just for the over 30's;
2) It's not something you should think about later; and
3) It's never too early to start.

There are probably hundreds of investors, like me, who wish that they thought about these things earlier on. I constantly feel like chiding my blissfully ignorant 18 year old self. But the beautiful thing about investing is that it's never too late to start either.

Once you have $100 in the bank it's time to start thinking about what to do with it. The banks notoriously have the worst interest rates around and there is a lot of money that is sitting around doing nothing in particular. Make it work for you. Make your money make money.

Remember 1% makes a difference!

$1,000 at 4% interest:
 Year 1: $1,040.00
 Year 2: $1081.50

$1,000 at 5% interest:
 Year 1: $1,050.00
 Year 2: $1,102.50

A $10.00 difference becomes a $21.00 difference in year two and keeps compounding. Now, I started thinking, well it's only $20, what do I care about that? But every dollar helps. The next difference is $32.87. You see what I mean? That extra money is working for you. It starts as only $10 but in the course of a year it starts to add up.

Now interest is not that high currently. But do you have money in your account at 1.8% interest? It could be earning you 3% or 3.3% in a term deposit or high interest savings account. Little things make big differences later on.